Realistic Energy Commitments in Peer-to-Peer Transactive Market with
Risk Adjusted Prosumer Welfare Maximization
Abstract
As the local energy sources are mostly uncertain and fluctuating in
nature, the ‘energy risk’ due to discrepancies between committed energy
transactions and metered measurements is prominent in peer to peer (P2P)
markets. We propose a P2P market settlement mechanism which lowers this
risk and maximizes the welfare of buyers and sellers. The risk in energy
production is modeled using Markowitz portfolio theory and the best
point where energy return per unit risk is maximum is obtained from the
efficient frontier by using the modified Sharpe ratio. The energy
portfolio thus obtained is used as a constraint while optimizing the
conflicting prosumer benefits using multi-objective stochastic weight
trade-off chaotic non-dominated sorting particle swarm optimization
(SWTC-NSPSO). In effect, only a reliable proportion of total energy
demand submitted in the bid is cleared in the market, foreseeing the
real-time fluctuations. The proposed market settlement mechanism also
gives room to the existing distribution system operators by assigning
them the duty of 1) optimally allocating energy among buyers and sellers
in accordance with their competitive bids 2) providing the
infrastructure, managing the market and charging for the service and 3)
checking the technical feasibility by performing load flow and
monitoring power transfer sensitivities to encourage short distance
transactions. The energy allocation is done in CIGRE LV benchmark
microgrid with ten peers having solar and wind generation. The allocated
energy is found to be closer to the metered measurements and hence the
reserve cost is observed to be low.