We present a hierarchical framework aimed at decentralizing the distribution systems market operations using localized peer-to-peer energy markets. A hierarchically designed decision-making algorithm approaches the power systems market operations from a bottom-up perspective. The three layers of the hierarchical framework operate in orchestration to enable prosumers (the grass-root ac- tors) to maximize their revenues - hence, a prosumer-centric framework. The design of the framework incorporates existing smart grid technologies (Virtual Power Plants, Microgrids, Distributed Energy Resources) and redefines their functional objectives to align them with the decentralization paradigm focused on empowering the bottom-up grid operations approach. On one hand, the framework is enabling prosumers with simultaneous access to the buy-sell choices that help them maximize their cost savings while ensuring their consumption patterns and preferences are not being traded off as a result of top-down operational decisions. On the other hand, it is designed to operate in harmony with the existing top-down grid operations mechanisms - thereby reducing the potential friction in its adaptation. This marriage of the top-down and bottom-up operational approaches is facilitated through meticulous orchestration of operational timescales. The frameworkâ\euro™s novel design also incorporates scalability and interoperability considerations, thereby tackling the challenge of decentralization holistically.

Point-of-view article. Abstract: For more than a century, the grid has operated in a centralized top-down fashion. However, as the penetration of the distributed energy resources (DERs) grows, the grid edge is increasingly infused with intelligent computing and communication capabilities. Thus, the bottom-up approach to grid operations inclined toward decentralization of energy systems will likely gain momentum alongside the existing centralized paradigm. In this point of view article, we aim to highlight the need for and outline a credible path toward restructuring the current operational architecture of the electricity grid in view of the ongoing decentralization trends with an emphasis on peer-to-peer energy trading. We further suggest that blockchain is an effective technology for facilitating the synergistic operations of top-down and bottom-up approaches to grid management.