An Optimal Market Clearing Algorithm for Peer-to-Peer Energy Trading in Smart Grid

Abstract

Energy trading problem in electricity market is one of the emerging concepts in smart grid. Peer-to-peer (P2P) trading is one of the promising approaches for designing decentralized mechanism. In P2P trading approach, each player in the network connects and exchanges power or energy directedly with a set of trading neighbours. In this work, we introduce a new optimal clearing problem for P2P energy market. Next, we present a decentralized algorithm using Alternating Direction Method of Multipliers (ADMM) to maximize the total welfare of the whole community and also reach the supply-demand balance. Lastly, a pricing mechanism will be provided to choose the appropriate prices for all trading pairs such that sellers and buyers are both satisfied.