Exogenous Cost Allocation in Peer-to-Peer Electricity Markets

TLDR

The rise of distributed energy resources and proactive demand‑side management is creating a new paradigm in power system operation, where peer‑to‑peer markets use multilateral negotiation to match supply and demand and map exchanges onto the grid, enabling a rethinking of how shared infrastructure costs are allocated. The study proposes attributing shared infrastructure costs through exogenous network charges applied uniformly, by electrical distance, or by zones. The approach considers different grid physical and regulatory configurations and is demonstrated on the IEEE 39‑bus test system to show how attribution mechanisms affect trades and grid usage. Exogenous attribution mechanisms shift the market to cover grid exploitation costs and can alleviate grid stress, as demonstrated in the IEEE 39‑bus test case.

Abstract

The deployment of distributed energy resources, combined with a more proactive demand side management, is inducing a new paradigm in power system operation and electricity markets. Within a consumer-centric market framework, peer-to-peer (P2P) approaches have gained substantial interest. P2P markets rely on multibilateral negotiation among all agents to match supply and demand. These markets can yield a complete mapping of exchanges onto the grid; hence, allowing to rethink the sharing of costs related to the use of common infrastructure and services. We propose here to attribute such costs through exogenous network charges in several alternative ways, i.e., uniformly, based on the electrical distance between agents and by zones. This variety covers the main grid physical and regulatory configurations. Since attribution mechanisms are defined in an exogenous manner to affect each P2P trade, they eventually shift the market issue to cover the grid exploitation costs. It can even be used to release the stress on the grid when necessary. The interest of our approach is illustrated on a test case using the IEEE 39 bus test system, underlying the impact of attribution mechanisms on trades and grid usage.