A Real-Time Framework Design for Local Energy Markets Under a Generalized Nash Equilibrium considering Prosumers-Utility Electricity Market

The ever-increasing proliferation of Distributed Energy Resources is changing the monopolistic structure of the electrical distribution systems. This observation implies that every agent connected to the distribution grid becomes a potential active participant within a potential Local Energy Market which faces massive design challenges in terms of Distributed Energy Resources management, private information concerns and the safe operation of the distribution network guided by the Distribution System Operator. Considering that every agent aims to optimize their own cost function and that the electricity market has many coupled constraints involving the prosumer’s behavior, we propose a Generalized Nash Equilibrium Problem to model an Energy Sharing Game considering all agents’ preferences. The Utility acts as an extra agent that could sell energy in shortage scenarios and buy energy in excess scenarios under a framework where selling rates differ from the buying rates. We characterize the solution of this game and describe the conditions for a unique solution in terms of price. The model is used to define ahead transactions, and then we propose a framework to deal with the real-time operation. Under this scheme, each agent earns profits from the proposed operation compared to the case where there is no market. Under the conditions defined in the computational study, an overall cost reduction (generation costs plus transaction costs) of 42% was achieved in real–time concerning the maximum cost reduction achievable based on perfect demand prediction capability.