Enabling Federated Power Plant Formation of Prosumers via Incentive-Driven Real-Time Peer-to-Peer Energy Market Clearing for Grid Regulation

The peer-to-peer (P2P) energy market constitutes a potent infrastructure for coordinating distributed energy resources. However, its capacity to elicit decentralized prosumer participation in real-time regulatory provision remains inadequately characterized. This study develops a novel trilevel coordination framework that explicitly links the distribution system operator), a federated power plant (FPP) manager, and individual prosumers to integrate bilateral P2P trading with real-time system regulation. We propose an incentive-aligned pricing mechanism derived from differential-cost analysis that motivates prosumers to self-organize within FPPs and commit regulation capacity while safeguarding their private economic incentives. To overcome the intrinsic nonconvexity of the resulting trilevel market-clearing problem, we formulate and employ an exact relaxation condition that convexifies the embedded equilibrium constraints, producing a computationally tractable reformulation suitable for real-time deployment. For decentralized implementation under communication and privacy limits, we design a pruning-enhanced distributed bipartite-matching algorithm based on the Hungarian method. Day-ahead shadow prices are used to preselect candidate trading pairs, substantially reducing exchange overhead and problem dimensionality. Case studies on a modified IEEE 69-bus system corroborate that the proposed methodology attains socially optimal allocations in real time with minimal computational burden and rapid empirical convergence.