Bilateral block bid trading in a local energy market under varying matching strategies

The primary goals of local energy markets include reducing energy costs for end-users, creating financial incentives for the utilization of flexibility options, and thereby promoting the integration of renewable energy sources. Negotiation-based mechanisms have emerged as a promising approach to achieve these objectives. However, existing research reveals gaps in leveraging flexibility options to maximize trading volumes and self supply within energy communities. In this study, we introduce a novel bilateral matching and trading approach for energy communities, enabling the trading of block bids. For the first time, we analyze the implementation of block bids and compare different matching criteria as well as the maximum number of trading rounds. Our findings demonstrate that trading block bids on local energy markets enhances the temporal alignment of electricity purchase and feed-in within the neighborhood and increases trading volumes. This results in significant cost savings, particularly for user groups equipped with distributed energy resources. For the investigated use case involving different user groups with varying building energy systems, improvements of up to 2.9% in the temporal overlap of electricity purchase and feed-in within the neighborhood and up to 5.2% in trading volume compared to trading simple bids were achieved. However, unconstrained flexibility activation increased storage losses and grid exchange, indicating a cost–efficiency trade-off. • Distributed local energy market with a novel matching and trading approach. • Bilateral block bid trading to incentivize load shifting within trading periods. • Trading based on optimization with physical building energy models. • Block bids improve demand and generation alignment and trading volume. • Market participation yields notable cost savings for flexible users.