A Grid-friendly Neighborhood Energy Trading Mechanism

More customers are tending to install batteries with photovoltaic (PV), so they can better control their electricity bills. In this context, customers may be tempted to go off-grid at a substantial up-front cost, leading electricity companies into a death spiral, thereby raising electricity price further on those remaining on grid. Neighborhood energy markets can promote the sharing of locally generated renewable energy and encourage prosumers to stay on grid with financial incentives. A novel neighborhood energy trading (NET) mechanism is developed using the topology of existing radial distribution network to encourage sustainable energy sharing in neighborhood and encourage prosumers to stay on grid. This mechanism considers loss, congestion management, and voltage regulation, and it is scalable with low computation and communication overhead. An IEEE test system is used to validate the NET mechanism. The simulation shows that the price and flow results are obtained with fast computation speed (within 10 iterations) and with loss reflected, flow limit reinforced, and voltage regulated. This study proves that the economic demand-supply-based pricing mechanism can be applied effectively in distribution networks to help encourage more renewable energy sharing in sustainable neighborhood and avoid energy network death spiral.