Transactive Energy Market Mechanism with Loss Implication

Electric distribution network is undergoing fundamental transition from conventional top-down structure to an environment where local prosumers, as transactive agents, are able to form peer-to-peer (P2P) energy trades among themselves. One of the challenges in such networks is allocating the incurred losses to the peers of the transactive market through a transparent and fair framework. In this article, it is demonstrated that the existing methods of loss allocation may cause a cross-subsidization problem when it comes to transactive energy systems, and a solution is offered to the problem. Furthermore, a novel transactive market mechanism is proposed which deploys the loss allocated to each transaction as a criterion to match the peers of the market for energy trading. It will be shown that the presented mechanism will help in diminishing the cross-subsidization problem. More importantly, our method will encourage the agents of the transactive market to trade energy with others located at a shorter distance, rather than farther ones in the network. This is indeed a salient goal of the smart grid concept and will give rise to prominent technical and administrative benefits regarding the transactive energy market and its players.