A Computationally Efficient Method for Energy Allocation in Spot Markets With Application to Transactive Energy Systems

Abstract

Spot markets provide an interesting opportunity for profit maximization by energy trading based on immediate decisions on participant bids. However, their short market-clearing time can affect computational efficiency, search space, and reliability of price-energy allocation to bidding participants. Accordingly, developing a prompt and effective decision-making process plays a vital role in smooth energy delivery in these markets. This paper proposes an approach to alleviate the computational cost of the spot market aggregator in order to decide price-energy bids. The proposed bidding model is developed for the transactive energy systems, where the spot market aggregator utilizes the proposed method to maximize profit by choosing participants’ demand-side bids. The proposed method can efficiently manage participants’ combined energy and price information and avoid a highly complicated search space. It takes advantage of the multi-variable Taylor series approximation to create users’ individual cost functions. The approximated cost functions lead to user-specific bids that expedite the spot market transaction while maintaining aggregator profit. The resultant system is able to exercise profit maximization with high performance within milliseconds. The efficiency of this scheme is also demonstrated through a comparative study by using the particle swarm optimization method.

Keywords

• Transactive energy
• spot markets
• combinatorial auction
• smart grids
• computational efficiency
• demand response