Decentralized peer-to-peer energy trading: The impact of power loss and transaction fee for optimal market design

Abstract

Peer-to-Peer (P2P) energy trading has emerged as a transformative approach for creating decentralized energy markets, empowering prosumers to actively participate in energy generation and consumption. This paper presents a novel P2P energy market framework that incorporates the technical constraints of physical electricity networks to design a more economically efficient market. By allocating power losses and transaction fees, the proposed model ensures fairness and transparency in energy transactions. Additionally, the market allows consumers to trade with the main grid to meet their energy needs and integrates Demand Response (DR) programs to balance supply and demand during periods of local generation shortages. To evaluate the proposed model, an Alternating Direction Method of Multiplier (ADMM) is employed for market clearing, ensuring scalability and efficiency. Numerical simulations were conducted on a standard IEEE 13-node test feeder demonstrate the feasibility and effectiveness of the proposed framework, highlighting its potential to enhance sustainability and grid resilience in decentralized energy systems.