Decentralized local electricity market model using Automated Market Maker

Bevin K.C. and Ashu Verma

Applied Energy, 2023, vol. 334, issue C, No S0306261923000533

Abstract: The desire of prosumers to participate in the markets has led to the setting up of Decentralized Local Electricity Markets (DLEM). These markets are usually confined to a small geographical location, often with a small number of participants. Such markets have very low liquidity for participants to trade, so price discovery becomes a cumbersome process. To solve the issue of market liquidity, this paper introduces a DLEM model where market participants can trade with a Liquidity Pool (LP) created by Energy Storage Units (ESU). The market model provides iteration-free price discovery by using an Automated Market Maker (AMM) protocol, which automatically updates energy price in the LP based on demand–supply balance. The efficiency of AMM is further improved using the concept of concentrated liquidity by restricting the trading range. A network loss compensation method is applied to ensure DLEM transactions do not affect the power contracts already committed. Simulation studies are conducted on IEEE 33 bus and 123 bus distribution networks for various energy demand scenarios to show operation of the proposed market model.

Keywords: Decentralized local energy market; Automated market maker; Liquidity pool; Smart contracts; Blockchain (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (3)

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DOI: 10.1016/j.apenergy.2023.120689

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