Consensus-based decentralized energy trading for distributed energy resources

In smart grids, distributed energy resources (DERs) have penetrated residential zones to provide a new form of electricity supply, mainly from renewable energy. Residential households and commercial buildings with DERs have become prosumers in local grids because they can sell surplus power to others. Research has been initiated to integrate and utilize DERs through better control and communication strategies. With the advances in the Internet of Things (IoT) technology, unprecedented coordination among DERs can be achieved to facilitate energy trading and transactive energy management. However, preventing leakage of user information during the optimization process remains a challenge for researchers, which drives them to develop privacy-preserving energy management systems. In this study, a fully decentralized transactive energy management method using a consensus-based algorithm is developed. Specifically, a virtual pool is designed for prosumers to trade energy and exchange information with the support of IoT technologies. The consensus-based algorithm enables prosumers to obtain an optimal energy schedule independently in a coordinated manner without revealing any personal data. Practical data was used to perform simulations and validate the proposed algorithm. The results showed that the authors' consensus-based decentralized transactive energy management strategy is feasible and can significantly reduce the overall system cost.