Risk-averse energy trading among peer-to-peer based virtual power plants: A stochastic game approach

Developing clean and renewable energies provides a good solution to mitigate the growing environmental and energy crises, however, electricity market structures have not yet embraced the evolution to include these decentralized, small-scale and uncertain renewable generation units. In this paper, peer-to-peer based virtual power plants are proposed for risk-averse energy trading of small-scale generations and consumers. Inside the virtual power plants, peer-to-peer platforms are introduced to coordinate the small-scale generators and consumers into virtual power plants. The uncertainty of the renewable-based generations is compensated by the energy diversities in virtual power plants, which further improves the energy utilization efficiency of the renewable-based generations. Physical electricity trading approach is adopted, which promotes local electricity consumption and reduces the power congestion risk. For energy trading among virtual power plants, financial trading approaches (e.g.day-ahead contracts) are provided. The diversified trading framework of the proposed mechanism facilitates the renewable energy's access to the electricity market despite their small-scale and non-dispatchable characteristics. Moreover, a two-stage stochastic game model is proposed for the day-ahead energy bidding strategies, in which Cournot Nash pricing mechanism is introduced to balance the supply and demand and the conditional value-at-risk is employed for overbidding risk management. A set of realistic case studies of the Australian energy market and their analysis allow us to show that such a peer-to-peer-based virtual power plant market structure can effectively reduce the overbidding risk while maximizing the renewable energy usage. © 2021 Elsevier Ltd