IEEE Electrification - December 2020 - 81

microgrids (MGs) play an increasingly important role in such
development. MGs represent a viable alternative to conventional bulk power transmission for addressing the vulnerabilities of long-distance power delivery from centralized
generation units to distributed customer sites. A controllable
MG equipped with on-site distributed energy resources
(DERs), which could include distributed generators, energy
storage, and economic demand responses, cultivates local
resources to enhance the reliability, resilience, sustainability,
security, and economics of local power systems.
The proliferation of DERs in power distribution systems also brings about operational challenges for distribution system operators (DSOs). Peer-to-peer (P2P)
transactive energy trading, which allows networked MGs
located in a community to trade flexible energy with each
other, is regarded as an effective method to boost DER utilization. P2P transactive energy trading allows networked
MGs to serve local utilities as controllable loads and provides a reliable means of accommodating variable DERs
dispersed at various locations in a regional power distribution system.
The introduction of P2P transactive energy in a power
distribution system allows for the decentralized and
active operation of the local power system, thus benefitting from local, economically viable, environmentally
sound, and abundant generation systems. Accordingly,
decentralized management methods
are required in the power system operation and control to accommodate decentralized P2P strategies. Blockchain
provides an effective and decentralized
strategy that can address the operational challenges introduced by the P2P
transactive energy trading. Blockchain
provides an immutable and distributed
ledger to allow automatic P2P transactions among blockchain network participants that are independent of a
central authority. The decentralized
nature of blockchain provides a transparent and trustworthy environment
for network participants to directly
interact with each other and carry out
P2P transactions in a secure manner.
The introduction of blockchain to P2P
transactive energy trading can increase
the power system operation efficiency,
reduce operational costs, and provide
an automatic energy trading process
for participating MGs.
This article proposes the use of blockchain technology
in P2P transactive energy trading for delivering a secure
and efficient level of distributed power generation in a
networked MG. The proposed solution can address operational threats caused by the hosting of many DERs in
active power distribution systems.

P2P Transactive Energy Trading
Among Networked MGs
MGs, which can be operated in grid-connected or islanded
mode, interconnect local DERs and are expected to play an
important role in modern power distribution systems.
MGs, which serve as controllable loads, can exchange
energy and ancillary services to improve the sustainability,
reliability, and resilience of the power distribution system
operation and help reduce additional investments on distribution network upgrades.
Figure 1(a) and (b) illustrates the conventional and P2P
transactive energy markets in the power distribution system for MG trading, respectively. In Figure 1(a), the MGs
can exchange energy only with the DSO at a clearing energy price in a conventional market. For instance, the DSO
can purchase surplus energy from one MG and sell it to
other MGs. The clearing price for trading energy with the
DSO may not incentivize MGs to utilize local DERs and
apply a demand response. In Figure 1(b), P2P transactive
energy trading allows MGs to communicate and exchange
energy with each other at dynamic prices, which could
differ from the market clearing price offered by the DSO.
In P2P transactive energy trading, MGs determine their
trading partners based on the market price and other criteria that reflect their specific objective values. For
instance, certain MGs might prefer to exchange only clean
energy, even if the exchange price is higher than that of
market clearing. Here, the DSO is in charge only of the distribution network management. The DSO optimizes the
network reconfiguration by switching the distribution
lines to realize P2P transactive energy flows among participating MGs. Furthermore, the DSO provides instructions
to MGs to adjust their energy trading strategies if energy
trading results violate the distribution network security.
For privacy concerns, each MG is treated as an equivalent
load in the energy trading results provided to the DSO.
P2P transactive energy trading offers valuable solutions
to address the technological and socioeconomic challenges in power distribution systems. One of the prime applications of the P2P transactive energy trading market will
be in networked MGs in which participating MGs with various energy production and consumption profiles will
cooperate based on the market signals for providing energy services in a power distribution network. Such cooperative energy trading alternatives will incentivize networked
MGs to make full use of the local energy production to
provide affordable energy prices for their respective customers. The application of P2P transactive energy trading
allows MGs to better value local DERs since self-generating MGs will gain higher economic benefits from their DER
investments. The DER investments in networked MGs will
enhance the utilization of the renewable energy power
distribution systems and promote sustainable development using P2P transactive energy trading markets. In
addition, the P2P transactive energy market will promote
the use of demand response when variable DERs cannot
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IEEE Electrification - December 2020

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