A generalized Nash-in-Nash bargaining solution to allocating energy loss and network usage cost of buildings in peer-to-peer trading market

Although the peer-to-peer (P2P) energy market has emerged as a promising method to accommodate the distributed energy resources (DERs) on the demand side, the different stakeholders in the market make the energy loss allocation and network usage cost problems hard to solve. Considering the inconsistent interests of various market entities, we propose a generalized Nash-in-Nash bargaining (GNNB) model for the trading result, network usage cost, and energy loss allocation in the P2P market among buildings. We first establish the profit maximization models of distribution system operators (DSO) and building managers in P2P markets. A tripartite Nash bargaining model is developed to depict the negotiation among these entities. We then equivalently transform the Nash bargaining problem into two subproblems. A nested market-clearing algorithm based on the alternating direction method of multipliers (ADMM) is developed to solve the P2P energy market equilibrium with these bargaining results. We finally import two cases to verify the effectiveness of the GNNB solution. The heterogeneous network usage prices in the GNNB solution balance the interests of DSO and building managers. It can be concluded from the numerical results that the energy losses are allocated according to market participants’ trading amounts. Therefore, the negotiation result is fair. Our proposed model presents a fair framework to determine the network cost and energy loss allocation for the P2P energy market. It can be applied to optimize the trading result and energy loss in the local energy market project. All three parties will be satisfied with this welfare distribution.