Approaching Prosumer Social Optimum via Energy Sharing with Proof of Convergence

Abstract

The conventional power system operation approach has been proven to be effective and reliable for decades. Specially, at the demand side, customers are managed centrally by aggregators and usually not price-responsive. With the prevalence of distributed energy resources (DERs), traditional consumers are now endowed with the ability to produce energy, turning into so-called prosumers. Prosumers can tradeoff between supply and demand and participate in energy management proactively. At the same time, the intermittent and uncertain nature of DERs call for a stronger capability of dealing with real-time energy fluctuation. In this context, exploiting demand-side flexibility to support real-time energy balancing, which can reduce required generation reserves and save costs, is a promising direction for energy system modernization. However, the traditional centralized scheme fails to allow a prosumer to act upon its profit-maximizing philosophy, which reduces prosumer incentives and restricts demand-side flexibility. Therefore, a new prosumer-oriented approach is desired.