Double Auction With Hidden User Information: Application to Energy Transaction in Microgrid

In this paper, a general-purpose double auction mechanism that is specifically relevant for energy transactions among competing buyers and sellers, i.e., agents, in a microgrid has been investigated. This auction algorithm is implemented by means of a microgrid controller (MC), and is individually rational, weakly budget balanced, and efficient (social welfare maximizing). Furthermore, the mechanism does not violate any physical grid constraints and does not require agents’ private information. These characteristics of the auction are accomplished by a suitable surrogate objective function which implicitly maximizes the social welfare while the agents place bids in a selfish manner and can sell or procure energy. The sellers of energy are modeled as prosumers that are equipped with photovoltaic panels as well as advanced smart meters and are willing to participate in selling their excess energy due to saturation in their energy consumption utility curves. Buyers of energy are assumed to be conventional consumers with smart meter capabilities to communicate with the MC and place bids to get optimal allocations. Buyers aim to maximize their energy usage utility plus their payment amount whereas sellers maximize their own energy consumption utility plus the reimbursement that they receive for selling their excess generation. Furthermore, the mechanism allows the possibility of sellers’ coalition where a fair redistribution of the energy supply is possible in a competitive market with less demand and more supply.