A Nested Transactive Energy Market Model to Trade Demand-Side Flexibility of Residential Consumers

A nested transactive energy (TE) market methodology is presented in this paper for the effective utilization of demand-side flexibility of small-scale residential consumers. The consumers' flexibilities are traded in a local flexibility market to prevent transformer overloading, whereas the demand-side flexibilities are traded in an event-triggered central wholesale demand response market after successive aggregation in the intermediate layers. A two-stage optimization-based scheduling model is presented to optimize the transactive bidding of residential consumers with on-site distributed energy resources and controllable loads. The optimal market methodologies are presented for the integrated TE markets to ensure economic trading for all involved stakeholders. The proposed methodology is numerically validated by simulation studies for different consumer participation levels, and the case studies indicate the efficacy of the proposed methodology for economically feasible procurement of consumer flexibility for transformer overloading and wholesale peak-price events. Results also illustrate that the proposed method offers 2.8-14 times more profits to the participating consumers than the energy-supply incentives according to existing retail tariff structures even considering their thermal discomfort and cycle-aging of storage units for the flexibility support.