Towards Sustainable Energy Communities: Privacy-Preserving Auctions with Homomorphic Encryption

In the pursuit of a sustainable energy future, the integration of distributed renewable energy sources within communities has emerged as a pivotal paradigm. This paper introduces a novel approach to facilitate the sharing of a medium-scale renewable energy (RE) generation with a community of consumers. Leveraging ascending price auctions, we propose a mechanism that not only maximizes revenue for the RE producer but also upholds the privacy of consumers through the application of homomorphic encryption. We model consumers to have dual motivations, both financial and environmental. The proposed ascending price auction takes these preferences into consideration by dynamically adjusting RE prices until the aggregate demand falls within the available supply. This ensures an equitable allocation of energy resources while encouraging participation from economically and ecologically conscious consumers. Through the integration of homomorphic encryption, the private preferences of consumers remain confidential, thus preserving trust among participants. A case study based on real-world data shows that the proposed homomorphically encrypted auction can maximize revenues, lower energy emissions, and preserve the privacy of its participants.