Energy Trading System in Microgrids With Future Forecasting and Forecasting Errors

Abstract

In this paper, we propose a periodic energy trading system model in microgrids with future forecasting and forecasting errors. In the proposed model, retailers in a microgrid can purchase (sell) energy periodically from (to) other retailers in the same microgrid. In this regard, our proposed model uses stochastic processes that capture the series of forecasted energy generation/consumption over time and the forecasting errors as transitions among states. We show with the proposed model that it is enough to consider only one time period to maximize revenues of retailers over the whole time period. We further design a hierarchical algorithm that provides an equilibrium price of energy among retailers to balance between energy demand and supply in the microgrid. Some numerical examples show that our proposed model and algorithm outperform traditional ones by efficiently managing forecasting errors.