Peer-to-Peer Energy Trading in Smart Grid Through Blockchain: A Double Auction-Based Game Theoretic Approach

Abstract

In a smart grid, each residential unit with renewable energy sources can trade energy with others for profit. Buyers with insufficient energy meet their demand by buying the required energy from other houses with surplus energy. However, they will not be willing to engage in the trade if it is not beneficial. With the aim of improving participants' profits and reducing the impacts on the grid, we study a peer-to-peer (P2P) energy trading system among prosumers using a double auction-based game theoretic approach, where the buyer adjusts the amount of energy to buy according to varying electricity price in order to maximize benefit, the auctioneer controls the game, and the seller does not participate in the game but finally achieves the maximum social welfare. The proposed method not only benefits the participants but also hides their information, such as their bids and asks, for privacy. We further study individual rationality and incentive compatibility properties in the proposed method's auction process at the game's unique Stackelberg equilibrium. For practical applicability, we implement our proposed energy trading system using blockchain technology to show the feasibility of real-time P2P trading. Finally, simulation results under different scenarios demonstrate the effectiveness of the proposed method.