Uncertainty and Autarky: Cooperative Game Theory for Stable Local Energy Market Partitioning

Abstract

Local energy markets empower prosumers to form coalitions for energy trading. However, the optimal partitioning of the distribution grid into such coalitions remains unclear, especially in constrained grids with stochastic production and consumption. This analysis must take into account the interests of both the grid operator and the constituent prosumers. In this work, we present a cooperative game theoretic framework to study distribution grid partitioning into local energy market coalitions under uncertain prosumption and grid constraints. We formulate the optimal stable partitioning problem to balance the interests of the grid operator with that of prosumers. Under deterministic load and generation, we show that the largest market coalition is the optimal stable partition. For the case of stochastic loads and generation, we provide an algorithm to evaluate the optimal stable partition. Numerical experiments are performed on benchmark and real world distribution grids. Our results help in understanding how uncertainty affects local energy market partitioning decisions in constrained distribution grids.