A decentralised electricity market model: An electric vehicle charging example

Decentralized competitive markets are essential for a meaningful growth of distributed generation. Currently most jurisdictions use administered prices at the retail level. Through the example of electricity trade at an electric vehicle charging facility, this paper presents a trade mechanism that can help create decentralized markets. The mechanism is based on random matching and subsequent bargaining between the electricity sources and the electric vehicles. The entity organizing the market sets designated trade parameters. The ensuing interaction between the electricity sources and the vehicles, where each is trying to maximise its own benefit, is modeled as a non-cooperative game of incomplete information. Equilibrium analysis and examples are used to demonstrate the merits of this mechanism. In comparison to the market clearing price based approaches, this model provides market governance capabilities that can help tune a market to local requirements. The distribution companies may find the model useful as it will allow gradual introduction of localised markets and thereby enable phasing in of the investments required for upgrade of distribution infrastructure to service the electric vehicle charging needs.