Trustful double auction design for Peer-to-Peer energy trading between interconnected micro-grids with supply–demand imbalance

Peer-to-Peer (P2P) energy trading between Interconnected Micro-Grids (IMGs) presents a promising approach for enhancing the economic advantages for prosumers while mitigating supply–demand imbalances within individual Micro-Grids (MGs). This paper proposes a trustful double auction mechanism for P2P energy trading among prosumers in IMGs, structured into two distinct stages. Initially, concurrent auctions are conducted within each MG to facilitate intra-grid trading, followed by subsequent auctions facilitating inter-grid trading across IMGs. We figure out the allocation and pricing rules that satisfy the required properties in mechanism design even when the auction consists of two stages. Given that energy transactions across IMGs entail non-negligible power losses, equitable allocation of these losses among prosumers is paramount. To address this, we integrate a fair cost distribution methodology into our auction mechanism, implemented by an iterative algorithm. Rigorous analysis substantiates our proposed auction mechanism's incentive compatibility, individual rationality, and budget balance, thereby fostering truthful and voluntary prosumer participation while averting potential market deficits. Numerical analysis underscores the efficacy of our approach, showcasing a significant improvement in P2P transactions and supply–demand balance enhancement compared to trading solely within individual MGs. • A double auction is designed for Peer-to-Peer energy trading between interconnected micro-grids. • A two-stage auction is developed to increase the engagement of prosumers. • A fair and feasible cost distribution method is developed to fully recover the budget deficit. • The proposed model mitigates supply–demand imbalance and improves economic benefits.