Combined Heat and Power Markets by Double-Sided Auction Mechanisms

Abstract

In order to reduce CO2 emissions, energy systems using different energy carriers (e.g., heat and power) are becoming more intertwined and integrated. However, coordination between non-cooperative participants of these systems in the combined heat and power domain has been limited to single-sided auctions with one centralised seller. In this paper, we present a double-sided auction mechanism in which prosumers as well as consumers and producers of heat and power can participate. By showing that our mechanism is Incentive Compatible and Individually Rational, we ensure that truthful bidding is the optimal strategy, simplifying the bidding process and thus accommodating agents with limited computational resources. Finally, we show that our mechanism is fiscally sustainable, i.e., Weakly Budget Balanced.