fuels, enhancing energy security, and reducing emissions. Renewables modernize power grids and drive the shift toward low-carbon networks. Peer-to-peer (P2P) local energy trading, as an innovative approach, enables direct transactions between consumers and small producers, supporting renewable integration and optimal use of distributed energy resources (DERs). This decentralized model enhances flexibility, resilience, and efficiency by reducing losses and managing the intermittency of renewable generation.



This paper proposes a two-stage, two-layer decentralized local electricity market for smart microgrids. In the first stage, a bargaining game model unit commitment (BGMU) schedules distributed units and determines optimal energy plans of prosumers. These plans guide DERs to initiate packet-based trading in the second stage.



The second stage introduces a two-layer P2P market. In the first layer, prosumers exchange energy packets via a decentralized mechanism, but some bids remain unmatched due to limited competitiveness. To resolve this, the second layer trades remaining packets through a market-based mechanism, ensuring full utilization of resources.



Simulation results show that the proposed BGMU achieves optimal scheduling of DERs while considering distribution constraints. The first-layer P2P market reduces total operation cost by 57% compared to wholesale trading, and adding the second layer lowers costs by an additional 9%. Overall, the proposed framework improves efficiency, reduces costs, and enhances the role of renewables in smart microgrids.