# Software Defined Networking Architecture for Energy Transaction in Smart Microgrid Systems
## 1 Introduction
[8] identify them as follows:  
* Distributed renewable energy resources (DRER)/smart microgrids/prosumer--the entity that generates electricity from renewable resources. * Utility network--the entity that delivers the electricity to the consumers. * Consumer--the user of the delivered electricity. * Regulator--the entity providing the rules and regulations to ensure safe transactions in the marketplace. Peer-to-peer (P2P) energy trading, which is a trading process between prosumers and consumers, is decentralized due to the independence from an intermediate medium, according to [PERSON] et al. [9]. They identify two pricing mechanisms that support P2P energy trading, energy pricing and network service pricing (NSP). Energy pricing is classified into two trading strategies, synchronous and asynchronous strategies. Both strategies use proposed pricing and volume as the base of the trading, denoted P and Q in the sequence diagram in Figure 2 below. The sequence diagram in Figure 2 was adapted from [PERSON] et al. [9] and it shows multiple exchanges of trading information between the prosumer, consumer, and the P2P market platform. The proposed transaction comprises the pricing P (USD/kWh) and volume Q (kWh). In addition, [PERSON] et al. [10] also confirm that the decentralized energy trading strategy within a local area is a modern approach. They state that it is essential to create a local energy market to support a Peer-to-peer market, community-manager-based market, and a hybrid P2P market. This decentralized approach requires new localized governance of the energy infrastructure. Various literature documents identify the challenges that traditional IP architectures encounter. According to [PERSON] [11], traditional IP technology cannot support real-time business traffic on the Internet. This limitation is due to two reasons: the data path and data delivery are unreliable, and packet-switched services of the IP network are best-effort. He proposes a multiprotocol label switching (MPLS) based network with quality of service (QoS) as a solution. Typical transaction-type networks, such as financial institution networks (banking networks), use MPLS networks to establish a dynamic communication network between all the relevant nodes. [PERSON] [11] explains that MPLS creates a label between the layer 2 header and the layer 3 IP data header. The basic concept of MPLS is to combine the IP routing technology of the third layer with the switching technology of the second  
Figure 2: An asynchronous trading strategy sequence diagram. layer through a process called label switching. Unfortunately, certain communication technologies cannot identify the MPLS label and support the MPLS function. This limitation makes MPLS challenging to use as a flexible architecture. Based on the literature study, there is a research gap regarding the need to improve the reliability, flexibility, and security of the existing IP infrastructure as applied to transactive energy in smart microgrid systems (TESMS). This requirement is due to the static nature of traditional IP infrastructure that is unable to adapt to the dynamic nature of the transactive energy process. Although software-defined networking (SDN) technology has been designed to adapt to the dynamic requirements of a Transactive Energy Network, there is a need to develop an optimized SDN network architecture that meets the reliable, flexible, and secure requirements of TESMS. In this manuscript, SDN is referred to as a technology for network management that enables dynamic, programmatically efficient network configuration of TESMS in order to improve network performance and monitoring [12]. SDN centralizes management by abstracting the control plane from the data forwarding function in the discrete networking devices [12]. This development has not been proposed in the existing literature. Therefore, this paper explores the development of a suitable SDN architecture for the TESMS.