# Software Defined Networking Architecture for Energy Transaction in Smart Microgrid Systems
## 1 Introduction  
The fourth industrial revolution (4 IR) has introduced a change in how energy is generated, transmitted, and distributed. [PERSON] et al. [1] explain that the method of generating energy is moving towards alternative green energy sources like solar, tidal and wind generators. This movement is due to the growing energy demand and the ability of the centralized power distribution network (CPDN) to provide stable power to meet this demand, which is introducing a growing number of microgrids that can supplement the shortfall from the CPDN. As a result, decentralized microgrids are becoming increasingly more common, which is also confirmed by [PERSON] et al. [2]. [PERSON] et al. [3] state that the distributed energy resources through microgrids globally are expected to increase from 132.4 GW to 528.4 GW between 2017 and 2026. Decentralized microgrids are using renewable energy sources due to the environmental impact of fossil fuels. However, the main drawback of renewable energy is that energy generation is not constant, and the energy demand varies. Therefore, microgrids should be able to store energy to compensate for the difference in supply, demand, and future use. [PERSON] et al. [4] confirm that microgrids can store energy more effectively by using multiple types of batteries in a hybrid model that includes chemical batteries (lead Acid, lithium-based, and nickel-based). Other battery types include mechanical batteries (flywheel energy storage (FES)), superconductive magnetic energy storage (SMES), and supercapacitor energy storage systems (SCES), as per [PERSON] et al. [5]. [PERSON] et al. [1] further identify a change in transmission and distribution towards decentralized systems. The recent development of geographically distributed subsystems of microgrids (MG) supports this change. However, the decentralized MG system is complex and dynamic. It, therefore, requires the capability to use advanced information and communication technology (ICT) and intelligent information process (IIP) to monitor and control energy generation, transmission, and distribution. This capability evolves the MG system into a smart microgrid (SMG) network. The SMG network provides energy to end-users (consumers) and themselves as prosumers. Figure 1 illustrates a basic architecture for a decentralized smart microgrid network. It shows that the electric distribution network and communication network operate in separate environments to the same endpoints: SMGs (energy producers only), prosumers and consumers. In Figure 1, the electric distribution network is the maximum voltage (MV) distribution network that geographically provides power to areas that are stepped down at the local substation to the user's and prosumer's operating voltage in the distribution level of the low voltage (LV) network. The communication network comprises various mediums, including fiber networks, GSM networks, wireless networks, and satellite networks. These networks can form part of the Internet or be private networks, providing Internet protocol (IP) connectivity for prosumer networks using Smart microgrids. The ability of SMGs to distribute energy into the power grid and the requirement of consumers for energy from the power grid creates the opportunity for transactive energy (TE), as explained by [PERSON] et al. [2]. According to [PERSON] et al. [6], transactive energy is defined as \"a set of economic and control mechanisms that allows the dynamic balance of supply and demand across the entire electrical infrastructure using value as a key operational parameter\". [PERSON] et al. [7] provide another definition in that TE is the exchange and balance of value, or in other words, the transaction of energy. Both literature papers confirm  
Figure 1: A communication and power services architecture for a smart microgrid network. that various participants can transact energy as a commodity. There are different types of participants in the TE processes, and [PERSON] et al.