  The continuous penetration of distributed energy resources (DER) in the
electric power grid is driving a new paradigm shift towards transactive energy
system (TES), an active and more sustainable system characterized by
distributed generation and energy exchanges among consumers and producers in
the network. This transition, however, comes with challenges such as dealing
with the nonlinear and non-convex power flows of the system, determining an
optimal transaction price to maximize overall system welfare, and ensuring
fairness for all participants. In this paper, we propose a three-stage
transactive energy framework that aims to address these challenges. In the
first stage, the cost without trading is calculated which will serve as the
reference in the profit maximization problem in the next stage. DER dispatch,
power flows and initial transaction payments/incentives of the participants
will then be determined in the second stage. A benefit allocation algorithm is
applied in the third control stage to determine the optimal transaction price
and final payments/incentives that will ensure fairness for trading
participants. The proposed framework was tested in an IEEE 33-bus system and
results show that fair benefits are given for all participants during trading
and the system operates within the network and economic constraints.
