The penetration of distributed renewable generation provides green energy to the local energy system. However

the uncertainties it brings to the system are becoming more and more unacceptable

making it difficult to efficiently operate the local energy system. In a foreseeable future

there could be an increasing number of flexible resources

such as natural gas power plants and interruptible demands

which provide solutions to these uncertainties. In this paper

a novel day-ahead energy market design for the local energy system is proposed. This market allows its participants to trade day-ahead energy in a peer-to-peer approach. In addition

flexible resources can provide up/down-ward reserves to the system through reserve trading

where the local system operator (LSO) takes charge of reserve procurement. Then

to operate the market

a market clearing model is proposed incorporating operating costs of the day-ahead and real time stages. A consensus-based approach is applied which enables the market to clear in a decentralized method. Finally

since the LSO bears the reserve procurement costs as well as the operating costs in the real time stage

we then propose a cost reallocation model to transfer the expenses to the renewables. Case studies demonstrate the validity and efficiency of the proposed market design

including local energy trading facilitation

high and stable revenue preservation

high computation efficiency and prevention of strategic bidding behaviors.