Architecture
How the different parts of FP-AMM fit together.
Overview
FP-AMM is not a single market mechanism.
It is a complete market architecture designed to coordinate millions of distributed energy resources across an electricity network.
Rather than relying on a sequence of disconnected markets operating independently, FP-AMM integrates price formation, network coordination, reliability, fairness and settlement into a single continuously operating system.
Each component performs a distinct role while sharing a common view of the physical and economic state of the electricity system.
Together they form a cyber-physical operating architecture capable of coordinating modern electricity networks.
A Layered Architecture
The architecture consists of five core components.
Each solves a different coordination problem.
FP-AMM Architecture
┌──────────────────────┐
│ Service Levels │
│ Reliability Products│
└──────────┬───────────┘
│
┌──────────▼───────────┐
│ Automatic Market Maker│
│ Continuous Clearing │
└──────────┬───────────┘
│
┌──────────▼───────────┐
│ Holarchical Control │
│ Network Coordination │
└──────────┬───────────┘
│
┌──────────▼───────────┐
│ Fair Play │
│ Scarcity Allocation │
└──────────┬───────────┘
│
┌──────────▼───────────┐
│ Shapley Settlement │
│ Value Allocation │
└──────────────────────┘
Each layer contributes a specific capability to the overall market.
Service Levels
Service Levels define the contractual relationship between participants and the market.
Rather than assuming every request requires identical reliability, participants explicitly communicate the level of service required for each registered device.
This provides the market with an understanding of:
- reliability expectations,
- operational flexibility,
- contractual commitments.
Service Levels therefore define what the customer requires.
Automatic Market Maker
The Automatic Market Maker continuously forms prices by observing the evolving state of the electricity system.
Rather than waiting for discrete market intervals, every accepted transaction updates:
- available supply,
- outstanding demand,
- network conditions,
- future commitments.
Prices therefore evolve continuously as the system evolves.
The AMM determines the economic conditions under which transactions occur.
Holarchical Coordination
Electricity networks are naturally hierarchical.
Households connect to feeders.
Feeders connect to substations.
Substations connect to transmission networks.
FP-AMM mirrors this structure by distributing market coordination throughout the network.
Each level manages its own local conditions while exchanging only the information required with neighbouring levels.
This allows the architecture to scale naturally from individual households to national electricity systems.
Fair Play
Most of the time, sufficient resources exist to satisfy every requested service.
Occasionally, however, genuine scarcity occurs.
There may be insufficient energy generation.
A local feeder may become congested.
Multiple devices may require service simultaneously.
Fair Play governs how scarce resources are allocated under these conditions.
Rather than relying solely on willingness to pay, allocation follows transparent rules that respect:
- Service Levels,
- historic fairness,
- physical feasibility,
- system objectives.
Fair Play therefore determines who receives service when scarcity cannot be completely avoided.
Shapley Settlement
Electricity markets must determine not only how resources are allocated, but also how value is distributed.
FP-AMM separates these questions.
Once physical coordination has occurred, Shapley Settlement allocates costs and rewards according to each participant's contribution to the overall system.
This provides incentives that encourage:
- efficient investment,
- beneficial behaviour,
- congestion relief,
- flexibility provision.
Settlement therefore rewards participants according to the value they create rather than solely according to the quantity of electricity exchanged.
Continuous Information Flow
Unlike traditional market architectures, information flows continuously throughout FP-AMM.
Physical measurements update the market.
The market updates prices.
Prices influence participant behaviour.
Participant behaviour changes the physical state.
This creates a continuous cyber-physical feedback loop.
Physical State
│
▼
State Estimation
│
▼
Automatic Market Maker
│
▼
Participant Decisions
│
▼
Physical Electricity System
│
└─────────────────────►
Rather than separating engineering from economics, both evolve together.
Separation of Responsibilities
Each architectural component has a clearly defined responsibility.
| Component | Primary Responsibility |
|---|---|
| Service Levels | Define contractual reliability |
| Automatic Market Maker | Continuously determine prices |
| Holarchical Coordination | Coordinate across the network |
| Fair Play | Allocate scarce resources fairly |
| Shapley Settlement | Allocate costs and rewards fairly |
This separation allows each mechanism to remain conceptually simple while collectively solving a highly complex coordination problem.
A Unified Market
Many existing electricity markets have evolved by adding new mechanisms to solve individual problems.
Wholesale markets determine energy prices.
Balancing markets correct dispatch errors.
Capacity markets procure reliability.
Flexibility markets resolve local congestion.
Ancillary service markets procure stability.
Each market typically operates using different assumptions, objectives and settlement rules.
FP-AMM instead provides a single coordination architecture in which these functions emerge from a common market operating continuously over the same shared physical state.
Rather than coordinating multiple markets, the architecture coordinates the electricity system itself.
From Architecture to Mechanisms
The remainder of this documentation examines each architectural component in detail.
The following sections describe:
- how the Automatic Market Maker forms prices,
- how Holarchical Coordination scales decision making,
- how Service Levels represent contractual reliability,
- how Fair Play allocates scarce resources,
- how Shapley Settlement rewards system value.
Together these mechanisms implement the architectural principles described in the previous section and realise the vision of a continuously coordinated electricity market.