Distributed generators(DG)and loads can form coalitions for energy supply and consumption in the distribution network

as well as participate in the local electricity market. Compared with working alone

such coalition helps DG and load whose market capabilities are weak to participate in the electricity market. Therefore

improving the direct power purchase between themselves encourages the formation of distribution electricity market. In the meantime

such coalition could also guide the production and usage of distributed electricity power with price signals

enhancing the incentives of DG and load in a deregulated electricity market by enabling them to make more profits. The conditions for the existence of such a coalition trading mode are studied. Based on the role of the utility grid and the cooperative game theory

corresponding price models are developed. Moreover

for the aggregator

an optimization decision model is built to maximize its profit

whose outputs are the optimal formulation of the coalition and price of energy traded inside the coalition. Simulation results show the theoretical feasibility of such a coalition trading mode and the effectiveness of the proposed optimization decision model in different scenarios.