1. State Key Laboratory of Control and Simulation of Power System and Generation Equipments(Tsinghua University), Beijing 100084, China; 2. Key Laboratory of Control of Power Transmission and Conversion, Ministry of Education(Shanghai Jiao Tong University), Shanghai 200240, China

Power systems are now facing challenges in terms of safety, stability and economic efficiency with penetration of a great number of distributed resources(DRs). Transactive energy(TE)has become a hot research area for its promises on supply-demand balance. Considering the current development of DR, the TE is limited to distributed systems when facing the distributed agents such as end-users, DR, and distributed storage. In our mechanism, the distributed agents can communicate and trade directly with each other which form a decentralized and flat trading system. Such transactions feature spot electricity prices so that the interests of members and the system are incentive compatible. Firstly the TE's concept is elaborated and its characters and significance are listed. Secondly TE's architecture and trading mechanism are designed comprehensively. Then, TE's operational process is presented and the benefits of all related members are discussed. Finally the key technologies for TE, such as the intelligent decision system and block chain, are briefly described from the perspective of system operation requirement.