With the increasing share of renewable and thus volatile distributed generation
worldwide, small-scale energy producers, prosumers and consumers will become more and more involved in the overall energy system. These small-scale actors were formerly excluded from the energy market, as legislative restrictions about generation size and legal stipulations prohibited them from actively taking part in the bidding process. While DERs of intermittent nature, such as PV installations already constitute a significant part of the generation mix, the wholesale electricity markets have not been designed taking their characteristics (production variability, low predictability, zero marginal cost of generation and strong site-specificity) into account, thus making their market integration harder. Local electricity markets (LEMs) solve this issue by providing a local market platform to residential actors within a community. They empower small scale electricity producers, prosumers, and consumers and offer economic incentives for creating local electricity balances. Yet, definitions of LEMs, their concepts and market mechanisms are mostly case driven instead of comparative. Furthermore, mechanisms which induce truthful bidding from market participants have received little attention within the context of residential LEMs. This thesis attempts to address these gaps by comparing several truthful double auction mechanisms and proposing a market mechanism framework suitable for residential LEMs. A Monte Carlo simulation is conducted to compare mechanism performance indicators under various LEM scenarios. Main performance indicators include the quantity of energy traded locally, gains-from-trade between market participants and total revenue received by the market operator. Finally, recommendations on capturing the value of implementing truthful mechanisms are made for potential LEM stakeholders.