Local Energy Markets: Paving the Path Toward Fully Transactive Energy Systems

Abstract

Triggered by the increased fluctuations of renewable energy sources, the European Commission stated the need for integrated short-term energy markets (e.g., intraday), and recognized the facilitating role that local energy communities could play. In particular, microgrids and energy communities are expected to play a crucial part in guaranteeing the balance between generation and consumption on a local level. Local energy markets empower small players and provide a stepping stone towards fully transactive energy systems. In this paper we evaluate such a fully integrated transactive system by (1) modelling the energy resource management problem of a microgrid under uncertainty considering flexible loads and market participation (solved via two-stage stochastic programming), (2) modelling a wholesale market and a local market, and (3) coupling these elements into an integrated transactive energy simulation. Results under a realistic case study (varying prices and competitiveness of local markets) show the effectiveness of the transactive system resulting in a reduction of up to 75% of the expected costs when local markets and flexibility are considered. This illustrates how local markets can facilitate the trade of energy, thereby increasing the tolerable penetration of renewable resources and facilitating the energy transition.Index Terms-Demand response, local electricity markets, microgrids, transactive energy, smart grids, stochastic optimization. NOTATIONIndices: e energy storage systems (ESSs) i distributed generation (DG) units l, m, s, t, v loads, markets, scenarios, periods, electric vehicles (EVs) Sets and subsets: Ω DG , Ω load set of DG units/loads Ω d DG ,Ω nd DG subset of dispatchable/non-dispatchable DG units Ω curt load ,Ω inte load subset of curtailable/interruptible loads Ω shift load subset of shiftable loads Parameters: C DG generation cost of DG unit (m.u./kWh) C ESS − ,C EV − discharging cost of ESS/EV (m.u./kWh) Ccurt,C inte ,C shift load curtailment/interruption/shift cost (m.u./kWh) C imb grid imbalance cost (m.u./kWh) M P electricity market price (m.u./kWh) Ne, N i , N l number of ESS/DG/loads Nm, Ns, Nv number of markets/scenarios/EVs Pcurt max maximum load reduction of Ω curt load (kW) P DG max/min maximum/minimum power of dispatchable DGs (kW) P DG nd forecast power of non-dispatchable DGs (kW) P ESS/EV + max maximum charge rate of ESSs/EV (kW) P ESS/EV − max maximum discharge rate of ESSs/EV (kW) P ESS max/min maximum/minimum energy capacity of ESSs (kWh) P EV max/min maximum/minimum energy capacity of EVs (kWh) P EV trip forecasted energy demand for EVs' trip (kWh) P load forecasted active power of loads (kW) P offer max/min maximum/minimum energy offer in markets (kW) P shift forecasted power of Ω shift load in T shift (kW) P shift max maximum load shifted of Ω shift load in T shift (kW) T number of periods T shift shift interval of Ω shift load T start shift /T end shift earliest/latest possible period for load shift of Ω shift load η EV + /EV − charging/discharging efficiency of EV...

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