Lecture 6: Local Market Coupling

Question 1

Explain the concept of a local energy Market ?

Answer 1

Local Energy markets enables the integration of the participants in the energy market, which were excluded before from active participation. So the particpants can contribute the **local supply **both in terms of energy, capacity and reserve/balancing energy.

A local energy market enables the marketing of renewable energies at the local level. It can boost previously unused flexibility potential through price incentives and thus contribute to more efficient operation of the distribution grid.

Local Energy Markets are empowered by ICT Infrastructre that enables automation of transactions.

Question 2

Various market models are possible in local energy markets, which are they?

Answer 2

Pure Market
Intermediated Market
Microgrid Market
Centrally Controlled Market

Question 3

Various market models are possible in local energy markets

Pure Market

Answer 3

In a pure market the only flow of information to the participant is the changing price signal. End Customer has the ICT (smart meter) to react the price signals and thus profit from his flexibility.

Question 4

Various market models are possible in local energy markets

Intermediated Market

Answer 4

In a intermediated market there is a load aggregator or ESCo between the wholesale market and retail market. Customers do not participate directly in the wholesale market, but only through the (load) aggregator

Question 5

Various market models are possible in local energy markets

Centrally Controlled Market

Answer 5

Centrally Controlled Market: Utilities , not end consumers monitor and control the operations at appliance level consumption devices in order to minimize operational costs.

Zentral gesteuerter Markt: Die Versorgungsunternehmen, nicht die Endverbraucher, überwachen und steuern den Betrieb der Verbrauchsgeräte auf Geräteebene, um die Betriebskosten zu minimieren.

Question 6

Various market models are possible in local energy markets

Microgrid Market

Answer 6

It is characterized by balancing or attempting to balance
energy between supply and demand within a predetermined geographical area, it could be unconnected to the big grid

Question 7

What are Citizen Energy Communities?

Answer 7

Citizen energy communities (CEC), as the name implies, are geared toward local communities, with the aim that these are owned and/or (directly or indirectly) governed by the citizens themselves.

Decentralized CEC they are “a community of households, businesses or a municipality that generates and consumes energy locally for self-sufficiency that may or may not connect to the main grid”

Question 8

How is the provider and customer relationships in a centralized
electricity supply system versus one that is based on community microgrid.

Answer 8

in a centralized electricity supply system there is take it or leave it principle so that the customer should leave the area when he is not happy with the provider. In a community microgrid there is more of a bilateral dependency because of the high customer involcement. The bargaining power of the MG is also collective and higher then individual bargaining power of centralized supply.

Question 9

How is the definition of Microgrid?

Answer 9

“a group of interconnected loads and distributed energy resources within clearly defined electrical boundaries that acts as a single controllable entity with respect to the grid and that connects and disconnects from such grid to enable it to operate in both grid connected or ‘island’ mode.”

Question 10

Which Three sizes have been distinguished in the literature for MicroGrids?

Answer 10

Small sized microgrids (e.g., commercial buildings);

Medium sized microgrids (e.g., communities);

Large sized microgrids (e.g., universities, military)

Question 11

Why there could be a need for a MicroGrid ?

Answer 11

Market Prices are often determined on a national level and doesnt reflect the local energy scarcity or surplus of supply. New market approaches should mirror the locality of their services

Question 12

Market Prices are often determined on a national level and doesnt reflect the local energy scarcity or surplus of supply. New market approaches should mirror the locality of their services

How does the MicroGrid represent a solution here ?

Answer 12

enabling small scale participants for active energy trade within their community in real time

facilitating a sustainable, reliable, and local balance of generation and consumption

representing a viable option for integrating distributed RES into the current energy system in an economical way

empowering small scale energy consumers and prosumers

incentivizing investments in local generation , and helping to develop self sustainable microgrid communities

Question 13

What does the implementation of
microgrid energy markets requires?

Answer 13

innovative , secure , and smart information systems as an essential succeeding factor for their operation

Question 14

Microgrid energy markets
* provide small scale prosumers and consumers with a market platform to trade ……… generated energy within their community
* promote the consumption of energy ………….
* reduce the need for expensive and inefficient energy transportation with substantial losses by: satisfying demand
from local energy resources.
* strengthen the local community in terms of ……… and provide the possibility of energy cost ……… by: keeping ………. within the community due to local transactions , encouraging
reinvestments in additional renewable generation

Answer 14

Microgrid energy markets
* provide small scale prosumers and consumers with a market platform to trade locally generated energy within their community
* promote the consumption of energy close to its generation
* foster sustainability and the efficient use of local resources
* reduce the need for expensive and inefficient energy transportation with substantial losses by: satisfying demand
from local energy resources.
* strengthen the local community in terms of self sufficiency and provide the possibility of energy cost reduction by: keeping profits within the community due to local transactions , encouraging
reinvestments in additional renewable generation

Question 15

How can the Microgrid energy markets
strengthen the local community in terms of self sufficiency and providing the possibility of energy cost reduction?

Answer 15

• by keeping the profits within the community by local transactions and thus encouraging reinvestments in additional renewable generation so the self sufficiency level grows

Question 16

Info

in a local Microgridenergy Market the preferences of the consumers are also decisive. Because when the only incentive to produce green energy is monatery reaosons there is a hig chance that these producer sells his energy to the FeedInTariff. But if residents are also willing to pay more than traditioanl Grid price for the non-speisific brown energy then they could value local green production more.

Question 17

How is some economic effects for the communities through the micro grid?

Answer 17

An economically profitable microgrid market encourages more renewable generation to be build in a community.

local employment can rise through employment opportunities for building and maintaining additional local generation.

the local economy can grow as more profits stay within the community.

Question 18

Which two purposes does the auction model for local energy market serves?

How can the end energy users profit twice from that design?

How is the long term effects of it?

Answer 18

(1) it helps to further integrate DER; +
(2) it can help to lower the costs for reserve energy by mitigating the market power of the currently dominating, largescale utility companies.

End-use energy consumers can benefit from this newly designed market twice, in that they are the **ones providing the energy and getting paid for it, **and in that their energy bill can be lower once the market offers reserve energy at a lower cost.

In the longer term, when subsidy schemes are eventually
phased out, it can serve as a long-lasting incentive scheme for investments in the designated technologies.

Question 19

AUS SG BUCH

Finding a local energy auction mechanism is necessary which is ….. , ….. to understand, with lower …..

….. enables direct interaction between local market participants without the involvement of third parties.

P2P might involve ….. technologies in order to keep track of the transactions made and to offer a transparent and at the same time automated settlement of the market transactions that occurred

Answer 19

Finding a local energy auction mechanism is necessary which is simple , easy to understand, with lower transaction costs

P2P trading enables direct interaction between local market participants without the involvement of third parties.

P2P might involve blockchain technologies in order to keep track of the transactions made and to offer a transparent and at the same time automated settlement of the market transactions that occurred

Question 20

SGEM textbook, Ch. 2: Peer to peer trading platform architecture

The prosumer community is depicted as a number of buildings/households; based on a renewable power generation forecast, these bid into a day-ahead market.
At this stage, each household plans its grid consumption, P2P trade, battery storage utilization, and the grid feed-in. The community submits at this stage a commitment to the day-ahead market that takes into account the wholesale electricity price and local wind and solar power generation uncertainties. In a second stage, the community needs to balance any deviations from the day-ahead market commitment by adjusting P2P trade, battery usages, and grid electricity procurement from the intraday electricity market. The households are somewhat heterogeneous (enabling some diversification effect), and are assumed to be connected both to the main grid as well as interconnected with each other by a local grid. The objective of the optimization problem could then be to minimize the community’s expected costs of procuring electricity from the (intraday and day-ahead) wholesale markets

Answer 20

The interplay and synergies of pooled heterogeneous households
engaged in P2P trading is decisive

Two different market designs in the context of battery flexibility:
Decentralized, privately owned batteries in private households
Centralized, commonly accessible and thus shared battery

P2P trade can save more than 30% of the electricity costs for a community, allowing for a significant increase in self sufficiency , and utilization of local renewable energy resources.

Question 21

Explain the main feutures of Pebbles?

Answer 21

Pebbles is a concept for peer-to-peer energy trading based on blockchain technology. It aims to enable direct energy exchange between neighboring households or businesses without the need for a traditional energy provider as an intermediary.

Blockchain technology provides a decentralized and transparent platform for energy trading and management. In Pebbles, a specific blockchain is utilized, allowing for secure exchange of energy information and payments among participants.

The concept is based on the idea that households or businesses with renewable energy sources, such as solar panels or wind turbines, can generate excess energy that they do not consume themselves. Instead of leaving this surplus energy unused or selling it back to the conventional electricity market, Pebbles participants can sell their energy directly to other participants in their neighborhood.

Transactions are processed through the blockchain, ensuring a transparent and trustworthy trading mechanism. The blockchain records all transactions and verifies the authenticity of energy generation and payments, providing a verifiable proof of energy exchange while maintaining the integrity of the entire system.

The advantages of Pebbles lie in its decentralized nature. Participants can sell their excess energy directly to other participants, leading to more efficient utilization of renewable energy sources and reducing reliance on centralized energy providers and grids. This can potentially result in greater energy independence and lower energy costs.

Additionally, Pebbles enables participants to monitor their energy generation and consumption in real-time, allowing them to make informed decisions based on this information. This can promote a more conscious use of energy and support the transition towards a sustainable energy future.

However, it is important to note that Pebbles is a concept and has not been widely implemented yet. There are various projects and initiatives worldwide working on the development and implementation of peer-to-peer energy trading solutions, and Pebbles is one of them. The actual implementation will depend on various factors, including the legal and technical infrastructure in different countries and regions.

Question 22

Why does the Brooklyn MicroGrid was neccesary at the firts place?

Which main components does the projekt consist?

Answer 22

1. Increase of severe wheather events which increase the operational issuies -..a microgrid can reduce the impact by complete decoupling and control the supply in the microgrid
2. ## Growing amount of DER and new load apliences such as EV so the capacity utilization is to up limits —high congestion of the grid in Boriugh Hall1.The virtual community energy market platform–technical infrastructre for local energy market, private Blockchain Tech. private
   using the Tendermint protocol.
   2.The physical microgrid —- an electrical grid addinitioanl to existing distrubition grid, back up to the existing distrubition grid and power outages, option to operate in island mode

Question 23

How is the working principal of the Brooklyn MicroGrid?

Answer 23

It contains the physical level -the grid, and the virtual level -the virtual energy market platform.

While all the energy flows occurs on the grid level, information is transferred in the virtual level. Consumption and generation data is transferred from the participants smart meters to their blockchain accounts.

Buy and ask orders are created according to this information, and orders are sent to the market .

Once the matching is completed , payment is carried out and a new block (here Block iv) is added to the blockchain . This block
includes all current market information.

Question 24

UE06

Classical vs Future Energy System

Answer 24

In an classical way of energy system there is mostly unidirectional energy flows from the bigger flexible power plants to consumers. The Power is transmitted from HV to LV reducing the losts and the trading takes olace mostly in the transmission level, with no smaller players taking active part in it, due to lacking of smart meters. DERs are generating uncordinated with an inflexible fixed feed in tariff, where the variations of the DER Generation is compensated by reserve energy market by the grid operator.

In the future market the classical unidirectional flow will be replaced by bidirectional flows and smart meters and ITCs (SmartGrids) enabling the trading also in the smaller levels, thus increasing a demand for regulation. Also the rising DERs and increases the Increasing stochastic components on the
generation side so the need for flexibility also rises such as storage or DSMs. Local market coupling could be necessary.

Question 25

UE06

How can we define local energy markets

Answer 25

Local Energy Markets

enable the integration of new participants (e.g. DERs, End Consumers) into national energy markets that were excluded from active participation before, due to complexity or capacity reasons

they ease the design and implementation of new power related products like demand side load reduction potential or reactive power due to smart meters and ITC which enables the immediate information flow and reaction

Question 26

UE06

Which market models are possible in local energy markets?

Answer 26

Pure Market
The only flow of information are changing price signals
The end customer is empowered by ICT to react to changing conditions and thus profit from his flexibility by interacting with players in the wholesale market

Intermediated Market:
Characterized by a key player between the wholesale and retail market. Customers do not participate directly in the wholesale market, but only through the (load) aggregator

Centrally Controlled Market:
Utilities, not end users, monitor and control operations at the device level Consumption units in order to minimize operating costs

Microgrid Market:
Characterized by balancing or attempting to balance energy between supply and demand within a predetermined geographical area