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

TLDR

Renewable energy fluctuations have prompted the European Commission to call for integrated short‑term markets, with microgrids and energy communities expected to balance local generation and consumption and to pave the way toward fully transactive energy systems. The study evaluates a fully integrated transactive system. It models a microgrid’s uncertain energy resource management with flexible loads and market participation, a wholesale market, and a local market, then couples these elements into an integrated transactive energy simulation. The realistic case study shows that incorporating local markets and flexibility can reduce expected costs by up to 75%, demonstrating that local markets facilitate energy trade, increase renewable penetration, and support the energy transition.

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 toward fully transactive energy systems. In this paper, we evaluate such a fully integrated transactive system by, first, modeling the energy resource management problem of a microgrid under uncertainty considering flexible loads and market participation (solved via two-stage stochastic programming), second, modeling a wholesale market and a local market, and, third, 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 that how local markets can facilitate the trade of energy, thereby increasing the tolerable penetration of renewable resources and facilitating the energy transition.