Local energy trading

Market platforms for local energy trading, including peer-to-peer trading, are currently being developed and tested. The platforms are limited to a single region or community, typically defined by grid limitations. They enable increased local production and consumption and relieve transmission and distribution grids, particularly during peak time, thereby limiting congestions. The key projects considered here are EMPOWER and Cornwall. Another aspect is the trading of flexibility which can be conducted between participants within a local energy trading platform. The key projects covering this issue are INTERRFACE and COORDINET.

Local energy markets improve adequacy and prevent congestions through incentivising self-consumption, using local flexibility from production, generation and storage. At the core it's an ICT market platform organising the energy cooperative, which enables peer-to-peer trading, operating in addition to existing electricity, wholesale and balancing markets. Local battery storage and instalment of smart home appliances increase the available local flexibility. Economic incentives are provided, either through rebated prices for local consumption or subsidised prices for local production. As such, demand is incentivised to adjust to when there is surplus prosumer or renewable generation locally.


Components & enablers

The most important enablers for local energy markets are:

  • A well-functioning ICT solution (marketplace)
  • Machine learning prediction of production and consumption down to a 15-minute level
  • Removing regulatory barriers
  • Energy data from DSO/smart metering
  • A unified research approach
  • Efficient battery technology
  • Prosumer acceptance
  • Blockchain which facilitates the transparency of the transactions and enhances the trustworthiness of the system.

State of the art in application and research

In EMPOWER, economic benefits for peer-to-peer trading were provided through the community, where external agents (e.g. providers of PV panels or smart- home appliances) took a commercial interest in the investments of the community. This illustrated an economic feasibility of energy communities. Adequacy is provided through local self-consumption within the area, increased generation and storage. Local energy markets typically organised within one distribution area, and congestion management is therefore improved when relying less on the central grid.

EMPOWER pilots in Hvaler, Norway, showed that load reduction can be offered to the DSO and thus contribute to congestion management. In the German pilot, the load shifting potential in households was greater than that of public buildings.

EMPOWER built Norway’s first pilot microgrid in Hvaler. The area produced 171 MWh/year from solar and wind. Includes storage. Residential homes (consumers and prosumers), municipal recycling facility, storage units. EMPOWER showed both the technical and economic feasibility of energy communities and local trading.

SENSIBLE tested how installing storage units in buildings and communities can be controlled to increase local consumption in a pilot in Nottingham, UK.

PEBBLE’s goal is to design, develop and operate a blockchain-based platform for local energy trading (using a peer-to-peer or “P2P” model) and to integrate grid usefulness into the market mechanism in regional “energy-supply areas.

INTERRFACE will develop and operate a market framework for distributed flexibility exchange between key stakeholders, to develop technical procedures to manage grid and system limitations via aggregated control of consumption and generation.

Enervalis develops a proof of concept, compatible with blockchain, in a real-life local market setting, to demonstrate a Layered Energy System (LES), which is a community market-based model.

CoordiNet pilot in Sweden develops a P2P trading supported with Blockchain technology in order to facilitate customer engagement and reduce transaction costs.


Technology Readiness Level

TRL 7

EMPOWER has conducted three pilots (Malta, Norway and Germany) and commercialized part of the concept. Centrica is currently undertaking a pilot in Cornwall, UK. Several other project pilots have completed or are ongoing. INTERRFACE is going to test a prototype for the TSO-DSO flexibility market with blockchain based, smart contract and smart billing. CoordiNet is going to demonstrate in WP4 the peer-to-peer energy trading through blockchain technology.


Current focus of R&D and research gaps

INVADE builds on research results from EMPOWER. INVADE looks into aggregation through a flexibility operator, providing ancillary services to BRPs and DSOs. INVADE also has a wider range of participants (i.e. EV chargers, commercial).

P2P-SmarTest simulated how connected areas can participate to voltage control in a medium-voltage distribution grid.

INTERRFACE demo consists of a 3-phase approach to enhance a prototype for flexibility market with blockchain based, smart contract and smart billing, as follows: (a) development of a custom prototype where basic use cases can be simulated and where market players are invited to test, (b) evolution to a Minimal Viable Product (MVP), capturing the fundamental functions and architecture of the platform and (c) initiation of a continuous growth cycle by checking the use cases of the different players (Prosumers, TSO and DSO), the transparency in data and control and by validating the correctness of transactions (in the market/procurement process) and the transaction capacity, automatic level and speeds of market/procurement process. Sub-tasks include setting-up technical requirements and flexibility market arrangements for the test case, enhancing a prototype for flexibility market with blockchain based, including proof of concept, and demonstrating TSO- DSO procurement for flexibility.

CoordiNet project demonstrates in 10 pilot sites, how TSO-DSO shall act in a coordinated manner to procure grid services in the most reliable and efficient way. Innovative grid services such as demand response, storage and small-scale (RES) generation are considered in this project. In addition, the Blockchain maturity for peer-to-peer energy trading is investigated and further developed in Swedish pilot site.

PEBBLES focuses on a) Developing a local trading platform which encompasses market mechanism, market and network optimisation, and decentralised architecture, b) Developing business models for the future of the energy market on a local level, c) Developing a Smart Contract Library for energy applications, d) Pinpointing potential savings in the operation of supply grids by actively identifying prosumer behavior and e) Analyzing the technical and regulatory aspects of our demonstrator within the distribution grid area.

ENERVALIS with RENNOVATES project, although there are currently insufficient statistical data available to draw definitive conclusions, aims to a total energy consumption of the homes’ decrease by more than 60%. In addition, the solar panels will generate approximately 4 to 7 MWh per year. Consequently, the houses will effectively meet the zero on the meter scenario, which is one the primary objects of the project.

Research is also focused on both aggregation and allowing the DSO and sometimes the TSO to procure ancillary services (frequency response, voltage control) from local flexibility. This is still at a research stage and is currently considered covered by the flexibility market platforms solution.

Cornwall: In Cornwall (south-west England) a local energy market pilot is currently being tested. The local energy market trial tests an ICT-based market platform which involves both local pricing and flexibility provision through explicit incentives for a DSO. In the virtual marketplace, the DSO places bids onto the market place, participants (households and private firms) make offers to buy and sell energy or flexibility. Participants receive a payment for their response. End-to-end solution. A 2.5MW “smart” solar farm.


References

[1] NETfficcient. [Link]

[2] EMPOWER:

  • EMPOWER. (2019). Retrieved from EMPOWER. [Link]
  • Hirdes, D. e. (2018). Final project report.

[3] Cornwall:

  • Bray, R., & Woodman, B. (2018). Unlocking Local Energy Markets. Exeter: University of Exeter.
  • Bray, R., Woodman, B., & Connor, P. (2018). Policy and Regulatory Barriers to Local Energy Markets in Great Britain. Exeter: University of Exeter.
  • Centrica. (2019). Cornwall Local Energy Market. Retrieved from Centrica. [Link]

[4] P2P-SmarTest. [Link1] [Link2]

[5] Dominoes. [Link]

[6] Enervalis. [Link1] [Link2]

[7] SENSIBLE (Nottingham pilot). [Link]

[8] Nobel grid. [Link]

[9] Skagerak Energilab. [Link]

[10] INTERRFACE. [Link]

[11] PEBBLES. [Link]

[12] COORDINET. [Link]