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Transactive Energy: A Sustainable Business and Regulatory Model for Electricity
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Transactive Energy: A Sustainable Business and Regulatory Model for Electricity

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This slide deck introduces the Transactive Energy concept and provides an overview of how it can be implemented.

This slide deck introduces the Transactive Energy concept and provides an overview of how it can be implemented.

Published in: Environment, Technology, Business
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  • Whether any possibilities lay in the stored power use in aviation and ground hovering craft industry, in or around 2016-20. If it happens, then most power consuming sector will be aviation
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  • 1. Transactive Energy A Sustainable Business and Regulatory Model for Electricity Stephen Barrager, Ph.D. Baker Street Publishing, LLC steve@bakerstreetpublishing.com ! Edward Cazalet, Ph.D. TeMix, Inc ed@temix.com
  • 2. The Transactive Energy business model. There are two products: energy and transport. All parties act autonomously. Forward transactions are used to ! coordinate investments and manage risk. Spot transactions are used to ! coordinate operating decisions. © 2014 Baker Street Publishing, LLC. All Rights Reserved.
  • 3. Transactive Energy has several advantages. •Efficiency •Fairness •Transparency © 2013 Baker Street Publishing, LLC. All Rights Reserved.
  • 4. Our electrical systems are in a dramatic transition. • We are moving toward renewables, new storage technologies, and decentralized energy resources. • Our existing command and control business model can not keep up with the changes. • The current ways of doing business are stifling innovation. “We’re moving into an era where all ways to make or save energy will get to compete fairly, at honest prices, regardless of their type, technology, size, location, and ownership.” ! Amory Lovins, Rocky Mountain Institute, in Utility Fortnightly interview ! © 2013 Baker Street Publishing, LLC. All Rights Reserved.
  • 5. This is how the electric energy system looked in the year 2000. Storage © 2014 Baker Street Publishing, LLC. All Rights Reserved. Residential Customers Industrial Customers Generators Low voltage High voltage Transmission Grid Distribution grids Commercial Customers
  • 6. This is how the electrical system will look in the year 2020. Low voltage © 2013 Baker Street Publishing, LLC. All Rights Reserved. Storage Storage Renewables Storage Prosumers Residential Customers Industrial Customers Generators High voltage Transmission Grid Distribution grids Storage Decentralized Energy Resources Commercial Customers Coal, oil, gas, nuclear Pumped hydro and batteries Wind and solar Storage Storage Storage Microgrids
  • 7. The Transactive Energy Process is straightforward. There are tenders and transactions. There are two kinds of transactions: “forward” and “spot.” $ Buy Tenders: $ Forward and Spot Sell Tenders: Forward and Spot Transactions: Forward and Spot Delivery Consumer Prosumer Producer © 2014 Baker Street Publishing LLC. All Rights Reserved
  • 8. There are two products: electric energy and transport. © 2013 Baker Street Publishing, LLC. All Rights Reserved. Electric energy (produced at a place and time) Transport Electric energy (delivered at a different place and same time)
  • 9. Planning and regulation focus on producer investment and operating decisions. This command-and-control model is stifling innovation. Weather Outcome Decision Uncertainty Influence Solar Output Wind Output Actual Usage Climate Change Technology Cost Regulation Capital Stock Producer Operating Decisions Producer Investment Decisions
  • 10. Producers have always used forward transactions to limit investment risk. These take the form of contractual agreements with regulators and large customers. Investment Cash Flows Cash Flows secured by forward transactions. Estimated expenses (fuel, maintenance, taxes) 2013 2018 2023 2028 2033 © 2014 Baker Street Publishing, LLC. All Rights Reserved. Cash Flow 400 200 0 -200 -400 -600 -800 -1000 Year Investment Terminal Value
  • 11. The TE business model uses forward tenders and transactions to coordinate investment decisions and to manage risk. Spot tenders and transactions are used to coordinate operating decisions. Transactive Energy Platform Spot Tenders and Transactions Solar Output Wind Weather Output Actual Usage © 2014 Baker Street Publishing, LLC. All Rights Reserved. Climate Change Technology Regulation Net Benefit Outcome Decision Uncertainty Influence Capital Stock Forward Tenders and Transactions Investment ! Decisions! - Consumer! - Producer Operating ! Decisions! - Consumer! - Producer
  • 12. Savings from consumers’ efficiency investments are secured by forward transactions (subscriptions.) Cash Flows for Consumer Efficiency Investment Savings secured by forward transactions (subscriptions) Terminal 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 © 2014 Baker Street Publishing, LLC. All Rights Reserved. Cash Flow ($) 400 300 200 100 0 -100 -200 -300 -400 -500 Year Investment Value (increase in value of property) Tax Credit subsidy
  • 13. Here’s an example of how Transactive Energy works for a consumer. • Based on my typical usage, I automatically transact with a supplier for delivery of a fixed quantity of energy in each hour of the year(s) for a fixed monthly payment (subscription.) • If I use less than I subscribed for in each hour then I am paid for the difference at the hourly spot price. • If I use more than I subscribed for then I pay for the difference at the hourly spot price. • As my needs change, at any time I can automatically buy or sell a quantity of energy at the current spot price tendered by my supplier(s). All the decision making is handled by an algorithm in my energy management system. The energy management system is my agent. © 2013 Baker Street Publishing, LLC. All Rights Reserved.
  • 14. Spot market transactions are used to buy or sell the difference between forward positions and actual demand. Forward Positions 1 3 5 7 9 11 13 15 17 19 21 23 © 2014 Baker Street Publishing, LLC. All Rights Reserved. 100 KW 75 50 25 0 Hour Actual Delivery
  • 15. All parties are tied together by Transaction Platform Providers. Energy Services Parties Transaction Platform Providers © 2014 Baker Street Publishing, LLC. All Rights Reserved. ! ! ! Intermediaries - Exchanges - Marketers - Retailers - System Operators Transport ! Services Parties ! -Transmission Owners -Distribution Owners TE Service Interface ! - Consumers - Producers - Prosumers - Storage owners Tenders and Transactions
  • 16. The three pillars of Transactive Energy are protocols, connections, and systems. Physical System © 2014 Baker Street Publishing, LLC. All Rights Reserved. Transaction System Regulatory System Systems Home People Things Data Mobile Office Connections TeMix Organization for Energy Market Information Exchange (EMIX) the Advancement of Structured Information Standards American National Standards Institute Energy Inter-operation Services Protocols These two These 2 pieces are ready to go. The physical and regulator y systems are in place. The Transaction Systems need to be piloted and deployed.
  • 17. TheTeMix protocol covers the required process and content. Content Process TeMix Organization for Energy Market Information Exchange (EMIX) Energy Inter-operation Services the Advancement of Structured Information Standards American National Standards Institute © 2013 Baker Street Publishing, LLC. All Rights Reserved.
  • 18. Each party in the Transactive Energy network has a TE Service Interface that communicates between management algorithms, physical devices, and the transaction platforms. Physical Devices Device State Control Signals Management algorithms ! Energy in/out Weather forecasts Objectives TE Service Interface Benefit Tenders Transactions Transaction Platforms
  • 19. We have all the connections we need. Home, office, mobile. People, devices, data. You can buy a thermostat at the Apple Store that is remotely programable with your iPhone. The thermostat knows where you are, how you behave when you are at home, and what the weather forecast is. © 2013 Baker Street Publishing, LLC. All Rights Reserved.
  • 20. A fully-equipped home looks like this in the Transactive Energy model. TE Service Interface 0321 GRID HVAC! System Water! Heater Smart Appliances Battery Interval! Meter Transactive Energy Platforms Energy ! Management ! System (EMS)
  • 21. The system will probably be implemented in layers with retail platforms in the middle. Retail Customers, prosumers, and decentralized producers Device TE Service Interface Device Device Retail Platforms One year Energy Providers Distribution Transport Providers Wholesale Platforms Forwards and Futures System Operators © 2014 Baker Street Publishing, LLC. All Rights Reserved. Tenders and Transactions Tenders and Transactions One hour Five minute One month One w year One hour Five minute One month
  • 22. The California State Legislature and the Public Utilities Commission will have to do the following to enable Transactive Energy: • Encourage Transactive Energy pilot projects and monitor results. • Transition existing retail tariffs to long-term (forward) and spot transactions. • Deploy transaction platforms to facilitate buying and selling of energy and transport by retail customers. © 2013 Baker Street Publishing, LLC. All Rights Reserved.
  • 23. The California IOU rate base is mostly fixed costs and mostly for transport services. These fixed costs can be recovered using forward transactions Transmission Generation Energy Service! © 2014 Baker Street Publishing, 2013 ©B a2k01e3r B Sakterre Settre Petu Pbulbilsishhiinngg, L, LLCL.C A.l l RAiglhl tRs Rigehsetrsv eRd.e served. Title Billions ($) 50 40 30 20 10 0 8 25.5 Distribution 8.5 California IOU Rate Base Transport Service!
  • 24. Transactive Energy is a “Silver Bullet.” • It will spur innovation. • It will provide incentives for efficiency. • It addresses many current vexing problems: renewables integration, net metering, fixed cost recovery, dynamic pricing, decentralized generation and storage operation, microgrids, wholesale/retail market coordination, and regulation. • It is fair and transparent. © 2014 Baker Street Publishing, LLC. All Rights Reserved.
  • 25. The Transactive Energy concepts are developed in our new eBook. Click here to buy the iBook for the iPad and Mac. ! Click here to go to Amazon and buy the eBook for the Kindle. ! © 2014 Baker Street Publishing, LLC. All Rights Reserved.
  • 26. For more information on Transactive Energy go to the following sources: • Transactive Energy Association (TEA) • TeMix Inc. • LinkedIn Discussion Group © 2013 Baker Street Publishing, LLC. All Rights Reserved.

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