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Transactive Energy: A Sustainable Business and Regulatory Model for Electricity
 

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.

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

    • 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
    • © 2014 Baker Street Publishing, LLC.  All Rights Reserved. The Transactive Energy business model. Forward transactions are used to ! coordinate investments and manage risk. There are two products: energy and transport. Spot transactions are used to ! coordinate operating decisions. All parties act autonomously.
    • © 2013 Baker Street Publishing, LLC.  All Rights Reserved. Transactive Energy has several advantages. •Efficiency •Fairness •Transparency
    • © 2013 Baker Street Publishing, LLC.  All Rights Reserved. Our electrical systems are in a dramatic transition. “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 ! • 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.
    • © 2014 Baker Street Publishing, LLC.  All Rights Reserved. This is how the electric energy system looked in the year 2000. Storage Residential Customers Industrial Customers Generators Low voltage High voltage Transmission Grid Distribution grids Commercial Customers
    • © 2013 Baker Street Publishing, LLC.  All Rights Reserved. Storage Renewables Storage Prosumers Residential Customers Industrial Customers Generators Low voltage High voltage Transmission Grid Distribution grids Storage Decentralized Energy Resources This is how the electrical system will look in the year 2020. Commercial Customers Coal, oil, gas, nuclear Pumped hydro and batteries Wind and solar Storage StorageStorage Storage Microgrids
    • $ $ Buy Tenders: Forward and Spot The Transactive Energy Process is straightforward. There are tenders and transactions. There are two kinds of transactions: “forward” and “spot.” Sell Tenders: Forward and Spot Transactions: Forward and Spot Delivery Consumer Prosumer Producer © 2014 Baker Street Publishing LLC. All Rights Reserved
    • © 2013 Baker Street Publishing, LLC.  All Rights Reserved. There are two products: electric energy and transport. Electric energy (produced at a place and time) Transport Electric energy (delivered at a different place and same time)
    • Weather Outcome Decision Uncertainty Influence Solar Output Wind Output Actual Usage Climate Change Technology Cost Regulation Capital Stock Planning and regulation focus on producer investment and operating decisions.This command-and-control model is stifling innovation. Producer Operating Decisions Producer Investment Decisions
    • © 2014 Baker Street Publishing, LLC.  All Rights Reserved. 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 CashFlow -1000 -800 -600 -400 -200 0 200 400 Year 2013 2018 2023 2028 2033 Cash Flows secured by forward transactions. Estimated expenses (fuel, maintenance, taxes) Investment Terminal Value
    • © 2014 Baker Street Publishing, LLC.  All Rights Reserved. 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 Weather Solar Output Wind Output Actual Usage Climate Change Technology Regulation Net Benefit Outcome Decision Uncertainty Influence Capital Stock Forward Tenders and Transactions Investment ! Decisions! - Consumer! - Producer Operating ! Decisions! - Consumer! - Producer Spot Tenders and Transactions
    • © 2014 Baker Street Publishing, LLC.  All Rights Reserved. Savings from consumers’ efficiency investments are secured by forward transactions (subscriptions.) Cash Flows for Consumer Efficiency Investment CashFlow($) -500 -400 -300 -200 -100 0 100 200 300 400 Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Investment Savings secured by forward transactions (subscriptions) Terminal Value (increase in value of property) Tax Credit subsidy
    • © 2013 Baker Street Publishing, LLC.  All Rights Reserved. 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.
    • © 2014 Baker Street Publishing, LLC.  All Rights Reserved. KW 0 25 50 75 100 Hour 1 3 5 7 9 11 13 15 17 19 21 23 Forward Positions Spot market transactions are used to buy or sell the difference between forward positions and actual demand. Actual Delivery
    • © 2014 Baker Street Publishing, LLC.  All Rights Reserved. All parties are tied together by Transaction Platform Providers. Energy Services Parties ! ! ! Intermediaries -Exchanges -Marketers -Retailers -System Operators ! Transport Services Parties ! -Transmission Owners -Distribution Owners TE Service Interface Transaction Platform Providers ! -Consumers -Producers -Prosumers -Storage owners Tenders and Transactions
    • © 2014 Baker Street Publishing, LLC.  All Rights Reserved. The three pillars of Transactive Energy are protocols, connections, and systems. Physical System Transaction System Regulatory System Systems PeopleHome Things Data Mobile Office Connections Protocols American National Standards Institute Organization for the Advancement of Structured Information Standards TeMix Energy Market Information Exchange (EMIX) Energy Inter- operation Services These 2 pieces are ready to go. These two pieces are ready to go. The physical and regulatory systems are in place.The Transaction Systems need to be piloted and deployed.
    • © 2013 Baker Street Publishing, LLC.  All Rights Reserved. TheTeMix protocol covers the required process and content. American National Standards Institute Organization for the Advancement of Structured Information Standards TeMix Energy Market Information Exchange (EMIX) Energy Inter- operation Services Content Process
    • Management algorithms Device State Physical Devices Control Signals ! Weather forecasts Objectives Transaction Platforms Benefit TransactionsTenders TE Service Interface Energy in/out Each party in the Transactive Energy network has a TE Service Interface that communicates between management algorithms, physical devices, and the transaction platforms.
    • © 2013 Baker Street Publishing, LLC.  All Rights Reserved. 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.
    • A fully-equipped home looks like this in the Transactive Energy model. TE Service Interface 0321 GRID HVAC! System Water! Heater Battery Smart Appliances Interval! Meter Transactive Energy Platforms Energy ! Management ! System (EMS)
    • © 2014 Baker Street Publishing, LLC.  All Rights Reserved. The system will probably be implemented in layers with retail platforms in the middle. Retail Customers, prosumers, and decentralized producers Device TE Service Interface DeviceDevice Retail Platforms Energy Providers Distribution Transport Providers Forwards and Futures Wholesale Platforms System Operators One year Tenders and Transactions Tenders and Transactions One hour Five minute One month wOne year One hour Five minute One month
    • © 2013 Baker Street Publishing, LLC.  All Rights Reserved. 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.
    • © 2014 Baker Street Publishing, LLC.  All Rights Reserved.© 2013 Baker Street Publishing, LLC.  All Rights Reserved.© 2013 Baker Street Publishing, LLC.  All Rights Reserved.© 2013 Baker Street Publishing, LLC.  All Rights Reserved. The California IOU rate base is mostly fixed costs and mostly for transport services. These fixed costs can be recovered using forward transactions Title Billions($) 0 10 20 30 40 50 California IOU Rate Base 8 25.5 8.5 Transmission Distribution Energy Service!Generation Transport Service!
    • © 2014 Baker Street Publishing, LLC.  All Rights Reserved. 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. The Transactive Energy concepts are developed in our new iBook. Click here to go to the iBook store. ! https://itunes.apple.com/us/book/ transactive-energy-sustainable/ id894811747?ls=1&mt=11
    • © 2013 Baker Street Publishing, LLC.  All Rights Reserved. For more information on Transactive Energy go to the following sources: • Transactive Energy Association (TEA) 
 • TeMix Inc.
 • LinkedIn Discussion Group