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4 bernt market design - barcelona 26012017


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Empower H2020 Sumposium: "Local energy markets; dream or facta"

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4 bernt market design - barcelona 26012017

  1. 1. local Electricity retail Markets for Prosumer smart grid pOWER services This project has received funding from the European Union’s Horizon 2020 Research and Innovation programme under Grant Agreement No 646476. Bernt A. Bremdal, SmartIO WP6 Workshop Oslo, September 15th, 2016 WP6: Market Design for Local Energy Trade
  2. 2. Content • The EMPOWER ambition • Background and requirements • Overall approach • Local market, contracts and trade • Cross-market operations • Early field results
  3. 3. “Develop and verify a local market place and innovative business models, including operational methods to encourage micro-generation and active participation of prosumers to exploit the flexibility that this creates, for the benefit of all connected to the local grid.” The EMPOWER ambition
  4. 4. • The primary objective of this work package is to explore the theories on the micro-market and capitalize on former research related to market design and trading in a smart grid setting. • The idea is to synthesize this and specify a concise market arena that can support trading at the user end of the supply chain in a full scale, real-time environment of prosumers and surrounding supply system. WP6 objectives
  5. 5. Background and requirements
  6. 6. – Should encourage micro-generation (DER) – Must be user-centric  should stimulate active participation of prosumers and consumers – Should exploit end-user flexibility for the benefit of all involved – Must be competitive – Must be economically sustainable – Be adaptable to different regulatory regimes Main requirements
  7. 7. The local market “A micro-market is a local trading arena in the LV/MV grid characterized by strong user involvement, a high degree of innovation and continuous customization”
  8. 8. Three cases of local market
  9. 9. Maximize: Ep = 0 𝑇 Ep(t) V = 0 𝑇 Ep(t) + Ec(t) - ε(t) Ep(t) + Ec(t) + ε(t) + 𝐾𝛿(t) = 0 V = the volume of energy contracted locally over contract period T Ep = local production Ec = local consumption ε(t) is the instant flow of energy across the CoPP, εmin < ε(t) < εmax 𝐾𝛿 is total available flexibility that the SESP controls The EMPOWER ambition translated
  10. 10. Ep Ec Local Local supply demand Challenge No.1: Building local capacity Also room for import/export within limits (ε) to manage periodic mismatches In- crease Consumed locally Maximize local supply over time period T with distributed, renewable resources
  11. 11. Ep Ec Ep Ec Local Local supply demand Local Local supply demand Matching contracts Max possible capacity that can be contracted locally during time T Contract match for Vp = Vc = ∑TEc(t) Max possible capacity that can be contracted locally during time T Contract match for Vp = Vc = ∑TEp(t) Export Import Case 1 Case 2
  12. 12. Ep(t) Ec(t) Local Local supply demand at time instant, t The role of flexibility 𝐹𝑙𝑒𝑥: 𝐾1𝛿(t) ε(t) Temporary mismatch between supply and demand at any instant t can create a problem for the distribution system εmin < ε(t) < εmax Ep(t) Ec(t) Local Local supply demand at time instant, t 𝐹𝑙𝑒𝑥: 𝐾2𝛿(t) ε(t) εminεmax
  13. 13. Local market must be competitive Local price & unit cost = P4 Local supply Local price and unit cost (p4) for supplier must be higher than p3 + c3 Import price & unit cost = P3 - C3 Local price & unit cost = P2 Local demand Local price and unit cost (p2) for supplier must be less than p1 + c1 Import price & unit cost = P1 +C1 Demand side: P1 + C1 > P2 Supply side: P3 + C3 < P4 If P1 = P3 Competitive latitude will be: C1 – C3 For local trade to be attractive: This means that tariffs, taxes, commissions must be lower or eliminated OR…………..
  14. 14. Local Market Central Market Price signal ........ Add other type of value Added value (Flexibility sale) Added value (Reward points) Added value (discounts on services and products) Added value (lower prices through cross-subsidies) • What does this added value imply? • Answer: Multiple aspects – not price aspects alone • Where does this added value come from? • Answer: From the community itself Added value (Support And financing)
  15. 15. Overall approach
  16. 16. • Local versus global business concepts • Isolated versus connected markets • Mechanisms that help to ramp up DER – Lasting perspectives • User centricity – Energy cooperatives and shopping clubs – Demand-response and AMS failures – Community approach – Talking to people • Competitiveness – Added value drivers – Non-monetary reward mechanisms for engagement – Cross subsidies • Continuous versus non-continuous trading – Multi-agent systems – Problems with information flow – Problems with risk • The platform business concept (WP2) – Network markets Investigations
  17. 17. Energy cooperatives • Voluntary • Solidarity • Social recognition • Take control of personal «green future» • Together we are strong • Working together – achieving together • Local social welfare • Patriotism • Leveraging market power • Increased influence • Co-ownership • Cost sharing • more Energy Community formation requires dialog
  18. 18. • Weak value boosters – Green energy – Local energy – Lower commission – Minor price differences on energy • Medium value boosters – Consumer membership  Influence  Recognition and loyalty rewards  Shared faith and cooperation  Local and green energy – Capitalization on flexibility • High value boosters – Distinct price differences on energy – Add-on services and products  Discounts  Immediateness  Availability  Endorsement  Local  Complient – Bonuses (community currency) – Green certificates – Smart capitalization on flexibility Added value drivers
  19. 19. Network markets
  20. 20. Local markets, contracts and trade
  21. 21. 21 SESP = Smart Energy Service Provider Provider of: • An arena for local exchange of energy and flexibility • A set of consolidated services («service in the cloud») • Contract templates • Market liquidity (market making) SESP
  22. 22. • Hybrid, integrated market for – Energy trade – Flexibility trade – Service trade – Neighbourhood is a natural community • Community forms a network market – Membership • SESP takes all risk by default – Mitigates this through different ations • Long(er) term contracts – The EMPOWER local market deals primarily in energy derivatives and forward contracts – SESP secures  physical balance with DSO  contractual equilibrium • SESP and community members takesadvantage of meta-flexibility – The liberty to choose the most affordable/less stringent source of flxibility Base line
  23. 23. Ask/bid WHOLESALE MARKET Ask Market agent (power plant) Market agent (power plant) Market agent (retailer) Local market participant (consumer) Local market participant (prosumer) Local market participant (producer) Other services market Bid Ask/bid Market agent (retailer) RetailerAsk/bidBid Ask Bid Ask/bid Ask/bid LOCAL MARKETSESP coordinates the local market Local market participant (other service provider) Ask Bid Hybrid market
  24. 24. «Aggregator»«Community market manager» Two worlds meet
  25. 25. An integrated, hybrid market Community Services Community Energy Community Flexibility DSO TSO • High attraction value • Exploits local market power • High margin services/products • High awareness offers • Medium coalition potential • Emphasizes the local • Community must be built Contribution: • Community attraction & retainment • Sing-in fee/price cut • Can co-finance energy operations • More renewable • More efficiency • Community in place • Low margin commodity • Low awareness offers • High coalition potential • Local production – local consumption Contribution: • Life essential commodity • Community glue • Climate focus • Base value • Requires cooperative effort • Potentially high added value • Low awareness of opportunity • Significant barriers (privacy) • Low coalition potential • Local solution needed (DSO) • Community must be built Contribution: • Solves a power problem • Can co-finance energy operations • Increased reward • Can co-finance energy
  26. 26. – Loose coupling  Each market operates side-by-side  Separate contracts and trade  Synergies harvested through shared management – Tight coupling  One common market  Hybrid contracts (combos): » Energy + Flexibility » Energy + Services » Energy+Felxibility+ Services Two types of integration
  27. 27. Each market reinforces the other Community Services Community Energy Community Flexibility DSO TSO • Attraction • Energy efficiency • Cool factor • Cross subsidies • Improved control • More DER • Easier participation • Increased attractiveness • More LEMS /Ready connections • More awareness • Increased security • More flexibility • More demand for services and support • Increased recruitment of service/products and providers • Cross subsidies • Improved control • Increased need • More community members
  28. 28. Example: Energy seller’s contract
  29. 29. Example: Energy buyer’s contract
  30. 30. Example: Scheduled flexibility option Contract SESP – DSO
  31. 31. Contract SESP – Community member Example: Scheduled flexibility option
  32. 32. Example Specification Example Name of buyer string Peter Gabriel Date of endorsement date Feb 12, 2016 Date of initiation date March1, 2016 Date of termination date April 1, 2016 Energy profile [kWh] reference http://cllientbase/246735 Preferences 1 (renewable/indifferent) string Renewable Preferences 2 (local/indifferent) string Local Preferences (self-controlled/not- controlled) string Self controlled Base price (€-cent/kWh) number 3 €-cent Flexibility option 𝑲 𝜹= 500W (see conditions) number -0,3 €-cent Flexibility option 𝑲 𝜹= 500W (see conditions) number -0,6 €-cent Diagnosis & repair option (see conditions) number +0,2 €-cent Example: Combo contract
  33. 33. P C C P P S SESP Price sell(Vp,p) Price buy(Vc,p) C o u n t e r Two types of trade Over-the-counter trade Price scan auction
  34. 34. Price scan auction • Call auction by price scanning – SESP evaluates assets, ε + 𝐾𝛿 – SESP evaluates stte of market i.e. price – SESP makes the first price call – Sellers and buyers nominate or abstain – Balance is checked  If satisfactory – clear market and settle  Else continue – One base price – SESP offers mark-ups and discopunts
  35. 35. Preference curves User preferences can be modelled as sigmoid curves Increased call price  Willingness to negotiate Probability of a buy/ sales decision
  36. 36. 0 0,2 0,4 0,6 0,8 1 1,2 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 Buy P(buy|price) Sell P(sell|price) Conditional probabilities that two agents will reach a settlement Crowd intelligence makes the Nash Probability First call price from the auctioneer
  37. 37. Cross-market operations Assuring balance and system integrity Compensating for physical mismatches during contract period
  38. 38. 39 Time-line
  39. 39. Engagement Attracting end-users
  40. 40. The engagement process
  41. 41. Early field results 1 pilot site only Launched simplest form of contract (see image) Nov 2, 2016 No. of established energy neighborhoods – zone level 4 No. of new members 20 (50) No. of super users volunteered >10 Type of user delivered support/services shared Apps, videos,support services, janitor services etc. No. of external suppliers requesting access 15+ Community battery delivered and installed installed 1 Increase in PV sales 20% Increase in local DER capacity 100% Increase in sales of monitoring gadgets 40%??? Competitors 2 As of Jan 25, 2017
  42. 42. Community platform
  43. 43. • SESP as a ledger – Blockchain – Club coins – Smart contracts – Intelligent agents • Storage – More batteries  Behind and in front of the meter • Hyper-trade – Use of batteries – High frequency algorithmic/batch trade – Intelligent agents Beyond EMPOWER
  44. 44. This project has received funding from the European Union’s Horizon 2020 Research and Innovation programme under Grant Agreement No 646476. local Electricity retail Markets for Prosumer smart grid pOWER services