Energy Trading in Local Electricity Markets With Distributed Energy Resources

The energy system has been under dramatic transformation in recent years because of the advent of smart grid technologies and the increasing penetration of distributed energy resources (DERs), such as distributed photovoltaic (PV), wind turbines, energy storage systems, electric vehicles (EV), smart appliances, and others. While the increasing penetration of DERs helps the grid decarbonization, it imposes challenges on power system operation and economics. Some regions such as California that possesses the largest PV installation in the U.S., will have to deal with the fast solar capacity expansion. When the sun shines, the systems must make frequent regulations to offset the imbalance between demand and renewable energy production. After sunset, utility companies must rapidly increase other forms of generators to compensate for the loss of solar power. Besides, DERs have also disturbed the traditional electricity market by introducing a larger proportion of flexibility to the demand side. Therefore, it calls for a reconsideration of the economic model for future electricity markets. The concept of local electricity market (LEM) has emerged as a promising trading framework for future smart grids. Different from the wholesale electricity market, LEM enables participants to share their resources such as excess renewable generation, unused energy storage capacity, extra rooftop space, flexible appliances, etc., to other entities who are in shortage. LEM can be leveraged not only to efficiently manage the local supply and demand, but also to decrease the local community’s reliance on the main grid. This dissertation proposes to mitigate the over-generation issues with ever-increasing DERs in foreseeable future by designing and evaluating different LEM architectures considering the characteristics of distributed solar, residential load, multiple market entities/stakeholders, and their interactions. More specifically, in this dissertation LEMs are categorized into two main groups: peer-to-peer (P2P) models and subscription models, to investigate the interactions between different participating entities with various supply/demand and optimization goals. Besides, different pricing strategies are explored, to incentivize local customers to actively manage their energy resources. For P2P markets, we explore potential cooperative and non-cooperative energy sharing and trading strategies among prosumers and consumers. For subscription markets, unique and discriminated dynamic pricing strategies that take in account of customers’ different consumption flexibility with centralized ES are developed. In addition, different data availability and privacy concerns in the LEMs are also investigated. Experimental results indicate that the proposed LEM schemes are beneficial and efficient, which are practical and supportive for the future grid decentralization and decarbonization with the capacity expansion of DERs.