Local Electricity Market Design Utilizing Network State Dependent Dynamic Network Usage Tariff

Abstract

The new technologies emerging in the energy sector pose new requirements for both the regulation and the operation of the electricity grid. Revised tariff structures and the introduction of local markets are two approaches that could tackle the issues resulting from the increasing number of active end-users. However, a smooth transition from the traditional schemes is critical, thus creating the need for solutions that can be implemented in the current circumstances. This paper proposes a local market concept and a corresponding dynamic tariff system, which can not only be operated parallel to the current retail market, but which also considers possible interactions between the two markets by taking into account the estimated state of the network. The participants of the market can trade energy peer-to-peer via a platform that allocates proper network charges to all transactions. The calculated tariffs consider the physical effect of the transactions on the grid in terms of nodal voltage deviations, branch current flows, and overall system losses. The proposed method is tested and compared to the currently existing local market approach on the IEEE European LV test feeder through market simulations. The results imply that knowledge on network state prior to trades can increase the correctness of network charge allocation. With the proper tuning of DNUT (Dynamic Network Usage Tariff) components, the end-users can even realize larger surplus compared to other local market models, while the security of network operation is also ensured.

Keywords

• Congestion management
• dynamic tariff
• energy trading
• local market
• peer-to-peer
• trading platform