Abstract
In recent years, power systems have undergone changes in technology and definition of the associated stakeholders. With the increase in distributed renewable generation and small- to medium-sized consumers starting to actively participate on the supply side, a suitable incorporation of decentralized agents into the power system is required. A promising scheme to support this shift is given by local electricity markets. These provide an opportunity to extend the liberal wholesale markets for electrical power found in Europe and the United States to the communal level. Compared to these more established markets, local electricity markets, however, neither have few practical implementations nor standardized frameworks. In order to fill this research gap and classify the types of local electricity markets, the presented paper therefore starts with the challenges that these markets attempt to solve. This is then extended to an analysis of the theoretical and practical background with a focus on these derived challenges. The theoretical background is provided in the form of an introduction to state-of-the-art models and the associated literature, whereas the practical background is provided in form of a summary of ongoing and recent projects on local electricity markets. As a result, this paper presents a foundation for future research and projects attempting to approach the here presented challenges in distribution of generation, integration of demand response, decentralization of markets and legal and social issues via local electricity markets.
Highlights
Public blockchains offer pseudonyms and limit the possibility of analyzing the identity behind the addresses [92]. This may contradict the common way that DSOs deal with distribution grids, where customers are identified and physical entities - people - are responsible for energy consumption [55], [64]
WORK This paper presents a comprehensive review on the topic of local electricity markets, with a specific focus on recent literature and on the challenges of their modeling, implementation, analysis and management
The paper starts with an introduction to the topic and an analysis of previous literature studies that show a lack of literature on local electricity markets that extend beyond peer-to-peer implementation
Summary
[18], distributed investments into local generation are essential for the large-scale integration of renewable generation within power systems under liberalized markets and local electricity markets are a tool to support such issues This is shown in Article 16 of the ‘‘Clean Energy for all Europeans’’ package of the European Union which projects energy communities, and small-scale financial entities, to account for 17% of installed wind capacity and 21% of solar capacity by 2030 [19]. A number of challenges, including fairness in energy sharing, more complexity in management from the aspect of community management, ensuring consideration of individual consumer/prosumer preferences, integration and handling of data, additional complexity and transaction costs and difficulties in interactions with balancing market agents can be attributed to these centralized local markets.
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