Expediting battery investment returns for residential customers utilising spot price-aware local energy exchanges

Abstract

This paper presents a local energy exchange mechanism to benefit residential customers and retailers under variable wholesale market spot prices. To do so, a peer-to-peer (P2P) trading-enabled local energy market (LEM) is proposed to facilitate frequent energy transactions among participants. The proposed LEM mechanism considers market operational constraints and maximises electricity cost reductions. Further, the proposed LEM optimises the customers' investment return for battery energy storage systems (BESSs) and minimises retailers’ financial losses during higher spot prices in the wholesale market. Finally, a case study is demonstrated using real-world Australian data in which P2P trading is performed between interested buyers and sellers. Two scenarios with high and low wholesale market spot prices are analysed comprehensively considering five metrics such as solar-to-spot (STS); solar-to-load (STL); forward buy contract (FBC)-to-load (FBC-L); spot-to-load (Short); and FBC-to-spot (Long). The simulation results reveal that the customers reap substantial benefits from the proposed LEM in contrast with business-as-usual (BAU), allowing them to expedite BESS investment returns. Also, the proposed LEM helps a retailer decrease the effect of higher spot prices by reducing its unexpected financial losses while improving self-consumption and self-sufficiency in the local energy network.