Abstract
Local energy markets (LEMs) aim at building up local balances of generation and demand close to real time. A bottom-up energy system made up of several LEMs could reduce energy transmission, renewable curtailment and redispatch measures in the long-term, if managed properly. However, relying on limited local resources, LEMs require flexibility to achieve a high level of self-sufficiency. We introduce demand response (DR) into LEMs as a means of flexibility in residential demand that can be used to increase local self-sufficiency, decrease residual demand power peaks, facilitate local energy balances and reduce the cost of energy supply. We present a simulation study on a 100 household LEM and show how local sufficiency can be increased up to 16% with local trading and DR. We study three German regulatory scenarios and derive that the electricity price and the annual residual peak demand can be reduced by up to 10c€/kWh and 40%.
Highlights
Energy systems are in transition from centrally structured, fossil-fuel based generation towards smaller, less hierarchical and rather decentralized systems based on renewable energy sources (RES) (Gottwalt et al 2017)
Evaluation While we evaluate the simulation test runs, we focus on the Local energy market (LEM) as a whole and analyze the Degree of Local Sufficiency (DLS), market closing price (MCP) and Residual Peak Demand (RPD) averaged yearly over all conducted test runs per scenario
In the base case scenario, no trading is conducted, the DLS stays at 22%, which is the amount of direct self-consumption by the prosumers
Summary
Energy systems are in transition from centrally structured, fossil-fuel based generation towards smaller, less hierarchical and rather decentralized systems based on renewable energy sources (RES) (Gottwalt et al 2017). This transition requires monetary investments by governments, energy companies, utilities and retailers. In 2011, investments were estimated to reach up to 12.8 trillion USD between 2011 and 2030 for worldwide investments in RES (Bauwens 2016; Intergovernmental Panel on Climate Change (IPCC) 2011) This transition requires a restructuring of generation, transmission and distribution structures. Facilitating a market approach, local energy markets (LEMs) may enable the cost-efficient creation of local energy balances between energy producers, prosumers and consumers. On such LEMs, the participants can trade energy and flexibility among each other
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