On the impact of different electricity markets on the operation of a network of microgrids in remote areas

Abstract

The development of distributed energy generation, often aggregated to form micro- or nano- grids based on power generation from renewable sources, or small-size generators make it easier to electrify remote and isolated areas. In addition to privately owned generation capacities, it could be feasible and profitable to sell/buy the excess energy to/from the closest neighbors, giving rise to “peer-to-peer” forms of energy trades. Despite that peer-to-peer trading has been widely discussed in the literature, the organization of isolated markets with limited small capacities is still a subject of study and discussion in the power community. In this paper, we evaluate the functioning of an alternative shorter market scheme characterized by only one bidding period, closer to the delivery time, which is convenient as it profits from more accurate forecasts. Then, the final balancing is performed internally within the same microgrids. Feasibility and cost-effectiveness of the proposed market is assessed for an isolated cluster of microgrids and compared with the currently operating markets, modelled as a day-ahead and real-time balancing markets. Two-stages stochastic optimization is implemented to compare the two market options. For this purpose, a grid of five villages is considered as a case-study and simulations are performed under two possible sets of installed capacities, including both diesel generators and renewable energy sources, to operate in either a dependent or a self-sufficient regime. Simulation results show that both markets succeed in supplying the required power demand, but the proposed simpler type of market may also be cost effective with a cost reduction up to 20%.