Simulation Analysis of a Double Auction-Based Local Energy Market in Socio-Economic Context

Abstract

Local energy markets (LEMs) use online platforms and smart grid technologies to incentivize and coordinate a local supply of spatially-distributed renewable energy resources, which may not be directly controllable by power system operators. Socio-economic values are increasingly noted as prominent motivations for expected LEM users, but socio-economic aspects of user decision-making or market outcomes are not considered in current LEM mechanism design analyses. Here, agent-based simulation is used to analyze expected socio-economic outcomes from LEM operation under a double-sided auction with uniform pricing. The environment is modeled as a virtual LEM platform, operating independently from the underlying power grid. Socio-economic market inputs are produced by income-preference heterogeneous agents, and market outcomes are evaluated by two key socio-economic metrics: energy affordability, and market access. When LEM prices are not restricted to a common range considered by all agents (e.g., between external retail market prices), access disparities may arise; LEM price restriction addresses consumer disparities, but energy affordability gaps are expected to remain. The magnitude of affordability gaps is notably reduced, and bill assistance programs may eliminate remaining gaps, but a mechanism that efficiently realizes socio-economic standards for energy affordability may also reduce expected LEM operation costs. Remaining research gaps are noted, and LEM support for equitable and sustainable energy infrastructure is emphasized.