Trading in local markets: A review of concepts and challenges

Abstract

With the development of decentralized sources of electricity generation, different ways of organizing electricity exchanges at the local level have been developed. The literature has studied extensively over the past decade how local exchanges can take place. This has resulted in different concepts reflecting different perimeters of study. However, the perimeters of these different concepts are not always well defined in the literature, which can lead to some con- fusion about the organization of the local market under study. There is a lack of harmonization because different terms may be used for the same concept or the same term may be used for several concepts. This paper aims to propose a harmonization of the different concepts for the study of local markets including local energy markets, peer-to-peer trading, local flexibility markets, microgrids, energy communities and transactive energy. These concepts are com- pared by identifying the characteristics of each. For this purpose, a literature review was per- formed in order to understand the context in which these concepts emerged and to identify their specific characteristics. Moreover, this paper proposes to analyze the economic challenges of local exchanges by identifying the economic incentives and solutions developed to make business models viable.