Electricity Distribution Market Research Articles

A Distribution Market Clearing Mechanism for Renewable Generation Units With Zero Marginal Costs

A key feature of an electricity distribution market is that it may be dominated by renewable generation with zero marginal cost. Existing market mechanisms are likely to fail in this context since it cannot generate a reasonable price signal to compensate for the investment cost of renewable generators. Given this background, a double-sided auction market mechanism is presented for pricing the zero marginal cost renewable generation in the distribution system. Honesty is proved to be a dominant strategy for participants, which would enable the proposed mechanism to develop into a set-and-forget bidding market. The proposed market mechanism is also shown to be compatible with the nodal pricing system. Finally, case studies are carried out, and the results show that under the proposed market mechanism, the problem of always bidding a zero price by renewable generators in some existing markets can be avoided. Even when only renewable generation units with zero marginal costs participate in the bidding, the proposed mechanism can still produce a reasonable market clearing price. When adopting the average pricing market mechanism, merits of nodal pricing can still be retained and contribute to the enhancement of the operating efficiency of the distribution network.

A Pool Strategy of Microgrid in Power Distribution Electricity Market

This paper discusses a market-based pool strategy for a microgrid (MG) to optimally trade electric power in the distribution electricity market (DEM). The increasing penetration levels of distributed energy resources and MGs in distribution system (DS) stress distribution system operator and require higher levels of coordinated control strategies. The distribution system operator has limited visibility and control over such distributed resources. To reduce the complexity of the system and improve the efficiency of the electricity market operation, we propose a decentralized pool strategy for an MG to integrate with a distribution system through a market mechanism. A market-based interactions procedure between MGs and DS is developed for MGs as price makers to find an optimal bidding/offering strategy efficiently. To achieve a market equilibrium among all entities, we initially cast this problem as a bi-level programming problem, in which the upper level is an MG optimal scheduling problem and the lower level presents a DEM clearing mechanism. The proposed bi-level model is converted to a single mix-integer model, which is easier to solve. Uncertainties associated with MG's rivals’ offers and demands’ bids are considered in this problem. The solution results from a modified IEEE 33-Bus distribution system are presented and discussed. Finally, some conclusions are drawn and examined.

Distribution Electricity Pricing Under Uncertainty

Distribution locational marginal prices (DLMPs) facilitate the efficient operation of low-voltage electric power distribution systems. We propose an approach to internalize the stochasticity of renewable distributed energy resources (DERs) and risk tolerance of the distribution system operator in DLMP computations. This is achieved by means of applying conic duality to a chance-constrained AC optimal power flow. We show that the resulting DLMPs consist of the terms that allow to itemize the prices for the active and reactive power production, balancing regulation, and voltage support provided. Finally, we prove the proposed DLMPs constitute a competitive equilibrium, which can be leveraged for designing a distribution electricity market, and show that imposing chance constraints on voltage limits distorts the equilibrium.

Design and Simulation of an Energy Homeostaticity System for Electric and Thermal Power Management in a Building with Smart Microgrid

Nowadays, microgrids are gaining importance in electric power generation and distribution environments due to their flexibility, versatility, scalability and the possibility of supplying ancillary services when connected to the grid. They allow for the customization of electric supply for very different types of consumers. Therefore, a new control model for power and energy management based on homeostaticity of electric power systems (EPS) is presented, which has been already analyzed and approved by ENEL Chile in its developmental stage. ENEL, the largest electric utility in the country, is interested in incorporating smart microgrids in the electricity distribution market, as part of a worldwide policy. Such microgrids are to be installed in buildings serviced by ENEL. To demonstrate the model’s utility, a Simulink model of a real microgrid is used, which is comprised of PV generation, energy storage, an air conditioning (AC) equipment and thermal storage of the building upon which the microgrid is installed. The behavior of every element is simulated, including the dynamic thermal model of the building in order to optimize energy management and power supply versus consumption. The behavior of the whole system is analyzed under different environmental profiles and energy consumption patterns using the proposed homeostaticity system.

Equilibrium Analysis of Electricity Markets With Microgrids Based on Distributed Algorithm

Microgrid is an effective way to accommodate distributed renewable energy, and there is a need for microgrids to participate in electricity market competition to ensure its sustainable development. For this purpose, a market trading framework is presented where microgrids sell electricity by submitting bids in the distribution electricity market (DEM) while generators compete by submitting bids in the day-ahead wholesale market (DAWM). The retailers are considered to submit bids in the two markets to buy electricity to meet the demand of customers and an arbitrageur is introduced to buy and sell electricity between the DEM and the DAWM. Based on the market framework, a joint equilibrium model for the DEM and the DAWM is proposed. Moreover, the equilibrium problem is converted into a convex optimization problem, and the existence and uniqueness of Nash equilibrium for the DWAM and the DEM is theoretically demonstrated. Due to information asymmetry in practice, a distributed algorithm is applied to find equilibrium outcomes. Finally, numerical examples are presented to verify the effectiveness of the proposed model and algorithm.

Market-Based Versus Price-Based Microgrid Optimal Scheduling

An optimal scheduling model for a microgrid participating in the electricity distribution market in interaction with a Distribution Market Operator (DMO) is proposed in this paper. The DMO administers the established electricity market in the distribution level, sets electricity prices, determines the amount of the power exchange among market participants, and interacts with the Independent System Operator (ISO). Considering a predetermined main grid power transfer to the microgrid, the microgrid scheduling problem will aim at balancing the power supply and demand while taking financial objectives into account. Numerical simulations exhibit the application and the effectiveness of the proposed market-based microgrid scheduling model and further investigate merits over a price-based scheme.

Research on application model of blockchain technology in distributed electricity market

In the context of current energy Internet, the emergence of a large number of energy productive consumers will create a new business model. In the decentralized electricity market, the cost of traditional centralized solution construction, management and maintenance is too high, and it is difficult to support the collection, transmission, reception, storage and analysis of massive data. To provide a solution to this phenomenon, we apply the blockchain technology to this distributed electricity market to achieve peer to peer transactions in the power systems. The blockchain technology which is very popular nowadays will be used in power system to establish a credible direct transaction between devices. At first, this article analyzes the future direction of the development of power systems, studies the characteristics of decentralized power systems and summarizes the main issues in the development process. Then, we analyze the basic characteristics of blockchain and put forward a new transaction framework in consideration of problems existing in current energy market. The transaction framework is based on the blockchain technology in the distributed electricity market and includes the pricing method, the power transaction system architecture, various modules of the trading system and the details of the whole transaction system runtime. This framework provides a viable solution for increasingly complex energy transactions.

Communications protocol for power management in smart homes

Emergency situations, incentives for energy efficiency, new pricing plans, and distributed electricity market jointly require home automation systems that would conform an instantaneous load to a dynamically set limit. In this paper, a novel machine-to-machine communications protocol that interconnects a smart grid and smart house is described. ''Intelligent'' domestic appliances use it to coordinate their switch-on times so that the assigned power quota will not be exceeded. In this way, the end-user experience can be improved by reducing the electricity bills, conveniently conforming to prepaid pricing plans, or even by providing continued service at possibly reduced consumption levels during power shortages.

Revenue and ancillary benefit maximisation of multiple non‐collocated wind power producers considering uncertainties

In this study, optimal scheduling of multiple non-colocated, price taker, independent wind power producers (WPPs) participating in forward day-ahead (DA) distribution electricity market is described; where, a WPP is comprised of multiple wind turbine generator (WTG) and battery storage device (BSD). Cost equivalent of reduction in network losses and improvement in voltage profile for non-colocated placement of WTG and BSD in Distribution Network (termed as ancillary benefit) is included in the objective function resulting in a scheduling strategy dependent upon location of WPP in the network. Objective function comprises of following sub-objectives: (i) maximize return from energy market, (ii) maximize benefit obtained from providing ancillary services, and (iii) minimize uncertainties in schedule by providing reserve from BSDs. Non-linear programming (NLP) technique is used for scheduling. Location of a WPP is varied to obtain a ‘profit map’; which can be used as an ‘offline-tool’ to find out relative location of WTG and BSD for profit maximization. Proposed formulation is extended to participation of multiple WPP, where ancillary benefit is proportionally shared. Wind power forecast uncertainty leads to risk of not meeting the schedule and is probabilistically modeled in this work. Impact of reserve on DA energy schedule of is also studied.

Technical Efficiency in Turkish Electricity Distribution Market: An Application of Stochastic Frontier Analysis (SFA)

This study analyzes the technical efficiencies of Turkish electricity distribution companies (21 in total) throughout 2002 and 2009. For this aim, we used three different model specifications, all of which are generated from a Stochastic Frontier Analysis (SFA) model. It has been shown that the signs and significance levels of the coefficient estimations are very consistent and satisfactory in all models. For example, all model specifications confirm the presence of increasing returns to scale and of a mild technological progress over time in the market. In addition, among the inputs, all inputs except the quality of the electricity delivered are important in enhancing technical efficiency of the electricity distribution companies, according to the alternative specifications.

The effect of power distribution privatization on electricity prices in Turkey: Has liberalization served the purpose?

Various electricity reforms have been adopted by a number of countries within the last 2 decades. Turkey, as one of those countries, has restructured its electricity market and intensively privatized the distribution companies. As one of the main targets of the liberalization efforts in the sector was announced to be reduced consumer prices, it is a matter of interest to look at the related developments after privatizations. Hence, this study attempts to explore the impact of power distribution privatization in Turkey on the national end-user electricity prices. Results of the analysis suggest that privatization of electricity distribution companies has not yielded the expected retail price declines within the first 4 years of the program. Whereas wholesale tariffs exhibit a reduction in the rate of 10%, retail tariffs show an increase of 5.9% within the period in question. Besides, the unstable patterns of the two tariffs imply that the market is not yet ready for the automatic pricing mechanism planned to be implemented based on a cost-reflective methodology. Therefore, results indicate that the factors behind the unsatisfactory outcomes of the program should be explored in order for the privatization efforts in the Turkish electricity distribution market to serve the purpose.

Performance assessment of Turkish electricity distribution utilities: An application of combined FAHP/TOPSIS/DEA methodology to incorporate quality of service

The recent years have witnessed the increase in the importance of service quality in the performance measurement of the regulated utilities. In this study, to incorporate quality of service in performance measurement, we propose a combined methodology of FAHP/TOPSIS/DEA methods, and apply it to the Turkish electricity distribution market. With FAHP method, the relative importance levels of different quality indicators are determined. Then TOPSIS method is used to generate quality of service variable. And finally this variable is used as an output in the DEA stage, and efficiency performances of the electricity distribution utilities are determined. The most important advantage of the combined methodology is that it allows taking into account several quality measures simultaneously instead of relying on only one dimension of the quality.

A straightforward approach to minimizing unsupplied energy and power loss through DG placement and evaluating power quality in relation to load variations over time

Optimum energy consumption is of utmost significance considering the costs associated with the generation, transmission, and distribution of energy. In the competitive electricity distribution market, success rests on the supply of more reliable and higher quality energy to customers. This paper studied distribution network reliability, power loss, and power quality in the presence of distributed generation (DG) resources using the CYMEDIST software application. The location of DG resources substantially determines reliability, power quality, and the amount of power loss. Thus, so as to increase reliability and decrease loss, this work used innovative approaches to allocate DG resources. To study load variations over time, use was made of a two-state version of the Marcov model: peak-load and base-load. Finally, to evaluate power quality, the amount of harmonic injection was calculated using the ITHD index. The results indicate that this approach was highly successful in increasing reliability and decreasing power loss.

Manufacturing and Market-Oriented Development of SOFC Generators at SOFCpower SpA

SOFCpower-HTceramix' mission is to offer new energy solutions to the distributed electricity market based upon its efficient and competitive Solid Oxide Fuel Cell (SOFC) technology. The company develops and manufactures SOFC power modules in close collaboration with European heat appliance OEMs and utilities for domestic cogeneration and distributed power generation. Furthermore, the company is actively involved in strategic research initiatives to demonstrate the use of planar SOFC stack technology for high temperature electrolysis (SOEC) and leads for this purpose the European FCH project ADEL (ADvanced ELectrolysers) with 13 partners. Thanks to more than 2 years operational experience in running its pilot plant in Italy (Mezzolombardo, TN), SOFCpower has sufficiently consolidated its manufacturing knowhow and capabilities to confirm the competitiveness of its products, which are capable to match target market requirements and being produced at less than 1000 €/kWe. This result has been possible also thanks to specific investments made on testing and qualification facilities in order to ensure quality and reproducibility of stack production. The current focus of the company is to certify its products and to bring together the whole value chain for distributed power generation, including component suppliers, integrators, installers and utilities, in order to be able to start field tests campaign in late 2011.

Uncertainty and regulatory outcome in the Swedish electricity distribution sector

Regulatory agencies are potentially influenced by market characteristics and underlying incentives and use simplifying decision rules. When decision uncertainty increases, it is hypothesised that these influences become more apparent. This study investigates civil cases initiated by dissatisfied customers in the Swedish electricity distribution market. The purpose is to determine (1) how regulatory decision uncertainty manifests itself and (2) whether multi-echelon regulatory structure has a structural impact on regulatory outcome. The results indicate that the regulator’s decisions exhibit status quo bias and that large customers are privileged compared to small customers. The court distinguishes itself by favouring large utilities.

Uncertainty and Regulatory Outcome in the Swedish Electricity Distribution Sector

Regulatory agencies are potentially influenced by market characteristics and underlying incentives and use simplifying decision rules. When decision uncertainty increases, it is hypothesised that these influences become more apparent. This study investigates civil cases initiated by dissatisfied customers in the Swedish electricity distribution market. The purpose is to determine 1) how regulatory decision uncertainty manifests itself and 2) whether multi-echelon regulatory structure has a structural impact on regulatory outcome. The results indicate that the regulator's decisions exhibit status quo bias and that large customers are privileged compared to small customers. The court distinguishes itself by favouring large utilities.

The privatization of electricity distribution in Turkey: A legal and economic analysis

This paper analyzes the recent regulatory reform in the Turkish Electricity Distribution Market from a legal and economic perspective. We highlight tensions between the judiciary, politicians and bureaucracy and discuss their economic consequences. The paper engages in a discussion of economic consequences of legal procedures. We stress interactions between legal decisions and economic institutions. The historical positions of the Constitutional Court and Danıştay (Council of State), on privatizations have been ambivalent and it is hard to qualify them as an incentive for privatization and reform, despite some recent liberal decisions. We address reasons behind their decisions and offer some suggestions toward improving the privatization process.

An evolutionary computation approach to electricity trade negotiation

This paper presents an evolutionary negotiation process for power generating and power consuming companies in a distributed electricity market environment. The process is implemented within an electricity agent to best select a negotiation strategy that meets the underlying company objectives and interests. The negotiating agent generates a sequence of improving strategy population as the outcome of a search method modeled by the selection, crossover, and mutation genetic operators. Agents use a content specification language based on an extended object model to specify the requirements, constraints, and negotiation strategic rules, which are used by the negotiation server to conduct a negotiation. A design architecture and a framework for negotiation is presented with detailed KQML communication primitives that make up the negotiation protocol. Various software technologies have been used for implementation and tested in a C++ environment.

Marketing strategies of Australian electricity distributors in an opening market

Examines the development of marketing strategies in the Australian electricity distribution market which has recently opened to competition. Marketing managers of businesses licensed to compete in this market were surveyed to assess the importance they attached to particular marketing variables and marketing strategies and whether they were developing a strategic focus. The market currently open consists of medium and large commercial and industrial electricity users. The competitive methods used in this industry were classified according to their consistency with the generic strategic approaches either of being low‐cost, differentiated or focussed. Nine respondents are following a low‐cost strategy, three a differentiation strategy and one, a focus strategy. One can be labelled as “stuck in the middle”. There are more similarities than differences between respondents. The findings point to a lack of clear strategic direction and difficulties in competitors developing strategies consistent with their capabilities.

The Behaviour of Dominant Firms and the Principle of Equal Opportunities: Lessons From the SEN Antitrust Saga Case Comment to the Servizio Elettrico Nazionale Judgment of the Court of Justice of 12 May 2022, Case C-377/20

This commentary concerns the Servizio Elettrico Nazionale (SEN) case that stems from the conduct of an incumbent operator – Enel S.p.A. – called upon to confront the liberalization process of the Italian electricity market. In particular, the former legal monopolist allegedly worked to consolidate its dominant position in the electricity production market, by denying its rivals access to a resource that would have been non-replicable and of strategic importance to compete in the liberalized electricity distribution market. This ruling is of fundamental importance as the Court of Justice discusses therein the objectives of antitrust law and the notion of exclusionary abuse. Moreover, in light of the practical interpretation of the ruling, it is important to ask whether the CJEU would have developed the same reasoning if the relevant market had not concerned an industry undergoing liberalization, such as the electricity sector. The commentary closes by referencing the more recent Unilever case, where the Court of Justice seems to confirm the opportunity of applying the “as efficient competitor test” to non-price practices even, in the absence of a market liberalization process.