Local market models

Abstract Over the last decade, electricity markets have created more competitive environments for increasingly complex power systems. The fast growth of distributed energy resources (DER) has made it challenging to maintain the reliability and stability of the system. However, conventional energy management strategies are not capable of resolving these concerns centrally due to the intermittent and variable nature of renewable DER. Moreover, current centralized electricity markets are mainly serving the needs of transmission system operators. However, needs due to more fluctuating distributed generation at the distribution system level will create new flexibility and control needs also for distribution system operators. Therefore new electricity market and trading structures are required also at the distribution system level in order to keep the whole system costs and customer electricity prices at feasible levels. This chapter presents bottom-up energy management approaches for local electricity trading. Different strategies are defined, such as decentralized, centralized (community-based), and distributed (peer-to-peer) for local electricity trading. In this way, each player can participate in different types of the electricity transactions on the basis of their corresponding objective functions.