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Valuation Diagramming and Accounting of Transactive Energy Systems

Transactive energy (TE) systems support both economic and technical objectives of a power system including efficiency and reliability. TE systems utilize value-driven mechanisms to coordinate and balance responsive supply and demand in the power system. Economic performance of TE systems cannot be assessed without estimating their value. Estimating the potential value of transactive energy systems requires a systematic valuation methodology that can capture value exchanges among different stakeholders (i.e., actors) and ultimately estimate impact of one TE design and compare it against another one. Such a methodology can help decision makers choose the alternative that results in preferred outcomes. This paper presents a valuation methodology developed to assess value of TE systems. A TE use-case example is discussed, and metrics identified in the valuation process are quantified using a TE simulation program.

Makhmalbaf, Atefe↗

Transactive Energy Service System (TESS)

The Transactive Energy Service System (TESS) is a platform to design, deploy, and operate transactive energy systems in electric utility retail environments. TESS provides retail market clearing mechanisms for peer-to-peer trading of behind-the-meter distributed energy resources based on ramping, capacity, and storage prices.

Peery, Anna↗

Reducing Transaction Costs for Energy Efficiency Investments and Analysis of Economic Risk Associated With Building Performance Uncertainties: Small Buildings and Small Portfolios Program

The small buildings and small portfolios (SBSP) sector face a number of barriers that inhibit SBSP owners from adopting energy efficiency solutions. This pilot project focused on overcoming two of the largest barriers to financing energy efficiency in small buildings: disproportionately high transaction costs and unknown or unacceptable risk. Solutions to these barriers can often be at odds, because inexpensive turnkey solutions are often not sufficiently tailored to the unique circumstances of each building, reducing confidence that the expected energy savings will be achieved. To address these barriers, NREL worked with two innovative, forward-thinking lead partners, Michigan Saves and Energi, to develop technical solutions that provide a quick and easy process to encourage energy efficiency investments while managing risk. The pilot project was broken into two stages: the first stage focused on reducing transaction costs, and the second stage focused on reducing performance risk. In the first stage, NREL worked with the non-profit organization, Michigan Saves, to analyze the effects of 8 energy efficiency measures (EEMs) on 81 different baseline small office building models in Holland, Michigan (climate zone 5A). The results of this analysis (totaling over 30,000 cases) are summarized in a simple spreadsheet tool that enables users to easily sort through the results and find appropriate small office EEM packages that meet a particular energy savings threshold and are likely to be cost-effective.

29 ENERGY PLANNING, POLICY, AND ECONOMY↗

Transactive Control of Commercial Building HVAC Systems

This document details the development and testing of market-based transactive controls for building heating, ventilating and air conditioning (HVAC) systems. These controls are intended to serve the purposes of reducing electricity use through conservation, reducing peak building electric demand, and providing demand flexibility to assist with power system operations. This report is the summary of the first year of work conducted under Phase 1 of the Clean Energy and Transactive Campus Project. The methods and techniques described here were first investigated in simulation, and then subsequently deployed to a physical testbed on the Pacific Northwest National Laboratory (PNNL) campus for validation. In this report, we describe the models and control algorithms we have developed, testing of the control algorithms in simulation, and deployment to a physical testbed. Results from physical experiments support previous simulation findings, and provide insights for further improvement.

32 ENERGY CONSERVATION, CONSUMPTION, AND UTILIZATI↗

Transactive Control and Coordination of Distributed Assets for Ancillary Services: Controls, Markets and Simulations

The purpose of this project is to develop a plausible transactive framework for DER participation in a regulation market. This document focuses on the methodology for creating a transactive-based regulation market, using one class of end-use devices as an example. The system contains two parts, one for acquiring resources at a longer timescale and a second for controlling the devices in a distributed manner at much shorter timescales. The first is based on a formal double-auction market where every five minutes each device bids the amount of resource it is able to provide and the minimum price that it would accept to provide that resource. The bid price is determined by the current state of the device and the willingness of the consumer to participate. The market system collects and orders the bids by price, and then determines a cleared price to meet the level of regulation needed. It broadcasts the cleared price to the devices, which results in contracting the services of the least cost resources. By contract, the devices that cleared the market are now engaged for the next five-minute market period. They are part of a distributed control system that allows them to respond at four-second intervals to a broadcasted regulation signal. The approach also limits the number of times devices can cycle between states (say on to off) in a given amount of time to protect the equipment life.

29 ENERGY PLANNING, POLICY, AND ECONOMY↗

Resilience Service Framework Using Transactive Systems Valuation Methodology

Recent outage events have spurred national and international interest in improving grid resilience. Actions to make the grid more resilient must be valued against their costs and benefits. This is the goal of this report. We explore a resilience valuation framework, where the services procured by the utility are arranged such that the values associated with them are pinpointed. This is demonstrated by utilizing various diagrams developed in Pacific Northwest National Laboratory’s Transactive System Program, called the Transactive Systems Valuation Methodology (TSVM). We show that TSVM can be utilized to guide traditional valuation methodologies such as integrated resource planning so that resilience considerations can be embedded. This report demonstrates this using a three-step procedure: (1) a use case is developed to define functional requirements, (2) value identification of the utility and the actors with which it interacts (both inside and outside its internal functions), and (3) value tracking of activity performed by actors interacting with the utility while services are procured to enable a resilient grid.

24 POWER TRANSMISSION AND DISTRIBUTION↗

Federated Architecture for Secure and Transactive Distributed Energy Resource Management Solutions (FAST-DERMS)

This document provides system-level specifications for a federated architecture for secure and transactive distributed energy resource management solutions (FAST-DERMS), presents a solution, and describes operational concepts for the proposed solution. FAST-DERMS enables the provision of reliable, resilient, and secure transmission and distribution (T&D) grid services through the scalable aggregation and near-real-time management of utility-scale and small-scale distributed energy resources (DERs). We first present the principles and objectives of FAST-DERMS. Then, after discussing important system concepts, we present the specifications for FAST-DERMS and a solution that employs a distributed and federated control methodology in which the DERs connected to a single point of common coupling with the rest of the system, such as individual substations, are optimized coordinately to provide system-level grid services. FAST-DERMS aims to aggregate and coordinate the operations of DERs to support T&D grid operations. The key optimization and control component of this FAST-DERMS reference implementation is a flexible resource scheduler (FRS) that aggregates the DERs within a substation service area. These FRSs operate at the substation level and perform constrained economic dispatch of DERs, either directly or through a transactive market or aggregator, as shown in Figure ES-1. An FRS Coordinator at the distribution system operator (DSO) level aggregates distribution substations operated by FRSs and interfaces with the transmission system operator (TSO) to provide transmission services. FAST-DERMS also allows for the integration of the FRS Coordinator with an existing distribution utility management system that could be employed by the DSO to enhance distribution grid operations.

24 POWER TRANSMISSION AND DISTRIBUTION↗

Capacity Markets for Transactive Energy Systems

Capacity markets provide important incentives for resource adequacy in electricity markets and may become more important for providing sufficient revenue and generation capacity with changes to energy market prices driven by increasing levels of zero marginal cost resources. However, current capacity market designs also have important shortfalls that may limit the benefits they can provide to the future grid. Current capacity markets are primarily designed for participation from conventional thermal generators, but markets are evolving with increasing levels of variable renewable energy resources. However, further reforms may be necessary to enable more participation from DERs and demand-side resources. To understand the benefits and shortfalls of current capacity market design, we review the historical reasons electricity markets have needed capacity markets or capacity payments for resource adequacy, and how current capacity market designs may create challenges for incorporating increasing levels of DERs and demand-side resources. We then consider how transactive systems, which allow the coordination of bids and offers for DERs and demand-side resources through a market interaction approach, administered by a Distribution System Operator (DSO), can address traditional resource adequacy problems due to inelastic consumer demand. We also consider the need for a DSO-level capacity market in helping to meet resource adequacy, reliability, and other electricity market objectives. We find that because the missing money in electricity markets is largely driven by incentives to meet resource adequacy goals, and the bulk grid would always supply power to the DSO, that resource adequacy is unlikely to be a determining factor in the need for a DSO-level capacity market. Many current reliability problems could also be addressed by the incorporation of more flexible demand enabled with transactive energy systems. However, other DSO objectives, including resilience, reactive power, voltage control, environmental policies, and energy equity could lead to specific challenges that could be aided by a DSO-level capacity market. We consider the possibility of a DSO-level capacity market in addressing these challenges as well as its potential role in coordinating with the Independent System Operator (ISO) who operates the wholesale market. We conclude with suggestions for future research, including the need to develop analytical models of DSO-level capacity market designs to address these potential objectives and examine their implications for DSOs and consumers.

29 ENERGY PLANNING, POLICY, AND ECONOMY↗

Privacy-Preserving Transactive Energy System

In this paper, the privacy issue of recently proposed transactive energy systems for electric power systems is studied for the first time. It is identified that the private information of individual market participants is subject to the risk of leakage during their market-based interaction. In order to protect their privacy, a homomorphic encryption-based approach is developed to achieve the privacy preservation with the Paillier encryption scheme. The proposed privacy-perserving design is then demonstrated on a transactive energy system that coordinates and controls residential air conditioners to manage the feeder congestion. The simulation results confirm the effectiveness of the proposed design in protecting the privacy of individual market participants without affecting the overall system performance. Future work on the proposed design is also suggested.

Lu, Yang↗

Customer Engagement in AEP gridSMART Residential Transactive System

— In 2013, AEP Ohio (AEP) operated a 5-minute real-time price (RTP) electricity market system on 4 distribution feeders as part of their gridSMART® demonstration project. The RTP households were billed for their electricity usage according to an RTP tariff approved by the Public Utility Commission of Ohio. They were given the incentive that their annual bill would be no greater than if they were on the flat-rate tariff, but they had financial incentives to shift consumption from high price periods to low price periods. Incentives were also available for response under high prices from local events, such as reaching the distribution feeder capacity or a critical peak pricing event. An analysis of this transactive system experiment was completed in early 2014. This paper describes the incentive provided to the customer, the nature of their interaction with the smart thermostat that provided automated response to the transactive signal, and their level of satisfaction with the program.

Widergren, Steven E.↗

VOLTTRON™ Agent Development for Enabling Reactive Power Support of Non-Utility DERs by Integrating Transactive Energy Approach

To enable better voltage regulation in power systems with high penetration of photovoltaics (PV) and other distributed energy resources (DERs), future inverters are required to provide reactive power support to the grid in addition to providing real power generated by PV panels. This paper develops a framework that coordinates the support from DER-based inverters, which are grid-connected non-utility assets, by using a transactive energy approach. Results of the implementation demonstrate participation of DER-based inverters can be achieved by using the coordination between distributed controllers and a centralized controller. With the transactive energy approach, both the customer and utility can achieve benefits that meet their individual needs.

Kritprajun, Paychuda↗

Safe and Private Forward-trading Platform for Transactive Microgrids

Power grids are evolving at an unprecedented pace due to the rapid growth of distributed energy resources (DER) in communities. These resources are very different from traditional power sources, as they are located closer to loads and thus can significantly reduce transmission losses and carbon emissions. However, their intermittent and variable nature often results in spikes in the overall demand on distribution system operators (DSO). To manage these challenges, there has been a surge of interest in building decentralized control schemes, where a pool of DERs combined with energy storage devices can exchange energy locally to smooth fluctuations in net demand. Building a decentralized market for transactive microgrids is challenging, because even though a decentralized system provides resilience, it also must satisfy requirements such as privacy, efficiency, safety, and security, which are often in conflict with each other. As such, existing implementations of decentralized markets often focus on resilience and safety but compromise on privacy. In this article, we describe our platform, called TRANSAX, which enables participants to trade in an energy futures market, which improves efficiency by finding feasible matches for energy trades, enabling DSOs to plan their energy needs better. TRANSAX provides privacy to participants by anonymizing their trading activity using a distributed mixing service, while also enforcing constraints that limit trading activity based on safety requirements, such as keeping planned energy flow below line capacity. We show that TRANSAX can satisfy the seemingly conflicting requirements of efficiency, safety, and privacy. We also provide an analysis of how much trading efficiency is lost. Trading efficiency is improved through the problem formulation, which accounts for temporal flexibility, and system efficiency is improved using a hybrid-solver architecture. Lastly, we describe a testbed to run experiments and demonstrate its performance using simulation results.

29 ENERGY PLANNING, POLICY, AND ECONOMY↗

Power Grid Simulation Testbed for Transactive Energy Management Systems

To effectively engage demand-side and distributed energy resources (DERs) for dynamically maintaining the electric power balance, the challenges of controlling and coordinating building equipment and DERs on a large scale must be overcome. Although several control techniques have been proposed in the literature, a significant obstacle to applying these techniques in practice is having access to an effective testing platform. Performing tests at scale using real equipment is impractical, so simulation offers the only viable route to developmental testing at scales of practical interest. Existing power-grid testbeds are unable to model individual residential end-use devices for developing detailed control formulations for responsive loads and DERs. Furthermore, they cannot simulate the control and communications at subminute timescales. To address these issues, this paper presents a novel power-grid simulation testbed for transactive energy management systems. Detailed models of primary home appliances (e.g., heating and cooling systems, water heaters, photovoltaic panels, energy storage systems) are provided to simulate realistic load behaviors in response to environmental parameters and control commands. The proposed testbed incorporates software as it will be deployed, and enables deployable software to interact with various building equipment models for end-to-end performance evaluation at scale.

24 POWER TRANSMISSION AND DISTRIBUTION↗

Co-simulation of transactive energy markets: A framework for market testing and evaluation

The proliferation of distributed energy resources (DER)—and the ability to intelligently control these assets—is re-defining the electrical distribution system. As the number of controllable devices rapidly expands, grid operators must determine how to incorporate these assets while delivering reliable, equitable, and affordable electricity. One possible approach is to establish distribution-level electricity markets and allow devices/aggregations of devices to participate in price establishment. While this approach purports some of the same benefits as the highly successful wholesale electricity markets (i.e., open competition, efficient price discovery, reduced communication overhead), this needs to be researched and quantified via an analysis platform that models distribution-level markets at the appropriate fidelity. Specifically, the simultaneous evaluation of market performance, DER performance, DER bidding approaches, and distribution feeder power quality requires modeling that spans multiple technical areas. Co-simulation has emerged as a powerful tool in addressing this type of problem, where outputs depend on a range of underlying areas of expertise and associated models. In this paper we describe a solution, as implemented in the HELICS co-simulation platform, where we include (1) high fidelity house models, (2) intelligent bidding agents, (3) a modular market integration/design, and (4) a distribution feeder model. We then present a case study where we test two different market designs: (1) a pseudo-wholesale double-blind auction, and (2) an asynchronous matching market. In this work, the markets are run under two DER penetration levels and economic results are compared to full retail net energy metering and avoided cost net metering scenarios that bookend current approaches to remuneration of DER participation. We show the potential for transactive markets to provide increased value for most customers relative to net metering (and all customers relative to avoided cost scenarios) while decreasing costs for the utility.

24 POWER TRANSMISSION AND DISTRIBUTION↗

Taming the wild edge of smart grid – Lessons from transactive energy market deployments

For two decades, the idea of using market-based approaches in field deployments that coordinate the flexible operation of electricity customer assets has occupied the efforts of transactive energy practitioners. While the purported benefits of this distributed decision-making approach have been well explored, the practical aspects of implementing such a system to address real-world problems are just beginning to emerge. This report surveyed 24 field-deployed programs and interviewed experts instrumental in these deployments. The results of the survey and interviews reveal the diversity of designs and applications. They highlight the technical promise of the approaches as well as challenges with system integration, sustainable business strategy, and regulatory policy obstacles. Insights from the survey offer considerations to direct future effort and investment.

24 POWER TRANSMISSION AND DISTRIBUTION↗

Considerations for Commercial Building Participation in a Transactive Energy System

With transactive energy (TE), commercial customers have the potential to provide flexibility to the electricity grid by shifting electricity demand to avoid high-priced periods. The characteristics of commercial buildings and end uses are explored to determine factors supporting the feasibility of participation in a TE system. The key factors of commercial buildings that affect the potential benefits of participating in a TE system are the ownership and lease arrangement, the perceived impact of occupant comfort on worker productivity and customer sales, the state of buildings and equipment or the readiness of the buildings, and in some cases the additional standards in place that are unique to commercial settings. These characteristics will affect the commercial customer’s ability to adjust the timing of electricity consumption and benefit from a TE system.

transactive energy, commercial lease, occupant com↗

Transactive Home Energy Management Systems: The Impact of Their Proliferation on the Electric Grid

Approximately 100 million singlefamily homes in the United States account for 36% of the electricity load, and often they determine the peak system load, especially on hot summer days when residential air-conditioning use is high. Traditional building power profiles are changing. Currently, there is an increased use of energy-efficient building materials and designs, which decreases building loads. In addition, there is an increased adoption of rooftop solar photovoltaic (PV), which leads to bidirectional power flow and significant power ramps as PV output decreases in the late afternoon. Building power profiles are likely to change even more as residential energy storage products proliferate. Therefore, a better understanding of residential electricity demand is key to addressing the envisioned transition of the electric power system from its traditional structure to one that is transactive.

25 ENERGY STORAGE↗

A Society of Devices: Integrating Intelligent Distributed Resources with Transactive Energy

Secure, Clean and Efficient Energy is one of the great societal challenges of our time. Electricity as a sustainable energy carrier plays a central role in the most effective transition scenarios towards sustainability. To harness this potential, the current electricity infrastructure needs to be rigorously re-engineered into an integrated and intelligent electricity system: the smart grid. Key elements of the smart grid vision are the coordination mechanisms. In such a system, vast numbers of devices, currently just passively connected to the grid, will become actively involved in system-wide and local coordination tasks. In this light, transactive energy (TE) is emerging as a strong contender for orchestrating the coordinated operation of so many devices.

Transactive↗