A Community Microgrid Architecture with an Internal Local Market

TL;DR

This paper proposes a community microgrid framework with an internal local market based on marginal pricing, enhancing resource allocation, reducing peak power, and increasing reserves, leading to significant cost savings for members.

Contribution

It introduces a bilevel model for community microgrid operation with an internal market, ensuring voluntary participation and equitable revenue sharing among members.

Findings

Achieves around 54% annual cost savings for the community.

Demonstrates improved resource allocation and peak reduction.

Validates the framework with a real Belgian test case.

Abstract

This work fits in the context of community microgrids, where members of a community can exchange energy and services among themselves, without going through the usual channels of the public electricity grid. We introduce and analyze a framework to operate a community microgrid, and to share the resulting revenues and costs among its members. A market-oriented pricing of energy exchanges within the community is obtained by implementing an internal local market based on the marginal pricing scheme. The market aims at maximizing the social welfare of the community, thanks to the more efficient allocation of resources, the reduction of the peak power to be paid, and the increased amount of reserve, achieved at an aggregate level. A community microgrid operator, acting as a benevolent planner, redistributes revenues and costs among the members, in such a way that the solution achieved by each member within the community is not worse than the solution it would achieve by acting individually. In this way, each member is incentivized to participate in the community on a voluntary basis. The overall framework is formulated in the form of a bilevel model, where the lower level problem clears the market, while the upper level problem plays the role of the community microgrid operator. Numerical results obtained on a real test case implemented in Belgium show around 54% cost savings on a yearly scale for the community, as compared to the case when its members act individually.