Local Electricity Market Design Utilizing Dynamic Network Usage Tariff

TL;DR

This paper introduces a local electricity market with a dynamic tariff system that accounts for grid effects, enabling peer-to-peer trading and ensuring grid security while allowing end-users to benefit financially.

Contribution

It proposes a novel local market architecture with a dynamic network usage tariff that considers physical grid impacts, compatible with existing retail markets.

Findings

Proper tuning of DNUT allows end-user surplus.

The system maintains grid security during peer-to-peer trading.

Test results on IEEE LV feeder validate the approach.

Abstract

The new technologies emerging in the energy sector pose new requirements for both the regulation and operation of the electricity grid. Revised tariff structures and the introduction of local markets are two approaches that could tackle the issues resulting from the increasing number of active end-users. However, a smooth transition from the traditional schemes is critical, thus creating the need for architecture that can be implemented in the current circumstances. This paper proposes a local market concept and a corresponding dynamic tariff system, which can be operated parallel to the current retail market. The participants of the market can trade energy peer-to-peer via a platform that allocates proper network charges to all transactions. The calculated tariffs consider the physical effect of the transactions on the grid in terms of nodal voltage deviations, branch current flows, and overall system losses. The proposed method is tested on the IEEE European LV test feeder through market simulations. The results imply that with the proper tuning of DNUT (Dynamic Network Usage Tariff) components, the end-users can realize surplus, while the security of network operation is also ensured.