Impact of Local Energy Markets on the Distribution Systems: A Comprehensive Review

TL;DR

This comprehensive review analyzes how local energy markets, including peer-to-peer and transactive models, impact distribution systems, highlighting benefits, challenges, and methods for integrating physical network constraints to ensure grid stability.

Contribution

It provides an exhaustive overview of existing research on local energy markets, focusing on integration methods, benefits, challenges, and the physical constraints affecting distribution systems.

Findings

Financial transactions often do not match physical energy flows.

Physical constraints significantly impact market mechanisms.

Understanding these impacts is crucial for grid stability.

Abstract

In recent years extensive research has been conducted on the development of different models that enable energy trading between prosumers and consumers due to expected high integration of distributed energy resources. Some of the most researched mechanisms include Peer-to-Peer energy trading, Community Self-Consumption and Transactive Energy Models. Here, we present an exhaustive review of existing research around Local Energy Market integration into distribution systems, in particular benefits and challenges that the power grid can expect from integrating these models. We also present a detailed overview of methods that are used to integrate physical network constraints into the market mechanisms, their advantages, drawbacks, and scaling potential. We find that financial energy transactions do not directly reflect the physical energy flows imposed by the constraints of the installed electrical infrastructure. Therefore, ensuring the stable and reliable delivery of electricity, it is vital to understand the impact of these transactions on the grid infrastructure, e.g., impacts on the control, operation, and planning of electricity distribution systems.