(372p) A Novel Bidding Methodology for Power Trading in a Local Energy Market

As countries globally aim to fulfil the objectives outlined in the Paris Agreement and their Net Zero aspirations, electrification emerges as a key solution that is explored across various domains. The conventional electricity grid is structured as a centralized generation-distribution system, which dictates that certain large-scale, predominantly fossil fuel-based, generation units produce all energy then transmitted to consumers.

This system alone isn’t however effective for achieving net zero. In this context, the most prominent solution is the penetration of Distributed Energy Resources (DERs) in the distributed electricity network. DERs are renewable sources of energy (photovoltaic panels, wind turbines) and energy storage (residential batteries and electric vehicles) available in multiple scales. The effective introduction of DERs in the energy generation system will facilitate the reduction of generation from fossil fuels and consequently, CO₂ emissions. Another advantage of DERs is the flexibility they offer to their owners. Residential DER owners are referred to as prosumers due to their dual role as energy consumers and producers. For the effective implementation of DER penetration in the distributed electricity network, the construction of Local Energy Markets (LEMs) for communities across the grid is a very promising approach. LEMs are financial systems which support the exchange of electricity within a section of the distribution grid or a particular microgrid. Moreover, they directly interact with the retail and wholesale power markets. The key economic agents in LEMs are the prosumers who can benefit from this market system financially as well as enjoy a sense of energy independence and flexibility.

Here, we seek to extend the agent-based model of a LEM initially formulated by Hutty and Brown (Hutty & Brown, 2023). In the original model, the market was composed of a number of households, with ownership of various DERs and/or EVs. The LEM was structured as a Continuous Double Auction (CDA) where the prosumers submitted their asks and bids on an hourly basis. Moreover, the ask and bid prices submitted by prosumers were determined using a Zero Intelligence algorithm, namely, randomly within a certain price range.

In the current study, the aforementioned model is optimized to provide greater flexibility to market participants, potentially resulting in financial benefits. First, a bidding algorithm is developed based on the concept of Adaptive Aggressiveness (AA), which allows prosumers to adjust their bids and asks based on learnings from previous market clearings. Secondly, a novel approach for the AA algorithm is taken whereby the bidding is formulated as an optimization problem aimed at the maximization of prosumers’ financial satisfaction from interacting with the market. The customized trading activity this bidding approach offers allows the LEM to be simulated as a competitive financial market, where prosumers are consequently more encouraged to participate in the market than self-consume the electricity they produce.

In summary, this work presents an optimized Local Energy Market (LEM) model designed to enhance market participation and real-life applicability. By offering flexibility and financial benefits to prosumers, the model aims to promote sustainable energy practices and facilitate the integration of renewable resources into the electricity grid.

Acknowledgements

Funding from the UK Engineering and Physical Sciences Research Council (EPSRC) and EDF Energy R&D UK Centre Ltd (Grant Number: EP/Y528808/1) are gratefully acknowledged.

Reference

Hutty, T. & Brown, S., 2023. An iterated double auction model for peer-to-peer electricity trading. Computer Aided Chemical Engineering, Volume 52, pp. 3141-3146.