The ultimate dream for distributed energy resources (DER) is “transactive energy” and a completely decentralized energy marketplace that allows transactions between all residential and commercial customers on the distribution system.
Transactive energy is now done in wholesale power markets, but the transactions are enabled by system operators’ automated mechanisms for supply-demand balancing. Those kinds of technologies, regulations and clear price signals are not yet available at the retail level. But new software platforms could soon allow customer-to-customer transactions by automating supply-demand balancing based on real-time DER market value.
“Transactive energy should derive optimum value from customer-owned or utility-owned assets,” Avista Utilities Electrical Engineering Fellow and Technology Strategist Curtis Kirkeby told Utility Dive. “But value is not cost per kWh, it is the relative costs of keeping electricity flowing. On the distribution system, value is complex because of the magnitude of customers and assets.”
New pilots are using technology-enabled auctions to develop price signals and resolve some of the complexities of DER value. A pioneering new Green Mountain Power program will use third-party developed software to show what premium customers are willing to pay for renewables generated electricity. The bigger question, which power system stakeholders are now working on, is what the value of peer-to-peer transactions can be in balancing system needs and meeting policy goals.
Transactive energy would allow customers to market energy they generate to other customers on the distribution system. But that could compromise the utility’s management of the distribution system. GMP’s undertaking goes further than previous pilots in testing if transactions can take place without threatening utility control.
Significant early pilots by the Pacific Northwest National Laboratory (PNNL) in the 1990s advanced understanding of transactive energy’s value. It is a combination of power consumers’ preferences and choices and “how much an individual or entity who consumes power is willing to pay for energy when there is too much demand and not enough supply,” early PNNL work concluded.
Today’s drivers toward transactive energy are the “economic, technological and customer preference opportunities” available from DER, according to the 2018 Gridwise Architecture Council (GWAC) Roadmap. Limited DER deployment has been possible with “ad hoc arrangements” for utility management of them, but rising penetrations require “a more robust response to maintaining and enhancing safety, reliability, and resilience of distribution energy systems.”
DER can provide those values but it “will likely involve a real time price signal to monetize the operational needs of the system,” Ron Melton, group leader of distributed systems at PNNL told Utility Dive.
It will also necessitate smart devices and an automated transaction platform to engage “the human preferences programed into the devices and the real time signals,” Melton said. “We don’t envision consumers glued to dashboards watching price signals to decide when to use clothes dryers or charge electric vehicles.”
PNNL’s 2006-07 Olympic Peninsula Demonstration Project was probably the first significant test of transactive energy. Communications-enabled DER with pre-programed devices allowed system operators “to manage system peak load and distribution constraints,” according to a 2019 Smart Electric Power Alliance (SEPA) whitepaper.
PNNL’s 2009 to 2015 $178 million Pacific Northwest Demonstration Project expanded the validation to five states, the Bonneville Power Administration, and 11 utilities. It used a transactive energy management system and 55 intelligent technologies, including smart meters, innovative batteries and voltage controls.
But it called for better automation capabilities, now available in smart technologies, to get more benefits from smart meter data, improve smart interconnections, and grow DER markets.
Simulations from 2015 to 2018 by multiple research agencies found transactive energy can reduce voltage violations, lower customer bills, improve power flows, and reduce line losses, according to a National Institute of Standards and Technology (NIST) report.
Today, microgrid pilots are becoming the preferred transactive energy study sites, researchers and analysts agreed.