Energy Revolution Research Consortium - Plus - EnergyREV - Market Design for Scaling up Local Clean Energy Systems

Lead Research Organisation: University of Strathclyde
Department Name: Electronic and Electrical Engineering

Abstract

Smart local energy systems offer the new opportunity to unlock valuable demand flexibility from owners of distributed energy technologies, such as electric vehicles, home batteries and heat-pumps. When combined with consumer-level ICT infrastructure, these resources allow previously passive consumers to become 'prosumers' - consumers who can proactively manage their consumption, production and storage of energy.

The smart local energy system demonstrators are expected to generate a range of local energy markets and platforms, offering new opportunities for prosumers to actively engage with the energy system. A wide variety of designs and business models for these markets and platforms are possible. Platforms are already operating that aggregate groups of prosumers and offer balancing services to National Grid. New markets for local flexibility services could enable prosumers to help manage voltage and thermal constraints, contributing to distribution system resilience. Markets for direct peer-to-peer energy trading have also been proposed, which would offer a win-win for prosumers, and the system as a whole, by facilitating the use of flexible resources to help match local supply and demand.

To ensure local energy markets create value locally, and can successfully scale up, energy market and regulatory arrangements will need adjustment. The major opportunity is for local energy markets to be integrated at the national scale, with clean local energy and flexibility reducing the need for large investments in generation and transmission infrastructure. Achieving this scale-up will require new market design frameworks and supporting technologies, with prosumer preferences and behaviours of central importance.

The project aims to answer the research question: "How can local and system-level energy markets be designed to successfully integrate local clean energy systems at the national scale?" High performance computing will be used for large-scale simulation, to study the interactions between local energy markets operating in parallel at different time scales and physical scales. This will facilitate the design of new local and system-level coordination mechanisms and policies, and allow their impact to be evaluated. The project will enhance the value offered by the Energy Revolution Research Consortium by providing novel insights and quantitative evidence which can be shared with the smart local energy system demonstrators as well as policy-makers.

Planned Impact

Through this project, a new framework would be developed for combined local and system-wide energy market design, with the aim of helping to integrate local clean energy systems at the national scale.

Local authorities would benefit from new methodologies for building policy objectives into the design of local energy markets. This could include incentivising the take up of electric vehicles to improve air quality in particular areas, coordinating efficient use of on-street charging stations, offering subsidised energy to alleviate fuel poverty and increasing local utilisation of community-owned renewable generation.

Distribution network operators would be able to benefit from new market mechanisms for incentivising flexibility from prosumers. Without active coordination, the introduction of distributed renewables and the electrification of transport and heat are expected to lead to increasingly costly distribution networks, with more severe demand variability requiring investment in rarely used infrastructure. If properly coordinated, prosumers could alleviate this by contributing their flexibility to help manage demand locally. The project will investigate how local markets for distribution network services can be designed to incentivise efficient operation without exposing individual consumers to unacceptable price-volatility or unfairly penalising them for their location in the network.

At the national scale, coordinated use of clean local energy and flexibility could reduce the need for large investments in generation and transmission infrastructure. New negotiation mechanisms will be developed so that local energy markets operating in parallel at different time scales and physical scales can be integrated without degrading system resilience. The project will also investigate how the capacity market can be updated to achieve efficient investment in a system with a significant proportion of flexibility embedded within distribution networks.

Ultimately, by helping to ensure local energy markets are operating in alignment with system-level policy objectives, the research has the potential to contribute towards reducing energy costs for consumers across the system, reducing the cost of decarbonisation and improving energy security.

Publications

10 25 50
 
Description This research programme has uncovered a large number of key findings and insights about Smart Local Energy Systems, their value, barriers, opportunities and future direction. Academic and non-academic insights are all available at: https://www.energyrev.org.uk/outputs/
Exploitation Route The outcomes can be used by and inform the strategies, decision making and activities of a large selection of stakeholders in the energy sector. These include (but are not limited to): Government and local government; regulators; citizens; energy companies; technical and specialist delivery companies; policy groups; funders; and, academics.
Sectors Energy

URL https://www.energyrev.org.uk/outputs/
 
Description The EnergyREV consortium is working with the Prospering from the Energy Revolution (PFER) community, which is funded through the Industrial Strategy Challenge Fund. A key aspect of the work is to translate academic research and knowledge in Smart Local Energy Systems into impactful non-academic outputs. As a result, a wide range of tools and non-academic insight reports have been created. These are designed to be used and informative for a wide range of stakeholders. They are all available at: https://www.energyrev.org.uk/outputs/insights-and-tools/
First Year Of Impact 2021
Sector Energy
Impact Types Societal,Economic,Policy & public services

 
Description Dr Jeff Hardy Appointed Deputy Chair of UK Power Networks Customer Engagement Group
Geographic Reach Local/Municipal/Regional 
Policy Influence Type Participation in a advisory committee
Impact Together with the other members of the CEG, we influenced several areas of UK Power Networks plan, including on net zero, customer research and engagement, uncertainty, scenarios and resilience.
URL https://ceg.ukpowernetworks.co.uk/
 
Description Oral and written evidence to House of Lords Industry and Regulators Committee Ofgem and Net Zero
Geographic Reach National 
Policy Influence Type Gave evidence to a government review
Impact Dr Jeff Hardy was quoted seven times in the final report.
URL https://committees.parliament.uk/publications/9141/documents/159550/default/
 
Description EPSRC-SFI: Blockchain transactions in the electricity industry: beyond tokenised energy
Amount £176,553 (GBP)
Funding ID EP/T028564/1 
Organisation Engineering and Physical Sciences Research Council (EPSRC) 
Sector Public
Country United Kingdom
Start 02/2021 
End 08/2022
 
Description Impact Acceleration Account Award Impact Workshop
Amount £5,000 (GBP)
Funding ID 0006898 
Organisation Engineering and Physical Sciences Research Council (EPSRC) 
Sector Public
Country United Kingdom
Start 04/2019 
End 03/2020
 
Description Collaboration with BEIS to Design an Enhanced Contracts-for Difference Scheme 
Organisation Government of the UK
Department Department for Business, Energy and Industrial Strategy
Country United Kingdom 
Sector Public 
PI Contribution Based on meetings with BEIS Renewable Support Scheme Strategy team, we have developed a detailed (3000-node) UK power system and market model, and used it to show how the Contracts-for-Difference scheme could be further enhanced by introducing cost components to internalise system-wide externalities. In particular, the proposed scheme can help: (i) incentivise more efficient investments by signalling where renewable assets can offer more value from a whole system perspective, (ii) promote fairer competition between renewable energy technologies with different levels of intermittency, and (iii) reduce actual carbon emissions by accounting for the effect of grid redispatch.
Collaborator Contribution Meetings held with the BEIS Renewable Support Scheme Strategy team to understand current challenges with the existing contracts-for-difference scheme, and future objectives.
Impact A journal paper has been submitted based on this work: Iacopo Savellia, Jeffrey Hardy, Cameron Hepburn, Thomas Morstyn, "Putting wind and solar in their place: Internalising congestion and other system-wide costs with enhanced contracts for difference in Great Britain" 2021.
Start Year 2021
 
Title Open Platform for Energy Networks (OPEN) 
Description The Open Platform for Energy Networks (OPEN) provides a python toolset for modelling, simulation and optimisation of smart local energy systems. The framework combines distributed energy resource modelling (e.g. for PV generation sources, battery energy storage systems, electric vehicles), energy market modelling, power flow simulation and multi-period optimisation for scheduling flexible energy resources. We continue to extend OPEN as it is used on new projects. 
Type Of Technology Software 
Year Produced 2019 
Open Source License? Yes  
Impact OPEN is currently being use for modelling, design and testing smart energy system control strategies and market designs for a number of projects including the "Vehicle-to-Grid Oxford (V2GO)" demonstration project, "EnergyREV - Market Design for Scaling up Local Clean Energy Systems" project, and EPSRC IAA projects "Perth West as a Case Study for the Value of Greenfield Smart Local Energy Systems" and "Assessing options for a smart, resilient and low-carbon multivector energy system in the Scottish Borders". 
 
Description The Oxford Workshop on Flexible Federated Energy Systems 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Industry/Business
Results and Impact On the 2nd of October 2019, I organised and hosted the "Oxford Workshop on Flexible Federated Energy Systems". Funding for the workshop was provided by an EPSRC Impact Acceleration Award, and the event was co-organised by the Oxford Energy and Power Group, the Smith School for Enterprise and the Environment, and the Oxford Martin School Programme on Integrating Renewable Energy. The workshop brought together 28 representatives from industry and academia working on market design for smart local energy systems (SLES). The aim was to discuss emerging challenges and opportunities, with sessions focused on: 'What value can SLES offer?'; 'How can we design markets for SLES?'; 'How can we integrate local flexibility into transmission system operations?'; and 'What new tools are needed for managing SLES?'. As hoped, these topics provoked lively discussion and new ideas for collaborations. Presentations were given by Malcolm McCulloch from the Local Energy Oxfordshire (LEO) demonstrator, Colm Murphy from National Grid ESO, Steve Atkins from Scottish and Southern Electricity Networks and Nick Good from Upside Energy.

Subsequent to the meeting, Paul Cuffe from UCD and I developed a joint EPSRC and SFI grant proposal based on discussions we had at the workshop which was funded: "EPSRC-SFI: Blockchain transactions in the electricity industry: beyond tokenised energy" (EP/T028564/1)
Year(s) Of Engagement Activity 2019
 
Description Exhibition Road Day of Design panel session: "The Science Museum presents: Can batteries solve our clean energy problem?" 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Public/other audiences
Results and Impact Public panel session organised by the the Science Museum, in collaboration with the Royal Commission of 1851. Focus was on "What are the problems we need to solve to before the national grid can go green?" Had good questions from attendees from the public including high school students.
Year(s) Of Engagement Activity 2019
URL https://www.vam.ac.uk/articles/exhibition-road-day-of-design
 
Description IEEE Power and Energy Society General Meeting 2020 - Invited to present at panel session on "Intelligent Demand-Side Management in Consumer-Centric Energy Systems" 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact Panel session hosted by the IEEE Power and Energy Society Power System Economics Subcommittee at the 2020 IEEE Power and Energy Society General Meeting (held virtually). The goal of the panel was to holistically explore the economic, regulatory and technical challenges and opportunities that arise in the context of consumer-centric power systems, electricity markets and other interdependent infrastructure systems
Year(s) Of Engagement Activity 2020
URL https://resourcecenter.ieee-pes.org/conferences/general-meeting/PES_CVS_GM20_0805_3473.html
 
Description INFORMS Annual Meeting 2020 - Invited to chair a panel session on "Market Design for Peert-to-Peer Energy Trading and Distribution System Flexibility" and to present at a panel session on "Market Models and Optimization in Active Distribution Networks" 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact Invited to chair a panel session on "Market Design for Peert-to-Peer Energy Trading and Distribution System Flexibility" and to present at a panel session on "Market Models and Optimization in Active Distribution Networks" at the INFORMS 2020 Annual Meeting (held virtually). The INFORMS Annual Meeting is the main gathering of the The Institute for Operations Research and the Management Sciences. The aim of the panel sessions was to help introduce local energy market design as a new research problem for a broader audience of operations researchers, game theorists and computer scientists.
Year(s) Of Engagement Activity 2020
URL http://meetings2.informs.org/wordpress/annual2020
 
Description INFORMS Annual Meeting 2021 - Chaired Panel Session on "Market Design for Smart Local Energy Systems" 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact Invited to chair a panel session on "Market Design for Smart Local Energy Systems" at the INFORMS 2021 Annual Meeting (held virtually). The INFORMS Annual Meeting is the main gathering of the The Institute for Operations Research and the Management Sciences. The aim of the session was to bring together researchers working at the forefront of energy market design to discuss the state-of-the-art and identify impactful research directions.
Year(s) Of Engagement Activity 2021
URL http://meetings.informs.org/wordpress/anaheim2021/schedule
 
Description Panel Sessions at INFORMS Annual Meeting 2019 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact Invited to present on panel session on "Advanced Game-theoretic Models in Energy Systems" and "Advanced Analytics for Local Energy Markets and Aggregator Business Models" the INFORMS 2019 Annual Meeting in Seattle. The INFORMS Annual Meeting is the main gathering of the The Institute for Operations Research and the Management Sciences. The aim of the panel sessions was to help introduce local energy market design as a new research problem for a broader audience of operations researchers, game theorists and computer scientists.
Year(s) Of Engagement Activity 2019
 
Description Panel session on "Harnessing the Flexibility of Behind-the-Meter Energy Resources" at the 2019 IEEE Power and Energy Society General Meeting 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact Panel session hosted by the IEEE Working Group on Demand Response at the 2019 IEEE Power and Energy Society General Meeting in Atlanta.
Year(s) Of Engagement Activity 2019
URL https://site.ieee.org/pes-psope/subcommittees/power-system-economics-subcommittee/working-group-on-d...
 
Description Report launch - Working Paper 3: Decarbonisation of heat: How smart local energy systems can contribute 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Policymakers/politicians
Results and Impact Launch of EnergyREV Working Paper 3: Decarbonisation of heat: How smart local energy systems can contribute, attended by 100+ energy stakeholders. Significant follow up, including an invitation to present the report to BEIS.
Year(s) Of Engagement Activity 2022
URL https://www.energyrev.org.uk/outputs/insights-and-tools/working-paper-3-decarbonisation-of-heat-how-...
 
Description Seminar for the Iran Local Energy Market Committee 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/politicians
Results and Impact Presentation of research to the Iran Local Energy Market Committee in collaboration with the Iran Future Energy Market Forum and Iran Energy Agency. 30+ attendees showed interest with lots of questions at end of presentation.

Outcomes:
- New acdemic collaboration established with Dr Mohsen Khorasany and Dr Amin Shokri Gzafroudi on the design of integrated markets for peer-to-peer energy trading and distribution system flexibility.
- Asked to present a webinar for the second season of the Iran Local Energy Market Forum on tools, libraries, and softwares related to modelling local energy markets
- Asked to contribute two book chapters for a new book being published by Springer, "Trading in Local Energy Markets and Energy Communities: Concepts, Structures and Technologies"
Year(s) Of Engagement Activity 2021
URL https://www.youtube.com/watch?v=YVUJyd-CzaE
 
Description Trading Sunlight: Prospects for P2P energy trading (Breakfast Briefing) 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Industry/Business
Results and Impact Invited to present at event launching the report "Trading Sunlight: Prospects for peer to peer energy trading in the UK solar industry", which I contributed a chapter to on "How can P2P energy trading platforms be designed to create value for both prosumers and system operators?" co-authored with Dr Helen Gavin. The event brought together over 60 representatives from industry and goverement interested in new business models for solar generation.
Year(s) Of Engagement Activity 2019
URL https://www.solar-trade.org.uk/trading-sunlight-prospects-for-peer-to-peer-energy-trading/