IEEE Electrification - September 2021 - 43

markets to provide specific energy,
ancillary services, and capacity products.
The proposed DER optimization
structure is ideal for allowing DERs,
individually or in an aggregate, to
enter into TE transactions, as elaborated
on in the next section.
The Emergence of the
Transactive
Energy Markets
As discussed previously, the decarbonization
of the energy sector and
the technological innovations related
to energy resources at the edge of
the grid have resulted in the evolution
of the current energy market
model, which has been in operation
for more than 20 years, into a multitier
hierarchical energy market structure. This structure
may allow DERs to have unfettered participation in all
the markets along the energy supply chain. Within this
evolving market structure, the TE market framework has
emerged at the center of the future grid's state. TE markets
provide a platform where energy participants use
advances in technology, sensing, communications, and
data analytics to trade energy based on value and local
market and operational considerations. In the TE market,
energy is becoming a commodity for DER owners,
which can be traded among them either on a real-time
basis or on a predefined schedule. TE systems are
expected to revolutionize the relationships among energy
companies, the grid, and DER owners. The DAM and
RTM energy markets in the transmission level deploy TE
principles and use market price signals as the " value " to
balance, in real-time, supply and demand and solve reliability
and security problems.
The overall objective
of the DER
optimization
platform is to adjust
the aggregated
behavior of the
resulting VPP of the
closed meshed
network to meet
market instructions.
The emerging multitier market
structure allows us, for the first time,
to apply TE principles to the downstream
markets in distribution. TE
transactions include participation in
LEM/DSO and ISO/TSO markets, along
with peer-to-peer (P2P) transactions
in low-voltage networks, energy
exchanges between LEMs and other
external systems, and so forth. LEMto-LEM
exchanges can isolate local
systems from the central grid, fostering
system reliability for the electrification
of everything by decentralizing
power generation and reducing pressure
on the grid during emergency
conditions. Price mechanisms for
non-DSO/ISO transactions could
range from a double-sided market in
which each participant pays a unique price based on their
preferences and local supply and demand conditions
(analogous to the stock market), to a proxy price produced
by the closest organized market.
The scaling of the TE market will require regulatory
changes to 1) encourage more investments in distribution
and grid connections, 2) develop new rate structures and
give utilities incentives to adopt more resilient and innovative
technologies, and 3) encourage prosumers to diversify
backup sources as well as enable them to sell excess
power back to the grid. The investments in the grid cannot
be underestimated. For example, in the P2P TE model, each
house, apartment, public building, storage facility, or RES will
have a direct connection to each other. Each individual line
should be provisioned, with a smart meter to allow for accurate
auctioning and tracing of each transaction of energy.
The TE ecosystem will scale by allowing LEMs to exchange
and transact energy within and among each other.
Grid Operator
Dispatch
Instructions
ZOMECLOUD
Curtailment
Instructions
to Building
Controllers
VPP Resource
Portfolio
Bids/Offers
Aggregator
Curtailment
Instructions to
Smart Thermostats
Figure 5. The VPP resource portfolio creation for market participation.
IEEE Electrification Magazine / SEPTEMBER 2021
43
IEEE Electrification - September 2021

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