PUBLISHER: Guidehouse Insights | PRODUCT CODE: 1158456
PUBLISHER: Guidehouse Insights | PRODUCT CODE: 1158456
Local Energy Markets Can Expand Deployment of Renewables, Stabilize the Grid, and Increase ROI
A local energy market (LEM) is a geographically constrained, automated platform for trading electricity. The market platform is composed of physically proximate consumers and producers of electricity-prosumers-who trade and consume locally-produced energy from distributed energy resources (DER) using the existing distribution network.
An automated LEM platform facilitates trading-either peer-to-peer (P2P) or through third-party aggregators-between multiple buyers and sellers with the goal of balancing supply and demand in a particular part of the distribution grid. Additionally, the increased utilization of battery energy storage systems significantly reduces grid exports and imports. In turn, storage substantially reduces the number of transactions between the LEM and the distribution network, contributing to enhanced grid stability.
This report reviews LEM functionality and describes opportunities for using LEMs to provide greater grid flexibility, facilitate increased integration of DER, and help investors realize greater ROI
Table of Contents
Spark
Context
Recommendations
How Local Energy Markets Work
Increased DER Integration Raises Significant Transmission and Distribution Challenges
- At Greater Penetrations, Renewable DER Can Disrupt Normal Economic Dispatch, Causing a Net-load Duck Curve
Properly Designed, LEMs Can Help Solve the Duck Curve and Reduce Curtailment of Clean Energy
- Permitting DR Trading Reduces Market-based Curtailment
- Dynamic Phase Switching Stabilizes Distribution Networks and Reduces Congestion-based Curtailment
LEMs Produce Financial Benefits for Prosumers and Distribution Utilities
- LEMs Offset Utility Expenditures on Grid Flexibility
- LEMs Can Defer Network Capacity Upgrades
Case Studies of LEM Pilot Projects Provide Critical Lessons
- USA: Brooklyn Microgrid
- Germany: Pebbles Project
- Netherlands: Hoog Dalem Stedin Pilot Project
- UK: Cornwall Project
LEM Deployments Will Speed the Energy Transition, with Proper Guidance
List of Tables
- DER Versus Centralized Generation Capacity, World Markets: 2022-2031
California Wholesale Energy Market Net-load Duck Curve
Typical All-India Demand vs. Net Peak-day Demand
DSO CAPEX Budgets: Example from Australian DSO with High DER Penetration
Simplified Schematic Demonstrating How a Typical LEM Works
Net Electricity Demand in the Netherlands by Month, 2016-2021
List of Figures
- DER Versus Centralized Generation Capacity, World Markets: 2022-2031
California Wholesale Energy Market Net-load Duck Curve
Typical All-India Demand vs. Net Peak-day Demand
DSO CAPEX Budgets: Example from Australian DSO with High DER Penetration
Simplified Schematic Demonstrating How a Typical LEM Works
Net Electricity Demand in the Netherlands by Month, 2016-2021
