Local Market Mechanisms: how Local Markets can shape the Energy Transition

Europe has embarked on a journey towards a zero-emission system, with the power system at its core. From electricity generation to electric vehicles, the European power system must transform into an interconnected, intelligent network. To achieve this vision, active user participation is crucial, ensuring transparency, efficiency, and inclusivity. Thus, Europe has increasingly focused on the concept of markets in all their facets. This thesis seeks to answer the following questions: How can markets, often considered abstract and accessible only to high-level users, be integrated for end-users? How can market mechanisms be leveraged across various phases of the electrical system? Why is a market- driven approach essential for solving network congestions and even influencing planning? These questions shape the core of this research. The analysis unfolds in three layers, each aligned with milestones leading to 2050. The first explores how market mechanisms can be integrated into system operator development plans, enhancing system resilience in the face of changes. In this regard, this step addresses the question of how a market can be integrated into the development plans of a network and how network planning can account for uncertainties. Finally, the analysis highlights the importance of sector coupling in network planning, proposing a study in which various energy vectors lead to a multi-energy system. According to the roadmap to 2030, this layer demonstrates how markets can manage several components of the gas and electrical network. Finally, even though the robust optimisation increases the final cost in the market, it allows to cover the system operator from uncertainties. The second step delves into the concept of network congestion. While congestion management is primarily the domain of operators, it explores how technical and economic collaboration between operators and system users, via flexibility markets, can enhance resilience amid demand uncertainties and aggressive market behaviours. In addition to flexibility markets, other congestion markets are proposed, some radically different, like locational marginal pricing, and others more innovative, such as redispatching markets for distribution. Building upon the first analysis, this section addresses questions of how various energy vectors can be used not only to meet demand but also to manage the uncertainties associated with each resource. Consequently, this second part revisits the concept of sector coupling, demonstrating how various energy vectors can be managed through flexibility markets to resolve network congestion while simultaneously handling uncertainties related to different vectors. The results demonstrate the usefulness of the flexibility market in managing the sector coupling and the uncertainties related to several energy vectors. The third and most innovative step proposes energy and service markets for low-voltage users, employing distributed ledger technology. Since this step highlights topics that are currently too innovative to be realized, this third section offers a comparative study between centralised and decentralised markets using blockchain technology, highlighting which aspects of distributed ledger technology deserve attention and which aspects of low-voltage markets need revision. The results show that the blockchain technology is still in the early stage of its evolution, and several improvements are needed to fully apply this technology into real-world applications. To sum up, this thesis explores the evolving role of markets in the energy transition. Its insights are aimed at assisting system operators and network planners in effectively integrating market mechanisms at all levels of

Blockchain-Based Hardware-in-the-Loop Simulation of a Decentralized Controller for Local Energy Communities

The development of local energy communities observed in the last years requires the reorganization of energy consumption and production. In these newly considered energy systems, the commercial and technical decision processes should be decentralized in order to reduce their maintenance costs. This will be allowed by the progressive spreading of IoT systems capable of interacting with distributed energy resources, giving local sources the ability to be optimally coordinated in terms of network and energy management. In this context, this paper presents a decentralized controlling architecture that performs a wide spectrum of power system optimization procedures oriented to the local market management. The controller framework is based on a decentralized genetic algorithm. The manuscript describes the structure of the tool and its validation, considering an automated distributed resource scheduling for local energy markets. The simulation platform permits implementing the blockchain-based trading process and the automated distributed resource scheduling. The effectiveness of the tool proposed is discussed with a hardware-in-the-loop case study

Uncertainty Reduction on Flexibility Services Provision from DER by Resorting to DSO Storage Devices

Current trends in electrification of the final energy consumption and towards a massive electricity production from renewables are leading a revolution in the electric distribution system. Indeed, the traditional “fit & forget” planning approach used by Distributors would entail a huge amount of network investment. Therefore, for making these trends economically sustainable, the concept of Smart Distribution Network has been proposed, based on active management of the system and the exploitation of flexibility services provided by Distributed Energy Resources. However, the uncertainties associated to this innovation are holding its acceptance by utilities. For increasing their confidence, new risk-based planning tools are necessary, able to estimate the residual risk connected with each choice and identify solutions that can gradually lead to a full Smart Distribution Network implementation. Battery energy storage systems, owned and operated by Distributors, represent one of these solutions, since they can support the use of local flexibility services by covering part of the associated uncertainties. The paper presents a robust approach for the optimal exploitation of these flexibility services with a simultaneous optimal allocation of storage devices. For each solution, the residual risk is estimated, making this tool ready for its integration within a risk-based planning procedure

Energy Blockchain for Public Energy Communities

This paper suggests an application of blockchain as an energy open data ledger, designed to save and track data regarding the energy footprint of public buildings and public energy communities. The developed platform permits writing energy production and consumption of public buildings using blockchain-enabled smart meters. Once authenticated on the blockchain, this data can be made available to the public domain for techno-economic analyses for either research studies and internal or third parties audits, increasing, in this way, the perceived transparency of the public institutions. A further feature of the platform, starting on the previously disclosed raw data, allows calculating, validating, and sharing sustainability indicators of public buildings and facilities, allowing the tracking of their improvements in sustainability goals. The paper also provides the preliminary results of a field-test experimentation of the proposed platform on a group of public buildings, highlighting the possible benefits of its widespread exploitation

Distributed ledger technologies for peer-to-peer local markets in distribution networks

The newest Distributed Ledger Technology platforms, which delegate the execution of complex tasks in the form of Smart Contracts, make it possible to devise novel local electricity market frameworks, which are performed in a fully automated fashion. This paper proposes a novel fully automated platform for energy and ancillary service markets in distribution networks, able to run in a decentralized fashion, bypassing the need for a physical central authority. The proposed platform, able to perform the role of Virtual Decentralized Market Authority, shows excellent potential applications in the management of local ancillary service markets in local energy communities of various sizes. The proposed Virtual Decentralized Market Authority showed reasonable running costs and comparable technical management capabilities with respect to a physical, centralized managing authority

Local Market Mechanisms: how Local Markets can shape the Energy Transition

Europe has embarked on a journey towards a zero-emission system, with the power system at its core. From electricity generation to electric vehicles, the European power system must transform into an interconnected, intelligent network. To achieve this vision, active user participation is crucial, ensuring transparency, efficiency, and inclusivity. Thus, Europe has increasingly focused on the concept of markets in all their facets. This thesis seeks to answer the following questions: How can markets, often considered abstract and accessible only to high-level users, be integrated for end-users? How can market mechanisms be leveraged across various phases of the electrical system? Why is a market- driven approach essential for solving network congestions and even influencing planning? These questions shape the core of this research. The analysis unfolds in three layers, each aligned with milestones leading to 2050. The first explores how market mechanisms can be integrated into system operator development plans, enhancing system resilience in the face of changes. In this regard, this step addresses the question of how a market can be integrated into the development plans of a network and how network planning can account for uncertainties. Finally, the analysis highlights the importance of sector coupling in network planning, proposing a study in which various energy vectors lead to a multi-energy system. According to the roadmap to 2030, this layer demonstrates how markets can manage several components of the gas and electrical network. Finally, even though the robust optimisation increases the final cost in the market, it allows to cover the system operator from uncertainties. The second step delves into the concept of network congestion. While congestion management is primarily the domain of operators, it explores how technical and economic collaboration between operators and system users, via flexibility markets, can enhance resilience amid demand uncertainties and aggressive market behaviours. In addition to flexibility markets, other congestion markets are proposed, some radically different, like locational marginal pricing, and others more innovative, such as redispatching markets for distribution. Building upon the first analysis, this section addresses questions of how various energy vectors can be used not only to meet demand but also to manage the uncertainties associated with each resource. Consequently, this second part revisits the concept of sector coupling, demonstrating how various energy vectors can be managed through flexibility markets to resolve network congestion while simultaneously handling uncertainties related to different vectors. The results demonstrate the usefulness of the flexibility market in managing the sector coupling and the uncertainties related to several energy vectors. The third and most innovative step proposes energy and service markets for low-voltage users, employing distributed ledger technology. Since this step highlights topics that are currently too innovative to be realized, this third section offers a comparative study between centralised and decentralised markets using blockchain technology, highlighting which aspects of distributed ledger technology deserve attention and which aspects of low-voltage markets need revision. The results show that the blockchain technology is still in the early stage of its evolution, and several improvements are needed to fully apply this technology into real-world applications. To sum up, this thesis explores the evolving role of markets in the energy transition. Its insights are aimed at assisting system operators and network planners in effectively integrating market mechanisms at all levels of

Dynamic Programming for Optimal Energy Management in Nanogrids

The technological advancement in the energy sector leads to innovative grid structures for increasing the connection of renewable energy sources. The Nanogrid, a local modest-sized building energy system with power generation, energy storage, and real-time operation system, ranging from a residential home to a small commercial or industrial building, is a typical example. This paper aims to analyse the benefits for prosumers derived by adopting an intelligent electric energy management system that enables the optimal coordinated operation of the available resources within their Nanogrid. The optimisation objective is to maximise profits for the smart Nanogrid owner. The proposed energy management system is based on a dynamic programming algorithm implemented in MatLab on which is modelled the control system of the Nanogrid. The simulation result confirms that the proposed approach can be used in e realistic real-world case study

Decentralized Autonomous Control of Smart Grid with Blockchain Algorithms

The upcoming revolution in electricity distribution will change the way in which electricity will be delivered to end-users. In particular, these advancements will make end-users capable to managing and controlling the local energy production/consumption through local energy markets and peer to peer initiatives. In this scenario, this paper wants to propose a Decentralized Genetic Algorithm (DGA) able to perform market and grid optimizations in a fully autonomous and distributed fashion. The proposed DGA is specifically designed for being performed by IoT devices, such as smart meters and intelligent controllers, spread through the power network. Coordination among them is obtained by the presence of a Decentralized Master Ledger (DML) running on a blockchain, which serves as a common, immutable, trustless and cyber-attack safe memory for the process. In particular, the DGA has been used for performing automated scheduling of a LV smart distribution network through a grid constraint aware local energy market. The DGA platform has been tested with a Hardware in the Loop experimental setup implemented on a RTDS Novacor device as network simulator, and Raspberry Pi Zeroes as DGA computing devices. The defined setup has allowed to achieve decentralized and automated scheduling of distributed resources in the network with a fine-grained time step of one minute

Distributed Ledger Based Management of Local Energy Markets with a Federated Learning Approach

This paper presents an innovative methodology for managing a local electric market based on artificial intelligence techniques, integrated with a distributed ledger technology platform. The methodology allows an aggregate of users, for example constituting a local energy community, to optimize its energy costs by adopting a local energy market that manages its controllable energy resources in real-time. To achieve this result, the electricity market is managed by means of a distributed ledger platform used for both the certified recording of market operators' bids and for the sharing of a market-solving deep neural network algorithm. This market-solving platform is continuously adapted to the external changes in energy production, consumption and prices. By sharing the state of the system by means of the distributed ledger, the proposed platform allows every operator to locally define its optimal production/consumption and adapting its status according to the community energy needs. The proposed platform has been implemented with a computer-based simulation software and successfully tested for a day-long, 1-minute timestep. The results presented in the paper shown the usefulness of the tool developed in a renewable energy community real case scenario

Impact on Electricity Consumption and Market Pricing of Energy and Ancillary Services during Pandemic of COVID-19 in Italy

At the moment of writing, in Italy, there is an ongoing pandemic of coronavirus disease 2019 (COVID-19), caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). Its outbreak is leading to severe global socioeconomic disruptions impacting on all economic sectors from tourism, industry and the tertiary sector, up to the operational and opening of public offices, the closure of schools and the organization of families. Measures adopted by the Italian government to deal with the COVID-19 emergency have had direct effects both on people’s daily lives and on the activity of most industrial and commercial production companies. These changes have been unequivocally reflected also on the Italian electricity system, which has shown unprecedented behavior in terms of both energy consumption and volume and subsequently, in the observed share of renewable and conventional production technologies. The goal of this study is to show the impact on the power industry of all the restrictions and lockdown of the activities in Italy and to discuss the effects of COVID-19 outbreak on the bulk power system and the entire electricity sector. In particular, the consequences on load profiles, electricity consumption and market prices in Italy, including the environmental aspects, are examined