A Transactive Energy Future: The Inevitable Rise of Economic-based Grid Control

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Every day, the number of new power generators from renewable resources joining the world’s collective electricity grid steadily goes up. Growing at an equal pace are the people working to keep the balance between supply and demand on that collective grid. More and more, they are turning to an intelligent and interactive networked system based on economics and market mechanisms where transactions are used to manage the grid and ensure reliability and efficiency.

Companies, utilities, transmission operators, balancing authorities, government agencies and standards entities are coming together to define, simulate and demonstrate that method of transaction-based control under what they call transactive energy (TE) systems. Those systems are not pervasive in the market by any means, but it is clear that many people see them as an inevitable and critical part of the future power grid.

A Million Points of Control

Shawn Chandler, a director in Navigant’s Global Energy practice, thinks about power generators as points of control.

In the past, he said, most utilities had to manage 10 to 20 power plants — 10 to 20 points of control on the supply side, compared to millions of points of control on the demand side. Now, the number of points of control on the supply side for any given utility is increasing exponentially.

“How are utilities going to manage that?” he asked.

“TE is just a name of the system that helps to manage millions of points of control in the system that can generate power,” he said. Power plants have always been linked together with a communications platform that can control a million points of demand, but now, he added, the points of demand need to be able to supply power to themselves, or potentially supply power back to the grid. And that, he said, is the importance of TE.

Within a TE system, a network allows communication between all points of supply and demand, creating an environment of interoperability in which every point can exchange energy information and basically discuss in real time (or near real time) the value of energy at any given point in time or space. Based on those valuations, the supply and demand points can execute transactions for energy, while maintaining the delicate balance required for a healthy power grid.

Defining TE Systems

The TE concept is phenomenal, but let’s be real; putting it into practice requires highly complex and powerful computational systems. While the technological backbone of such systems exists today, stakeholders still are in the process of proving their worth; defining the basis of the systems; and putting them into practice in real-world power grids.

A global standard for TE does not exist today, but Chandler is helping to change that. He is the chair of the IEEE Power & Energy Society Smart Buildings, Loads and Customer Systems technical committee, which manages a working group for P825 — Meshing Smart Grid Interoperability Standards to Enable Transactive Energy Networks.

When complete, P825, rather than being a full standard, will provide TE guidelines.

“We decided to develop a guide because TE is still in its early stages of development, and we think there’s some flexibility needed there,” Chandler said. “The purpose of the guide will be to develop a common approach to all of the abstracted components necessary in order to develop TE systems for modern usage.”

Solar O&M provider BELECTRIC’s Control Center with an integrated real-time SCADA and visibility of solar power plants around Europe. Source: BELECTRIC

Chandler said the guide will leverage existing standards for interconnection and communication protocols to help with the development of interoperability features necessary for TE systems.

The guide will help identify “what interoperability standards would be required in order to have conformity in the interconnection and leverage any communication protocol that might be used,” he said, noting that there are many communication protocols available now to effect TE system communications.

The guide will outline the options for TE systems, and make recommendations for how to think about those options, he said.

According to Chandler, the working group, which was officially formed earlier this year, is planning to release the guide in 2019.

Chandler also has been instrumental in the efforts to further define TE systems as a participant in the U.S. Department of Commerce National Institute of Standards and Technology’s (NIST) Transactive Energy Modeling and Simulation Challenge for the Smart Grid (TE Challenge).

According to NIST, the purpose of the TE Challenge is to bring together grid stakeholders to demonstrate modeling and simulation platforms while applying transactive energy approaches to real grid problems.

Originally launched in 2015, the TE Challenge now is in its second phase. Simulations began in July, and results of the simulations will be shared in January 2018. Chandler was a member of the Common Transactive Services team, one of the seven teams that participated in the first phase of the TE Challenge. Chandler said that the intent of the team was to identify common services for transactive energy at a high level and then identify all the areas that needed additional definition in communications and control.

The team presented a paper on its findings in 2016.

“Our goal was to come up with TE services that would be common to all services, as a subset of the financial system,” Chandler said. “When you talk about system operation, there is a common information model, and that model has different capabilities because it defines how any system communicates with another system in common terms.”

The paper concluded that “Common Transactive Services are easily automatable and place responsibility for standards of performance with the transacting parties.” Furthermore, the paper recommended that “implementers and integrators of [TE systems] consider the application of these common services to drive their architecture and design, integrate other transactive energy systems, and to accelerate their work.”

In addition to Navigant, the Common Transactive Services team included EML, Alliander, The Energy Mashup Lab, MACT, TeMix, Caltech Resnick Institute, and TNO. The other phase-one teams addressed, for example, the development of a reference grid design; the demonstration of TE for microgrid management; and the definition of fundamental business model types.

TE Systems in Action

Beyond the realm of simulation, TE systems are a growing part of energy networks around the world. Chandler says that Alliander in the Netherlands is using a TE system now to help manage supply and demand on its grid. Alliander supplies electricity through its subsidiary Liander.

In the U.S., Toronto, Ontario-based Opus One Solutions is moving towards launching a fully-functioning TE system demonstration through its work with National Grid under New York’s REV.

Opus One President and CEO Joshua Wong says that the purpose of the project is to work with National Grid to develop and deploy an operational distributed system platform (DSP).

“We’re building the DSP as a software-driven platform that takes into account real-time and longer term grid data with the Buffalo Niagara Medical Campus in Buffalo, (N.Y.),” Wong said. “The campus will be a participant on the DSP, and they will exchange price signals so the DSP can generate a stacked value, which will be translated into a price signal and sent to the campus to evaluate whether to participate and dispatch distributed resources accordingly.”

The Bonneville Power Administration’s Dittmer Control Center from which BPA monitors the transmission grid in its service territory in the U.S. Pacific Northwest. Source: U.S. Department of Energy

Opus One’s work is based on the company’s intelligent energy networking solution, called GridOS.

According to Wong, the nature of the transactions on the DSP are DER-to-platform transactions before enabling peer-to-peer functionalities (i.e., one homeowner with solar generation transacting directly with a neighbor).

“There’s a lot of interest around enabling choice with peer-to-peer, but right now the emphasis is on providing grid-level services that are stacked across distribution and bulk systems,” Wong said.

He added that Opus One is in the second phase of the project with National Grid, actively building out the DSP now.

“There was a phase one feasibility stage that was reported back to the [New York Department of Public Service], and now we are going through software development in conjunction with National Grid,” he said.

Opus One’s work is primarily focused on North America at this time, but Wong says there are other attractive global markets for TE development, such as Germany, the U.K., Australia and Japan.

In the U.S., he said, each state will have its own timeline for TE integration. New York is leading the progress with its National Grid project under the REV initiative, and Wong says the California market is ripe for TE.

Wong also sees additional mid-term interest in TE from states that are debating net metering or have a high penetration of DERs — for example, Arizona, Illinois, Nevada, Minnesota and Hawaii. Those states, he said, could see an increase in TE activity over the next three years.

“We fully believe that a transactive energy future is an inevitable future, so it’s a most likely scenario — especially for those who are deregulated,” he said. “At the same time, we believe transactive energy doesn’t even need to be its own market necessarily, but we can adopt transactive energy mechanisms into, for example, an integrated distribution planning type of system.”

To that end, Opus One recently released its GridOS Integrated Distributed Planning solution, which uses the intelligent analytics of GridOS to enable an integrated planning strategy that aligns DER operations with the needs of the distribution system, including power quality, grid capacity and optimal control. Opus One said in late June that it is working with an undisclosed U.S. investor-owned utility to deploy GridOS IDP to address the utility’s distribution planning strategy.

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