The Influence of the Energy Spot Market on "On-the- Microgrid-Markets"

Abstract

With the transition towards distributed energy resources (DER) for electricity generation, new applications for information systems arise in enabling the development of innovative business models for grid control and operation. IS enables the merging of DERs and energy consumers into microgrids. Microgrids increase efficiency, e.g. through shorter transmission distances. Cost-savings due to these efficiency gains can be distributed among microgrid-participants via an “on-the-microgrid-market” platform. However, due to differences in the power plant parks and fluctuations in renewable energy generation, energy prices on the “on-the-microgrid-market” (OMM) are likely to differ from energy prices on the spot market. Based on the varying prices in both markets, the supplyor the demand-side of the OMM may from time-to-time, prefer to trade on the spot market, which could cause the OMM to stop functioning. We develop an economic model to analyse the conditions, under which OMMs are a viable concept for energy trading. Our results indicate that OMMs can indeed function in competitive energy markets.