The changes taking place in the energy sector, the transition towards smart grids and an increasing share of distributed renewable energy sources generate the need for new market designs as well as new business models on the level of distribution grids. This work applies the market engineering framework to markets in smart distribution grids.
Based on this structure, the most vital aspects of local markets in smart grids are examined. First, a systematic overview of important research approaches in the respective fields is given. Second, intermediaries are seen as markets engineers in their own one-sided market. This allows to further integrate related existing industry projects into the analysis. Thus, the relevance and practicability of the research and the value of the market engineering framework for local power markets is shown.
Table of Contents
1 Introduction
2 Related Work
3 Smart Distribution Grids: A Market Engineering Overview
3.1 Economic and Legal Environment
3.1.1 European Union (EU) Strategy
3.1.2 National Strategy in Germany
3.1.3 Implications for Local Markets in Distribution Grids
3.2 Market Outcome
3.3 Agent Behavior
3.4 Market Structure
3.4.1 Microstructure
3.4.2 IT Infrastructure
3.4.3 Business Structure
3.5 Transaction Object
3.6 Summary
4 Conclusion and Outlook
Objectives and Topics
This thesis aims to provide a structured analysis of current research and industry projects related to smarter distribution grids by applying the market engineering framework. The primary goal is to evaluate how local energy markets can be designed to improve grid stability and leverage flexibility from distributed energy resources.
- Application of the market engineering framework to local power markets.
- Analysis of the role of aggregators as market engineers in one-sided markets.
- Examination of economic, legal, and technical requirements for smart grid integration.
- Review of current business models for flexibility and energy management.
- Investigation of product differentiation and transaction object design in energy markets.
Excerpt from the Book
3.2 Market Outcome
Markets are designed to achieve a desired outcome, i.e., an allocation and pricing result. The performance of a market can be measured based on the market structure and in particular the agent behavior, i.e., their preferences and actions, as well as the market outcome (Weinhardt, Holtmann, and Neumann 2003). Well-known global economic performance criteria are social welfare, i.e., the sum of all agents’ payoffs for an outcome, and pareto efficiency, i.e., the state in which no agent can achieve a better solution without making at least one other agent worse off (Sandholm 1999).
Concerning the design of markets for distribution grids, market efficiency is crucial in order to ensure a continuous balance of supply and demand. Shortages on either side can result in costly emergency measures. Considering system stability, incentives of agents should be aligned with security of supply in mind to prevent market failure. Moreover, the following suggestions for outcome objectives of secondary nature represent promising, yet important goals towards the success of local markets in smart grids.
Consumer privacy must be protected in light of the large amount of high-resolution data collected by smart meters. Suitable arrangements in the IT infrastructure can support this outcome goal.
Market mechanisms should be efficient in terms of computational costs. Waiting times for consumers regarding feedback should be kept at a minimum and basically not perceivable whenever possible.
In order to integrate customers into such markets, intermediaries such as aggregators are required. These in turn will only operate given viable business models. Thus, a market outcome should consider (maximization of) revenue streams not only for the market engineer but also for its participants.
Summary of Chapters
1 Introduction: This chapter outlines the current energy sector transformation and the necessity for new market designs and business models to integrate renewable energy sources.
2 Related Work: This chapter introduces the market engineering framework as the theoretical basis for analyzing market design, covering microstructure, infrastructure, and business structure.
3 Smart Distribution Grids: A Market Engineering Overview: This central chapter provides a detailed analysis of local markets, investigating regulatory environments, market outcomes, agent behavior, structural pillars, and transaction objects through the lens of existing industry projects.
4 Conclusion and Outlook: This chapter synthesizes the research findings, confirming that local market design is essential for grid stability and identifying future research needs in an evolving energy landscape.
Keywords
Smart Grids, Market Engineering, Distribution Grids, Renewable Energy Sources, Aggregators, Market Design, Microstructure, Business Models, Grid Stability, Demand Response, Virtual Power Plants, IT Infrastructure, Transaction Object, Flexibility, Energy Policy
Frequently Asked Questions
What is the core focus of this thesis?
The work focuses on the transformation of the energy sector and the development of new market designs for distribution grids to better integrate renewable energy sources.
What are the primary thematic fields covered?
The research covers market design, aggregator business models, economic and legal environments, IT infrastructure requirements, and transaction object differentiation.
What is the main objective of the research?
The objective is to provide a structured overview and analysis of research and industry projects regarding smarter distribution grids using the market engineering framework to enhance grid stability and flexibility.
Which methodology is applied in this work?
The author applies the market engineering framework (Weinhardt et al., 2003) to analyze, design, and structure local energy markets systematically.
What topics are discussed in the main part of the work?
The main part analyzes the economic and legal environment, market outcomes, agent behavior, and the three pillars of market structure: microstructure, IT infrastructure, and business structure.
Which keywords best characterize this work?
Key terms include Smart Grids, Market Engineering, Distribution Grids, Aggregators, Demand Response, and Virtual Power Plants.
How does the work address the role of aggregators?
Aggregators are analyzed as market engineers in one-sided markets, facilitating the integration of small-scale flexible users into larger energy markets.
What is the significance of the "market outcome" for distribution grids?
Market outcome is deemed crucial for achieving grid stability, ensuring efficient resource allocation, and preventing market failure through aligned agent incentives.
- Arbeit zitieren
- B. Sc. Frederik vom Scheidt (Autor:in), 2016, Towards Smart Distribution Grids. A Structured Market Engineering Review, München, GRIN Verlag, https://www.grin.com/document/335098
