ORIGINAL REPORTING: Transactive Energy And The Value of Distributed Energy

Green Mountain Power's pioneering steps in transactive energy raise big questions about DER's value; The Vermont utility's program will show what distributed energy resources are worth in customer-to-customer transactions

Herman K. Trabish, March 4, 2020 (Utility Dive)

Editor’s note: As the power system requires more than the least cost resources to maintain balance, the question of value is becoming more important.

The ultimate dream for distributed energy resources (DER) is "transactive energy" and a completely decentralized energy marketplace that allows transactions between all residential and commercial customers on the distribution system.

Transactive energy is now done in wholesale power markets, but the transactions are enabled by system operators’ automated mechanisms for supply-demand balancing. Those kinds of technologies, regulations and clear price signals are not yet available at the retail level. But new software platforms could soon allow customer-to-customer transactions by automating supply-demand balancing based on real time DER market value.

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"Transactive energy should derive optimum value from customer-owned or utility-owned assets," Avista Utilities Electrical Engineering Fellow and Technology Strategist Curtis Kirkeby told Utility Dive. "But value is not cost per kWh, it is the relative costs of keeping electricity flowing. On the distribution system, value is complex because of the magnitude of customers and assets."

New pilots are using technology-enabled auctions to develop price signals and resolve some of the complexities of DER value. A pioneering new Green Mountain Power program will use third-party developed software to show what premium customers are willing to pay for renewables generated electricity. The bigger question, which power system stakeholders are now working on, is what the value of peer-to-peer transactions can be in balancing system needs and meeting policy goals.

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Transactive energy would allow customers to market energy they generate to other customers on the distribution system. But that could compromise the utility's management of the distribution system. GMP's undertaking goes further than previous pilots in testing if transactions can take place without threatening utility control.

Significant early pilots by the Pacific Northwest National Laboratory (PNNL) in the 1990s advanced understanding of transactive energy’s value. It is a combination of power consumers’ preferences and choices and "how much an individual or entity who consumes power is willing to pay for energy when there is too much demand and not enough supply," early PNNL work concluded… click here for more

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