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- Management of local citizen energy communities and bilateral contracting in multi-agent electricity marketsPublication . Algarvio, HugoABSTRACT: Over the last few decades, the electricity sector has experienced several changes, resulting in different electricity markets (EMs) models and paradigms. In particular, liberalization has led to the establishment of a wholesale market for electricity generation and a retail market for electricity retailing. In competitive EMs, customers can do the following: freely choose their electricity suppliers; invest in variable renewable energy such as solar photovoltaic; become prosumers; or form local alliances such as Citizen Energy Communities (CECs). Trading of electricity can be done in spot and derivatives markets, or by bilateral contracts. This article focuses on CECs. Specifically, it presents how agent-based local consumers can form alliances as CECs, manage their resources, and trade on EMs. It also presents a review of how agent-based systems can model and support the formation and interaction of alliances in the electricity sector. The CEC can trade electricity directly with sellers through private bilateral agreements. During the negotiation of private bilateral contracts, the CEC receives the prices and volumes of their members and according to its negotiation strategy, tries to satisfy the electricity demands of all members and reduce their costs for electricity.
- Stakeholder engagement plan: Deliverable D6.1Publication . Couto, António; Algarvio, Hugo; Sijm, Jos; Rinne, Erkka; Kochems, Johannes; Estanqueiro, AnaABSTRACT: This deliverable presents the approach implemented to perform a stakeholder analysis and to produce the TradeRES’ stakeholder engagement plan. It includes the description of the tools used for the stakeholder engagement, namely the webinars, tutorials, experiments and surveys. Before establishing the engagement plan, the identification and prioritization of the relevant stakeholders at the European and national levels are performed. To support this step, a stakeholder mapping approach is followed by clustering each target group into the following categories: “Key player”, “Meet their needs”, “Keep informed” and “Monitor”. This classification takes into account the level of interest and influence of each stakeholder in the project. The communications between the consortium and the stakeholders as well as the preferable channels for these communications are also presented. The engagement plan includes a description of the communication tools, objective, frequency and expected contribution of the different stakeholders. The project comprises different stakeholders to follow closely the work developed providing feedback on the modelling methodology and scope, on market design choices, and on our research results. The stakeholders’ knowledge has been effectively involved since the beginning of the project, namely in activities related to construct reference energy systems for 2030, and their role will be crucial during the iterative process of shaping market designs and testing as well as validating the newly developed open-access market tools.
- Agent-based retail competition and portfolio optimization in liberalized electricity markets: A study involving real-world consumersPublication . Algarvio, Hugo; Lopes, FernandoABSTRACT: The liberalization of energy markets brought full competition to the electric power industry. In the wholesale sector, producers and retailers submit bids to day-ahead markets, where prices are uncertain, or alternatively, they sign bilateral contracts to hedge against pool price volatility. In the retail sector, retailers compete to sign bilateral contracts with end-use customers. Typically, such contracts are subject to a high-risk premium—that is, retailers request a high premium to consumers to cover their potential risk of trading energy in wholesale markets. Accordingly, consumers pay a price for energy typically higher than the wholesale market price. This article addresses the optimization of the portfolios of retailers, which are composed of end-use customers. To this end, it makes use of a risk-return optimization model based on the Markowitz theory. The article presents a simulation-based study conducted with the help of the MATREM system, involving 6 retailer agents, with different risk preferences, and 312 real-world consumers. The retailers select a pricing strategy and compute a tariff to offer to target consumers, optimize their portfolio of consumers using data from the Iberian market, sign bilateral contracts with consumers, and compute their target return during contract duration. The results support the conclusion that retail markets are more favourable to risk-seeking retailers, since substantial variations in return lead to small variations in risk. However, for a given target return, risk-averse retailers consider lower risk portfolios, meaning that they may obtain higher returns in both favourable and unfavourable situations.
- Decarbonization of electricity systems in Europe: market design challengesPublication . Strbac, Goran; Papadaskalopoulos, Dimitrios; Chrysanthopoulos, Nikolaos; Estanqueiro, Ana; Algarvio, Hugo; Lopes, Fernando; Vries, Laurens de; Morales-España, Germán; Sijm, Jos; Hernandez-Serna, Ricardo; Kiviluoma, Juha; Helistö, NiinaABSTRACT: Driven by climate change concerns, Europe has taken significant initiatives toward the decarbonization of its energy system. The European Commission (EC) has set targets for 2030 to achieve at least 40% reduction in greenhouse gas emissions with respect to the 1990 baseline level and cover at least 32% of the total energy consumption in the European Union (EU) through renewable energy sources, predominantly wind and solar generation. However, these technologies are inherently characterized by high variability, limited predictability and controllability, and lack of inertia, significantly increasing the balancing requirements of the system with respect to historical levels. The flexibility burden is currently carried by flexible fossil-fueled conventional generators (mainly gas), which are required to produce significantly less energy (as low operating cost and CO2-free renewable and nuclear generation are prioritized in the merit order) and operate part loaded with frequent startup and shut-down cycles, with devastating effects on their cost efficiency.
- Renewable energy support policy based on contracts for difference and bilateral negotiationPublication . Algarvio, Hugo; Lopes, Fernando; Santana, JoãoABSTRACT: The European Union has been one of the major drivers of the development of renewable energy. The energy policies of most European countries have involved subsidized tariffs, such as the feed-in tariff in Portugal, the regulated tariff and the market price plus premium in Spain, and the Renewables Obligation in UK, that came into effect in 2002. Recently, UK has made some reforms and started to consider contracts for difference (CfDs) as a key element of the energy policy. This paper presents a support policy based on CfDs and bilateral negotiation. The first phase consists in a CfD auction and the second phase involves a bilateral negotiation between a Government and each of the selected investors. The paper also presents a case-study to analyze the potential benefits of the support policy. It was performed with the help of the MATREM system. The preliminary results indicate some advantages for the Government (and, in some cases, for the investors as well).
- Tutorial and webinar edited material (D6.2.2) : Deliverable D6.3Publication . Schimeczek, Christoph; Santos, Gabriel; Algarvio, Hugo; Jimenez, Ingrid Sanchez; Putkonen, Nelli
- Temporal flexibility options in electricity market simulation models: Deliverable D4.1Publication . Couto, António; Schimeczek, Christoph; José, Débora Regina S.; Algarvio, Hugo; Kochems, Johannes; Nienhaus, Kristina; Pinto, Tiago; Helistö, Niina; Johanndeiter, Silke; Estanqueiro, AnaABSTRACT: This report covers the implementation of temporal flexibility options in TradeRES’ agent-based electricity market simulations models. Within this project, the term “temporal flexibility option” was defined as an asset or measure supporting the power system to balance electric demand and supply and compensate for their stochastic fluctuations stemming from, e.g., weather or consumer behaviour by adjusting demand and/or supply as a function over time or by reducing their forecast uncertainty. Other reports from the same work package of TradeRES are published almost simultaneously, each focussing on another aspect of market model enhancements. These accompanying reports address sectoral flexibility, spatial flexibility, actor types, and modelling requirements for market designs. Flexibility options covered in this report were selected with regard to a predominantly temporal characteristic, a contribution to TradeRES’ assessment of market designs, and the feasibility to be implemented in at least one of the agent based models (ABM) during the project’s lifetime. The technical aspects of “Load shedding”, “Load shifting”, “Electricity storage”, and “Real-time pricing” were selected for implementation. In addition, the following new electricity market products were selected for implementation: “Rolling market clearing”, “Trading with shorter time units”, and “Variable market closure lead times”.
- Potential impact of load curtailment on the day-ahead Iberian market : a preliminary analysisPublication . Rodrigues, Francisco; Algarvio, Hugo; Lopes, Fernando; Pronto, Anabela; Santana, JoãoABSTRACT: Demand response (DR) in electricity markets may offer a variety of financial and operational benefits. Typically, customers respond to DR events by adopting curtailment and shifting strategies. This article focuses on the former strategy and assumes that consumers are encouraged to avoid consuming electricity during specific hours of a 24 h day, because the energy price is above a given threshold. It presents a study on the Iberian market, conducted with the help of an agent-based simulation tool, called MATREM. The results are very favorable to the adoption of the load curtailment strategy (as a consequence of the enrollment in different DR programs).
- Development of DLR analysis and power system models: Deliverable D3.1Publication . Algarvio, Hugo; Duque, Joaquim; Couto, AntónioABSTRACT: This deliverable presents the work developed by LNEG as part of the R&D activities of the project OPTIGRID - Methodology for the dynamic line rating analysis and optimal management of power networks. According to the plan activities of Tasks 3.1 and 3.2, the main objective of this deliverable is to integrate the mathematical model for the Dynamic Line Rating (DLR) analysis in the optimal power flow model for a generic AC power system, previously developed in LNEG. The main limiting factor for the transmission capacity of overhead lines (OHLs) is usually defined by a thermal constraint. For OHLs several effects are present, some with a positive contribution while others can lead to the potential congestion of the electrical networks. The seasonal line rating (SLR) methodology, traditionally used by the system operators to ensure that the grid does not operate over the maximum pre defined conductor temperature, determines the line’s ampacity from constant weather conditions using: 1) seasonal basis information or 2) conservative weather conditions. These conditions usually underestimate the real transmission capacity of OHLs. Thus DLR analysis allows assessing more realistic current limits for the power lines could present a method to deal with potentially congested electrical networks enabling the optimal integration of distributed renewable power generation.
- Risk-Sharing Contracts and risk management of bilateral contracting in electricity marketsPublication . Algarvio, HugoABSTRACT: The liberalization of the electricity sector has conducted to the establishment of spot markets, derivative markets and private bilateral contracts to trade electricity, increasing the competition in the sector. Spot markets are composed of day-ahead, intraday and real-time markets, and their prices are highly volatile. Derivative markets are composed of physical and financial products to hedge against spot price volatility. Players can set the terms and conditions of private bilateral contracts but these have several risks that can be mitigated using a risk management process composed of three phases: risk assessment, characterization and hedging. This paper focuses on both risk attitude and risk-sharing, and how they can influence the negotiation of the price. It presents the standard and non-standard designs of a new type of contract, the Risk-Sharing Contract (RSC). Furthermore, it describes the trading process of these contracts and introduces a negotiation strategy for dealing with risk. It also presents case studies on bilateral contracting involving the negotiation of RSCs, where different demand and supply agents interact and trade according to the rules of an alternating offers protocol. Results from the case studies prove the benefit of RSCs to hedging against spot price volatility, benefiting risk-averse players by reducing the price risk and conducting mutually beneficial agreements. While the use of derivatives products can conduct losses/revenues between -15% and 3% concerning the spot market, by using non-standard RSCs those outputs vary between -1% and 3% with substantially less risk.