Local Energy Trading Under Emerging Regulatory Frameworks: Impacts on Market Participants and Power Balance in Distribution Grids

Abstract

Local energy trading is a concept that allows trading between distribution grid participants such as consumers, producers, and prosumers on a local level in a transparent and competitive way. This can provide better local demand-supply balancing, decrease voltage deviations, and improve social welfare. However, economic feasibility of implementation of such a concept greatly depends on regulatory framework, as certain regulatory provisions can either lead to barriers and costs that can undermine the potential benefits of local energy trading, or support implementation of such projects. In this paper, feasibility of local energy trading under different variations of regulatory framework are assessed and implications on market participants and energy balance in distribution grids analyzed. It is shown that regulatory provisions have high influence on potential benefits and implementation of local energy trading in wider scope.