Technical assessment framework for cost-sharing agreements in transactive energy systems

Transactive Energy Systems (TES) brought opportunities to innovate on electricity market designs and improve the economic efficiency and fairness of the grid. Cost-sharing (CS) mechanism designs are appealing in TES since they can provide fair electricity prices when acknowledging average operating costs. However, CS must consider the grid’s physical constraints to ensure the feasibility of transactions and avoid affecting service quality. For this reason, this paper introduces an assessment methodology for TES cost-sharing agreements that incorporates the physical limits of the grid, allocates the total system cost, and reduces information disclosure among participants. The proposed framework utilizes the aggregated consumption of residential customers to determine active and reactive power demands through probabilistic modeling. Subsequently, the expected values of electrical variables are computed through Monte-Carlo simulations of dynamic power flows and summarized in a transactive report. The report serves as an input to allocate penalty costs and modify demand patterns to comply with the grid safety limits. The TES assessment methodology is evaluated using the IEEE 33-bus distribution system. Study results demonstrate that the proposed Transactive Energy market, employing cost-sharing, effectively reduces the expected power consumption peaks. The results also highlight the efficacy of the proposed voltage and congestion penalty cost by encouraging users to shift consumption into safe limits.