Transaction-based operation of electric distribution systems: A review

The proliferation of distributed energy resources (DERs) aligned with consumer- level information and communication technology (ICT) propels the power systems toward a new reality. In this light, transaction-based energy systems are emerging as a promising solution for orchestrating the growing number of dispersed prosumers and intelligent devices, each with their own objectives and value perspectives, into a resilient, secure, and efficient system. The study of market-driven operation of distribution systems has attracted significant research attention in recent years. The design of full market-based decentralized control of power systems has been taking many forms, according to different design philosophies and techniques. Only few of them have been implemented in pilot projects. Thus, it is not known so far which of these approaches will show to be more suitable for large-scale adoption. This study presents a review of the state of the art of the scientific community on the application of transactive energy, market-based control, and peer-to-peer energy trading, among other related concepts. A classification of the study efforts is proposed, analyzing the transaction-based system framework with regard to motivation, enabling technologies, market types and structures, system operation issues, case studies, and valuation metrics. Two main approaches are identified, considering whether the price is determined centrally by aggregating quantity/bids from a number of agents, or if it is negotiated through direct interactions of agents between themselves. The first case is mainly referred to as "transactive energy" and explores demand-response possibilities, whereas the second is being treated as "peer-to-peer energy," highlighting the active participation of prosumers in the energy markets. The potential benefits and downsides of these main market design philosophies are evaluated, contributing to the assessment of the underlying concepts applicability to the power and energy sector.