Realizing the Transactive Energy Future with Local Energy Market: an Overview

Purpose of Review: A transactive energy (TE) future promises to allow a large number of prosumers to be profit-seeking market participants. One way to realize this future is through the local energy market (LEM), a consumer-centric market platform. We aim to compare possible structures and mechanisms of LEM and systematically investigate the technical challenges faced by LEM implementation. Recent Findings: We carry out a detailed classification of LEM based on the market participants, physical layer, information and communication layer, and the market mechanism. We identify that research works on LEM are most interested in market participants’ strategic behaviors and innovative market design. Optimization, game theory, and agent-based simulation are the common methods to assist the analysis of LEM. Summary: Our classification of LEM can clear some confusion from terminology; we identify that LEM’s coordination with existing energy infrastructure remains as future research directions and call for greater synergy from industry and governments to pave the way for the TE future. © 2022, The Author(s), under exclusive licence to Springer Nature Switzerland AG.