Today's Power Markets are Too Big

The span of power markets today is too big. Market participation by net metering applying tariffs across a whole region makes no sense if power from the seller cannot physically get to the would-be buyer. Power markets are intrinsically local. (This is net of transmission/distribution line capacity and topology, whether or not particular transformers can “run backward”, etc.). Atop this, one must factor in the line loss transforming up from the local small-scale prosumer

For such local markets, there needs to be some equivalence of market participant scale. A large factory does not order wholesale supplies from the corner store in any non-power market. A bidder who works at an order of magnitude larger scale than anyone else deforms the local market. A local market may reach aggregate scale large enough to participate with bigger players.

Once one breaks the market down into the local smaller markets, storage can easily participate, either as part of portfolio management within a prosumer, or independently as a merchant battery within the local market. Local markets open the way to replace central battery control with autonomous power storage systems.

Different storage systems have different participation characteristics; fast or slow charge, fast or slow discharge, switching from charge to discharge, etc. Running a specific storage technology into the wrong participation scenario can degrade the system, or even result in “rapid unplanned energy discharge” (fire and explosions). We need the room to experiment with different strategies for market participation for different storage technologies, or even hybrid storage systems wherein several technologies are working together as a single participant. This experimentation will not happen in a centrally owned, operated, and regulated environment.

Large central markets may try to emulate this by targeting specific prices at specific devices or groups of devices. This attempt at direct control by proxy across neighborhood and region will not work much better than direct control does.

Spontaneous Order on a Continental Scale

A recent conversation about European power markets and some “glitches” in early June shown a light on profound issues in cybersecurity, in system architectures for big infrastructure, and to an extent the scalability problems with many of the hottest applications for the Internet of Things (IOT).

The specific observations was a plea for direct central control, even as it used an example that showed the shortcoming of infrastructure architecture based on assumptions of central control. It then learned the wrong lesson, that spontaneous order is too “risky” at large scale.

>>> Something went wrong on the 6., 12. and 25. June 2019.
>>> The belief in the Market to fix everything ... may end up in a big
>>> blackout.
>>>
>>> Add-On (2019-07-03):
>>> Today I found more details on the likely reason why we were so close
>>> to big trouble:
>>>
>>> "Due to a faulty data package, the European electricity
>>> exchange EPEX in Paris decoupled the European
>>> electricity market on June 7, 2019. This caused a great
>>> deal of excitement on the markets. Johannes Päffgen,
>>> Head of Energy Trading at Next Kraftwerke, explains the
>>> causes and consequences in an interview.
>>>
>>> Christian Sperling: Johannes - What happened? Why
>>> was there so much trouble at EPEX on the Friday before
>>> the Whitsun holidays?
>>>
>>> Johannes Päffgen: Well - in the end it's a computer error...
>>> but we should go into that later. At about 11:40 this Friday
>>> we noticed that something was wrong at EPEX.
>>> We couldn't place any more bids for the day-ahead electricity
>>> auction on Saturday. ..."
>>>
>>> I guess it was a human error ... somebody didn't take into account
>>> that corrupted data packages will be sent and received ... how could
>>> a faulty package have such a dangerous result?!?!
>>>

While Transactive Energy is superficially similar to the way the bulk power markets have long operated, the power of TE is in local markets. The first benefit of TE is to hide the control complexity/diversity of different technologies behind common signaling. The second benefit is to permit diversity of motivation of each participant in the TE market, as those are also hidden behind the common signals. The power of TE is to allow an emergent order to arise, with balancing of supply and demand occurring without respect to technology or control system or personal beliefs.

One can think of TE as embracing that the Knowledge Problem described by Economics applies to the world of things as well, and that we can use markets, i.e., small decisions made by the participants to participate or not at each moment, to solve power availability without central control. The evolution of life on Earth, of language, of the brain, and of a free market economy are considered systems which evolved through spontaneous order. Naturalists often point to the inherent "watch-like" precision of uncultivated ecosystems and to the universe itself as ultimate examples of this phenomenon.

TE implementations must be aligned with the newer methodology of Laminar Control. Mid-level lamina can coordinate lower level nodes, but do not reach in to provide direct controls. Lamina may however share situation awareness, local effects up, wider area conditions down, to improve the decision-making within each. No Lamina requires the situation awareness of the adjacent lamina.

This has important implications for security and for future technological evolution of power systems on the grid. Aside from the very top level, all lamina are discontinuous. The layer that controls one neighborhood is not actually connected to the controls of a nearby neighborhood except through a common higher level lamina.

The loose coupling of component systems based on abstract communications is characterized as an anti-fragile software pattern. Lightly managed systems coordinated by abstract communications create spontaneous order. Spontaneous orders are distinguished as being scale-free networks, as opposed to the hierarchical networks traditionally used in power distribution management. Spontaneous order is defined as the result of actions, not of design.

For anti-fragile patterns to create resilience and stability, their interactions must be properly scoped so at to not create additional dependencies that create fragility. For TE, this means that not only must the market be local, consistent with the grid lamina, but each market must not rely on additional fragile elements. Making local decisions directly dependent on the communications infrastructure and market infrastructure far away, say at EPEX in Paris, reduces grid resiliency and introduces new cybersecurity challenges.

Besides, the grid is not Magic, and one really cannot buy power from Castille in Antwerp absent the power transmission capability to support such local delivery.

The markets of Transactive Energy will work best when they are based on local markets, able to balance not only power but voltage and frequency within the local distribution loop. Another market may use TE in the district, managing flows between the local distribution systems, and, again, not requiring detailed knowledge of what is inside each. Ideally the market for each will be collocated with the nodes and the controls for each.

Loosely coupled systems in organized in an anti-fragile pattern are manage by objectives and for results. They have no need to expose their internal operations or controls. From a security perspective, this greatly reduces potential attack surfaces. From a policy perspective, this reduces barriers to rapid future introduction of new technologies into a system of systems.

ASHRAE finished defining the Facility/Smart Grid Information Model (FSGIM) some years ago to describe what a Facility should know about itself to participate in these distributed local markets (ASHRAE 201). The abstract information model is consistent with the information model of the Transactive Energy market operations. A Facility that knows its FSGIM, is ready to participate in the local market. Local distribution markets can then replace the wasteful statistical and historic models that manage local power delivery today.

From the SCADA Security perspective, this model moves intrinsically toward defense in depth. From a social and organizational level, each market is a move toward liquid democracy as neighborhoods with their own goals interact with the wider grid. From a technology market perspective, this enables more rapid introduction of new technologies, including those of distributed generation and storage.

Profiles for the Economic Actors in Distributed Energy

This post is part of the continuing Paths to Transactive Energy series. You can find them all listed by clicking on the matching metatag at the bottom of each post.

As this series continues its survey of Transactive Energy, we get, at last to what I see are the essential agent personalities. The Agent Personalities are a mid-level abstraction that makes it easier for the appliance supplier and the EMS/BMS maker to know what is being attached. Every appliance at the local store could be a pluripotent transactive agent, but this does not aid the brain-developer in understanding what you just bought. A wine cellar may not be on the list of known appliances, but it is useful to know that it is similar to the refrigerator and to an air conditioner in how it approaches the in-home energy market.

http://www.theenergymashuplab.org/blog/8agents 

These agent types interact based on the principals of transactive energy. The non-power services provided and mechanisms used by each system are not known to the energy market. The precise mechanism of each system is not known to the market. Each system uses the market to achieve its own goals.

The creator of a system can identify which economic best suits the system. Some systems may be most easily represented by aggregate roles, wherein each role remain simple.

For example, an air conditioning system and a refrigerator may each act as intermittent consumers. When in the same market, each system can optimize its own costs by buying when the other does not. The air conditioner produces an equilibrium of comfort, the refrigerator produces an equilibrium of the conditions to store food safely, and the market achieves a punctuated equilibrium of power use with lower peaks. An ice maker may act as a pre-consumer, buying power when it is cheap to have a supply of ice at the target time. A pre-consumer buys when others do not, so long as its delivery time and product (ice) can be met. These two agent types may coexist in a single interface just as the two roles coexist in the same refrigerator.

These agent profiles indicate patterns for market interaction. But the market doesn’t care what kind of agent you are. User interfaces, which is to say human interfaces, that want to augment information beyond market summaries, will need to look for another means to discover that information.

The ASHRAE Facility Smart Grid Info Model (FSGIM) allows for communication of expected forward load curves, I think. A controller needs to know more than a partner’s present state. The partners trading position is Inflexible until when? Shiftable until when, then available for how long? How adjustable (shed levels)? Etc. These are all things that higher-level controllers need to get from lower-level controllers. A higher level controller could pass DR-related signals to lower level controllers: it may choose to alter them for its own purposes.

Profiling Economic Actors for Transactive Energy

This post is part of the continuing Paths to Transactive Energy series. You can find them all listed by clicking on the matching metatag at the bottom of each post. These posts were written because the GridWise Architectural Council's Transactive Energy Conference begins tomorrow.

p>The communications defined in the common transactive services (CTS) can be used by every actor in transactive energy.

The needs of particular environments may require an actor to use different communications profiles. Security needs will be different for different environments. Security standards will change over time. Actors that participate only in small non-critical negotiations where both parties share a common owner may opt for lighter-weight standards to record transactions. These communications requirements will be expressed as profiles. These communications profiles will change over time without changing the fundamental information exchange between each actor.

There is profiling along a different dimension, profiling systems as economic actors, which can assist the system developer, the system integrator, and the system owner. These profiles describe the type of ends the actor has for participating in the market. They help system owner to understand how a new actor will affect the resource market.

Basic business interactions start with knowing who is a supplier, and who is a buyer. A similar distinction might distinguish the wholesaler from the retailer. A buyer approaches the farmer’s market and the supermarket chain differently, even when the goal is fresh produce either way. One is intermittently available in certain locations, one is available on a wide schedule and in many locations. It is useful to the seller to know which he is when designing his business. It is useful for the buyer to know whether transactions will be in cash or by card, and how to find the market location. Although the economic interaction is the same, these economic actor profiles help each market participants to meet his needs.

The purpose of the agents in the home (or in the office) is to enable meta-drivers to reduce complexity. I run windows. And when I plug in a device, and watch closely, I can see a human interface device arriving, being replaced by a pointing device, being replaced by the mouse I am using. My computer quickly drills down past the general to the specific, with specific devices offering specific functions. In the same way, a transactive energy capable device registers with the brain. In my model, it then describes what kind of abstract device it is. In this analogy, it goes as far as the “pointing device” but need not go all the way to device and control specificity.