Opportunities Evaluated for Local Energy Markets to Expand Deployment of Renewables, Stabilize the Grid, and Increase ROI
Regulators and utilities should consider LEMs to assist with grid stabilization, increased flexibility to integrate more DER, and energy cost reductions for customers and DER owners
A new report from Guidehouse Insights reviews LEM functionality and describes opportunities for using local energy markets (LEMs) to provide greater grid flexibility, facilitate increased integration of DER, and help investors increase ROI.
A LEM is a geographically constrained, automated platform for trading electricity. The market platform is composed of physically proximate consumers and producers of electricity—prosumers—who trade and consume locally-produced energy from distributed energy resources (DER) using the existing distribution network.
The increased utilization of battery energy storage systems significantly reduces grid exports and imports. In turn, storage substantially reduces the number of transactions between the LEM and the distribution network, contributing to enhanced grid stability. According to a new report from Guidehouse Insights, LEMs could potentially contribute to greater grid flexibility, helping to facilitate increased integration of DER into retail and wholesale markets and can maximize ROI by eliminating or deferring CAPEX for major system upgrades and increasing the capacity of renewable resources that networks can integrate.
“LEMs optimize the efficient use of distribution infrastructure and when strategically deployed, can reduce phase imbalances and voltage instability,” says Julia Benz, research analyst with Guidehouse Insights. “Regulators and utilities should consider LEMs to assist with grid stabilization, increased flexibility to integrate more DER, and energy cost reductions for customers and DER owners. They should also ensure that LEMs permit peer-to-peer trading of demand response resources.”
Further integration of DER raises important challenges to grid stability and may limit the number of renewable resources distribution networks can safely interconnect. Guidehouse Insights recommends that aggregators should support LEMs to address distribution grid contingencies.
The report, Local Energy Markets Can Expand Deployment of Renewables, Stabilize the Grid, and Increase ROI, reviews LEM functionality and describes opportunities for using LEMs to provide greater grid flexibility, facilitate increased integration of DER, and help investors realize greater ROI. An executive summary of the report is available for free download on the Guidehouse Insights website.
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*The information contained in this press release concerning the report, Local Energy Markets Can Expand Deployment of Renewables, Stabilize the Grid, and Increase ROI, summary and reflects the current expectations of Guidehouse Insights based on market data and trend analysis. Market predictions and expectations are inherently uncertain and actual results may differ materially from those contained in this press release or the report. Please refer to the full report for a complete understanding of the assumptions underlying the report’s conclusions and the methodologies used to create the report. Neither Guidehouse Insights nor Guidehouse undertakes any obligation to update any of the information contained in this press release or the report.