Local energy management: A base model for the optimization of virtual economic units

Benjamin Hildebrandt, Johann Hurink and Michael Manitz

Energy Economics, 2024, vol. 129, issue C

Abstract: As non-renewable resources are limited and the overall CO2 emissions need to be reduced drastically, there is an increasing need in making the energy supply more sustainable. This leads to a needed change in the traditional energy system, in which decentralized local energy resources must be better integrated. In order to face the challenges for a future energy management, the consideration of the domestic level is gaining more attention. In this paper, we aim to get insights into the potential value of local cooperations and focus on economic and control issues as to whether and how the domestic level can participate in upcoming solutions. We introduce a possible setup for a virtual economic unit representing a hybrid cooperation of domestic energy participants, whereby the objective of this cooperation is to realize the maximum possible savings for the community with specified individual contracts between the participants and assuming that participants continue to have additional contracts with their energy service provider. We propose a deterministic linear optimization model for determining optimal energy load profiles of the participants with the external suppliers and energy exchange between participants in a virtual economic unit. To efficiently solve this model and get an exact assignment of supply and demand, we present a maximum saving flow algorithm taking into account the underlying bipartite structure of this problem. The solution achieved is specified as a peer-to-peer allocation between the participants involved and provides insights into the aspects that determine the concrete assignment. It also has the advantage of leading to a robust solution within the collaboration case studies for a basic set-up demonstrate the impact of this approach on the economic potential of aggregating local generation and demand at the same time.

Keywords: Energy decentralization; Peer-to-peer energy exchange; Local energy management; Renewable energy; OR in Energy; Mathematical methods (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:129:y:2024:i:c:s0140988323007508

DOI: 10.1016/j.eneco.2023.107252

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