Bidding in Local Electricity Markets Considering Low Voltage Grid Constraints

Local electricity markets give end-users the ability to trade electricity at the distribution level. However, distributed energy transactions can threaten the correct operation and stability of the grid. This article proposes a local market framework and analyzes the impact of local energy transactions on the grid. A distribution system operator is considered, calculating the power losses and voltage limit violations after the LEM is cleared. The framework is validated considering 55 users and 6 strategic bidders trading energy in a low voltage grid. Results show an improvement in costs and incomes for market participants and network operation when the islanded LEM is considered. Counter intuitively, selecting a plain tariff improves local generation guaranteeing smooth grid operation and energy transactions but affecting consumers’ costs. These findings show that more scrutiny of results is needed when several participants with different objectives, including the network operator, are considered in local electricity markets.