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From demand response to transactive energy

From demand response to transactive energyby Chen-Ching Liu

Demand response programs incentivize consumers to align their demand with power supply conditions, enhancing power system reliability and economic operation. Although significant progress has been made in demand response, there are barriers to overcome to enhance its performance. In addition, the power grids are undergoing a transformation that requires demand response to adapt.

Transactive energy has been proposed as a promising solution that goes beyond demand response. It utilizes the flexibility of various generation/load resources to maintain a dynamic balance of supply and demand. These distributed resources are controlled by their owners, while the design of transaction mechanisms should align the individual behaviors with the interests of the entire system. Transactive energy features real-time, autonomous, and decentralized decision making. Potential benefits that transactive energy is expected to deliver include: (a) optimizing the use of distributed energy resources; (b) improving power system efficiency and reliability; (c) reducing the requirements for capacities and spinning reserves to address generation/load uncertainties; (d) creating a fair and transparent platform to allow all resources to transact.

However, there are also challenges that stakeholders should consider (a) Technology. What is the current level of automation for energy management devices and appliances? Are they ready for deployment, reliable and affordable? (b) Scalability. Can a distributed platform function well when the number of smart devices in the distribution system increases significantly? (c) System management. As a highly centralized control system moves toward a more decentralized system, what is the mechanism for oversight and governance of such a platform? The emerging technology of blockchain is perceived as a promising platform for transactive energy due to its decentralization, cybersecurity, and transparency. Can a blockchain platform manage problems such as congestion, power quality, and reliability? (d) Consumer behavior. Is transactive energy empowering consumers or making their lives more complicated? How can one prepare consumers for this new concept? How can consumers derive values from this platform so they are willing to participate? All these questions are crucial for the transition from conventional demand response to transactive energy.

Our open access article "From demand response to transactive energy: state of the art" published in the Journal of Modern Power Systems and Clean Energy reviews this emerging topic in more depth. 

Prof Chen-Ching LIUChen-Ching Liu

Boeing Distinguished Professor of Electrical Engineeering
Director, Energy Systems and Innovation Center (ESIC)

Washington State University, Pullman, USA