Development of Optimum Pricing Strategy for Energy Sharing in a Smart Community Microgrid

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ELECTRICAL ENGINEERING
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Table of Contents

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Executive summary...............................................................................................................................................................................3
CHAPTER 1.........................................................................................................................................................................................4
Introduction............................................................................................................................................................................................4
1.1 Background......................................................................................................................................................................................4
1.2 Study objectives...............................................................................................................................................................................5
1.3 Scope of the project.........................................................................................................................................................................6
1.4 Organisation of the report................................................................................................................................................................6
CHAPTER 2.........................................................................................................................................................................................8
Literature review....................................................................................................................................................................................8
2.1 Smart Grids......................................................................................................................................................................................8
2.2 Microgrids......................................................................................................................................................................................10
2.3 Energy sharing scenario in microgrid............................................................................................................................................13
2.4 Benefits of energy sharing in smart microgrid..............................................................................................................................14
2.5 Auction based pricing strategy for energy sharing........................................................................................................................14

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CHAPTER 3.......................................................................................................................................................................................17
Methodology........................................................................................................................................................................................17
3.1 Case studies...................................................................................................................................................................................17
3.2 Secondary sources.........................................................................................................................................................................18
3.3 Game Theory.................................................................................................................................................................................18
3.4 System Model................................................................................................................................................................................19
CHAPTER 4.......................................................................................................................................................................................21
Results & Discussions.........................................................................................................................................................................21
CHAPTER 5.......................................................................................................................................................................................27
Concluding remarks.............................................................................................................................................................................27
CHAPTER 6.......................................................................................................................................................................................29
References............................................................................................................................................................................................29
Appendices..........................................................................................................................................................................................31

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Executive summary
With the rapid increase in installation and demand of energy, many power consumers have been forced to become prosumers who
can both consume and generate energy. This study primary focuses on the Development of optimum pricing strategy for energy
sharing in a smart community Micro grid. Targets such as energy conservation, demand response, reduction of carbon footprint,
improved reliability, high penetration of renewable sources of energy and improving efficiency cannot be solved by using the
existing conventional electricity grid, this has called for the modernization of the convention power grid system to the modern
smart grid systems where ICT plays a significant role. Microgrid refers to a set of loads for households, distributed energy
resources (e.g. solar panels), and possibly an Energy storage System such as batteries, operating as a single controlled system
which provides power energy to its local area. The main advantages of sharing energy are: Saves money for those who buy the
excess energy from the prosumers, the tariff rates of the prosumers tends to be much lower as compared to those of main grid.
There are no middlemen who are involved in the trade, thus the consumers and prosumers can be able to carry out their business
on their own terms.

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CHAPTER 1
Introduction
1.1 Background
Increasing demands of energy, diminishing of fossil fuels and climate change have led to essential changes in the production,
distribution and consumption of electricity. This has called for the modernization of the convention power grid system to the
modern smart grid systems where Information and Communication Technology plays a significant role.
The Smartgrid is considered as an intelligent power grid and it is expected to solve the major challenges which are experienced in
the conventional grid. It is designed in a way to ensure a two-way flow of information and electricity between the power plants
and the appliances. It is required to enable resilient and adaptive operations at the same time and Self-healing.
The smart grid should offer full pervasive and visibility control over the system functions and components. They are considered as
the major component of sustainable smart communities and cities, thus opening a wide spectrum of modern technologies and
business models in order to improve energy efficiency and reduce the climate impact.
With the rapid increase installation of distribution generation at the demand side, many of the power consumers have been forced
to become prosumers who can both consume and generate energy. The high level of penetration by the renewable energies in the
power market may cause severe problems to the power systems (Alpcan, 2017, p. 76). Hence, to facilitate the self-consumption

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of the locally generated energy, the export price at which the electricity is sold by the prosumers to the utility grid should be
designed to be lower than the retail price at which they buy the electricity. This offers the major motivation for the prosumers to
share their surplus energy with the neighbour rather than feeding the electricity back to the utility grid. The tariff rates of the feed-
in in many countries are very low which strengthens the incentives. Encouraged by the demand, many projects have been initiated
by manufactures, utilities and high tech start-ups in various parts of the world such as Vandebron in Netherlands, Puclo in United
Kingdom, Mosaic and Yahola in the United States and Sonnen Community in Germany.
Established regional and national platforms which support energy sharing between the prosumers have developed projects like
Smart Watts and Peer Energy Cloud in Germany mainly to focus on the communications and information technologies which
support the incentives of sharing energy (Basar, 2016, p. 136). Also there are some projects like Trans Active grid in the United
States which creates decentralised energy sharing platforms based on the block chain technology.
1.2 Study objectives
The main aim of this study was to develop an energy sharing platform for a residential neighbourhood with different energy
portfolio in order to strengthen the incentive of energy sharing in various parts of the world. In order to achieve the aim of study, a
number of study objectives were set and they included:
1. To evaluate the economic benefits associate with energy sharing
2. To review the energy sharing scenarios in a smart community microgrid

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3. To come up with a pricing technique for energy sharing
1.3 Scope of the project
This study primary focuses on the Development of optimum pricing strategy for energy sharing in a smart community Micro grid.
The study will involve the literature review of the of the energy sharing in smart community micro grid, Reviewing the various
existing theories ,models and working principles, regarding to the energy sharing. Recording the findings from the models and
theories which were analysed for discussions. The materials which will be reviewed will include Books, Journals and other
publications containing relevant information regarding the study topic. The study will be restricted to the study of energy sharing
in a smart community Micro grid and therefore any other information outside the study topic will be irrelevant.
The study will involve:
 Developing an energy sharing platform for a residential neighbourhood with different energy portfolio.
 Develop pricing techniques for the energy sharing
 Analysis economic properties of energy sharing.
 Analysis the energy sharing scenarios in a smart community microgrid

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1.4 Organisation of the report
This study report contains the following sections:
Chapter 1: Introductions, which contains the background information about energy sharing in a smart community microgrid.
Chapter 2: Literature review, contains the summary of previous studies which have been conducted
Chapter 3: Methodology, discusses the working principles of energy sharing, mathematical models and other sources of data.
Chapter 4: Results, in this section the finding of the study are outlined and well presented
Chapter 5: Discussion, in this section the results are discussed and analysed to come up with a conclusion of the study.
Chapter 6: Concluding remarks, in this section the summary of the entire project is given and the recommendation for the future
project are also discussed.
Chapter 7: References, this section contains all the materials which date was referred from and they include books, Journals and
other publications.