Transactive Energy

This book is about transactive energy (TE) and its role in achieving California’s goal of 100 percent clean energy and electrification of buildings and transportation. It describes how TE works, the RATES project, and the TE roadmap for California. The authors are pioneers in the development of the modern electric power system. Stephen Barrager and Edward Cazalet have made groundbreaking contributions to electric power research and development.

TE allows for fully decentralized real-time buying and selling of renewable energy, directly placing control of energy transactions in the hands of individual energy producers and consumers.

TE retail markets enable all parties – customers, solar and storage operators, utilities, and comm.unity choice aggregators – to buy and sell electricity with each other. Transactions can be in real time or days, months, or years ahead (forward) of actual energy generation and use. Real-time transactions coordinate the operation of distributed generation, storage, customer devices and central generation. Forward transactions put distributed and central investment decisions on a level playing field and reduce risk.

The California Energy Commission sponsored a pilot of the TE approach in 2018. The RATES project proved that TE is eminently feasible and low cost

This book is about applying fundamental business concepts to move our electric power markets to a new paradigm. The heart of the new paradigm is the use of forward and spot transactions to guide investment and operating decisions. The current paradigm is regulated cost-of-service and centralized resource optimization. This old paradigm will gradually give way to the new model as the electric system evolves from centrally planned to a decentralized energy ecosystem.

The new business and regulatory model, Transactive Energy (TE), scales well. It can coordinate decisions across the full spectrum of size and technology. It works equally well for central power-plant planning and for smart home-appliance operation. It supports both competitive pricing and cost-of-service pricing.

The TE model embodies four big ideas:

1. There are two products: energy and transport services.
2. Forward transactions are used to manage risk and coordinate investment decisions.
3. Spot transactions are used to coordinate operating decisions.
4. All parties act autonomously.