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We propose an operating envelopes (OEs) aware energy community market mechanism that dynamically charges/rewards its members based on two-part pricing. The OEs are imposed exogenously by a regulated distribution system operator (DSO) on the energy community's revenue meter that is subject to a generalized net energy metering (NEM) tariff design. By formulating the interaction of the community manager and its members as a Stackelberg game, we show that the proposed two-part pricing achieves a Nash equilibrium and maximizes the community's social welfare in a decentralized fashion while ensuring that the community's operation abides by the OEs. The market mechanism conforms with the cost-causation principle and guarantees community members a surplus level no less than their maximum surplus when they autonomously face the DSO. The dynamic and uniform community price is a monotonically decreasing function of the community's aggregate renewable generation. We also analyze the impact of exogenous parameters such as NEM rates and OEs on the value of joining the community. Lastly, through numerical studies, we showcase the community's welfare, pricing, and compare its members' surplus to customers under the DSO and other OEs arrangements., Comment: 18 pages, 7 figures

The proliferation of behind-the-meter (BTM) distributed energy resources (DER) within the electrical distribution network presents significant supply and demand flexibilities, but also introduces operational challenges such as voltage spikes and reverse power flows. In response, this paper proposes a network-aware dynamic pricing framework tailored for energy-sharing coalitions that aggregate small, but ubiquitous, BTM DER downstream of a distribution system operator's (DSO) revenue meter that adopts a generic net energy metering (NEM) tariff. By formulating a Stackelberg game between the energy-sharing market leader and its prosumers, we show that the dynamic pricing policy induces the prosumers toward a network-safe operation and decentrally maximizes the energy-sharing social welfare. The dynamic pricing mechanism involves a combination of a locational {\em ex-ante} dynamic price and an {\em ex-post} allocation, both of which are functions of the energy sharing's BTM DER. The {\em ex-post} allocation is proportionate to the price differential between the DSO NEM price and the energy sharing locational price. Simulation results using real DER data and the IEEE 13-bus test systems illustrate the dynamic nature of network-aware pricing at each bus, and its impact on voltage., Comment: 10 pages, 3 figures

We analyze the overall benefits of an energy community cooperative game under which distributed energy resources (DER) are shared behind a regulated distribution utility meter under a general net energy metering (NEM) tariff. Two community DER scheduling algorithms are examined. The first is a community with centrally controlled DER, whereas the second is decentralized letting its members schedule their own DER locally. For both communities, we prove that the cooperative game's value function is superadditive, hence the grand coalition achieves the highest welfare. We also prove the balancedness of the cooperative game under the two DER scheduling algorithms, which means that there is a welfare re-distribution scheme that de-incentivizes players from leaving the grand coalition to form smaller ones. Lastly, we present five ex-post and an ex-ante welfare re-distribution mechanisms and evaluate them in simulation, in addition to investigating the performance of various community sizes under the two DER scheduling algorithms., Comment: 8 pages

We propose an operating-envelope-aware, prosumer-centric, and efficient energy community that aggregates individual and shared community distributed energy resources and transacts with a regulated distribution system operator (DSO) under a generalized net energy metering tariff design. To ensure safe network operation, the DSO imposes dynamic export and import limits, known as dynamic operating envelopes, on end-users' revenue meters. Given the operating envelopes, we propose an incentive-aligned community pricing mechanism under which the decentralized optimization of community members' benefit implies the optimization of overall community welfare. The proposed pricing mechanism satisfies the cost-causation principle and ensures the stability of the energy community in a coalition game setting. Numerical examples provide insights into the characteristics of the proposed pricing mechanism and quantitative measures of its performance., Comment: 22 pages, 5 figures, 1 table. Presented at the 59th Annual Allerton Conference on Communication, Control, and Computing, Monticello, IL, Sep., 2023

We consider the aggregation of distributed energy resources (DERs) by a profit-seeking DER aggregator (DERA), participating directly in the wholesale electricity market. We propose a competitive DER aggregation that maximizes the DERA's profit subject to that each customer of the DERA gains no less surplus and pays no higher energy cost than that under the regulated retail tariff. The DERA participates in the wholesale electricity market as virtual storage with optimized generation offers and consumption bids derived from the DERA's competitive aggregation. Also derived are DERA's bid curves for the distribution network access. We show that, with sufficiently high network access, the proposed DERA's wholesale market participation achieves the same welfare-maximizing outcome as when its customers participate directly in the wholesale electricity market. Numerical studies compare the proposed competitive DER aggregation with existing benchmarks on surpluses of DERA's customers, DERA profits, and the overall social welfare as functions of the DER adoption level in the distribution system., Comment: 14 pages, 7 figures

We propose a social welfare maximizing market mechanism for an energy community that aggregates individual and community-shared energy resources under a general net energy metering (NEM) policy. Referred to as Dynamic NEM (D-NEM), the proposed mechanism dynamically sets the community NEM prices based on aggregated community resources, including flexible consumption, storage, and renewable generation. D-NEM guarantees a higher benefit to each community member than possible outside the community, and no sub-communities would be better off departing from its parent community. D-NEM aligns each member's incentive with that of the community such that each member maximizing individual surplus under D-NEM results in maximum community social welfare. Empirical studies compare the proposed mechanism with existing benchmarks, demonstrating its welfare benefits, operational characteristics, and responsiveness to NEM rates., Comment: 19 pages, 7 figures, 2 tables. arXiv admin note: text overlap with arXiv:2211.09360. Accepted for publication at the IEEE Transactions on Energy Markets, Policy and Regulation

We consider the problem of co-optimizing behind-the-meter (BTM) storage and flexible demands with BTM stochastic renewable generation. Under a generalized net energy metering (NEM) policy-NEM X, we show that the optimal co-optimization policy schedules the flexible demands based on a load priority list that defers less prioritized loads to times when the BTM generation is abundant. This gives rise to the notion of a net-zero zone, which we quantify under different distributed energy resources (DER) compositions. We highlight the special case of inflexible demands that results in a storage policy that minimizes the imports and exports from and to the grid. Comparative statics are provided on the optimal co-optimization policy. Simulations using real residential data show the surplus gains of various customers under different DER compositions., Comment: 8 pages, 4 figures, 4 tables

We propose a social welfare maximizing mechanism for an energy community that aggregates individual and shared community resources under a general net energy metering (NEM) policy. Referred to as Dynamic NEM, the proposed mechanism adopts the standard NEM tariff model and sets NEM prices dynamically based on the total shared renewables within the community. We show that Dynamic NEM guarantees a higher benefit to each community member than possible outside the community. We further show that Dynamic NEM aligns the individual member's incentive with that of the overall community; each member optimizing individual surplus under Dynamic NEM results in maximum community's social welfare. Dynamic NEM is also shown to satisfy the cost-causation principle. Empirical studies using real data on a hypothetical energy community demonstrate the benefits to community members and grid operators., Comment: 9 pages, 5 figures

The co-optimization of behind-the-meter distributed energy resources is considered for prosumers under the net energy metering tariff. The distributed energy resources considered include renewable generations, flexible demands, and battery energy storage systems. An energy management system co-optimizes the consumptions and battery storage based on locally available stochastic renewables by solving a stochastic dynamic program that maximizes the expected operation surplus. To circumvent the exponential complexity of the dynamic program solution, we propose a closed-form and linear computation complexity co-optimization algorithm based on a relaxation-projection approach to a constrained stochastic dynamic program. Sufficient conditions for optimality for the proposed solution are obtained. Numerical studies demonstrate orders of magnitude reduction of computation costs and significantly reduced optimality gap., Comment: 20 pages, 8 figures, 2 tables

The problem of the large-scale aggregation of the behind-the-meter demand and generation resources by a distributed-energy-resource aggregator (DERA) is considered. As a profit-seeking wholesale market participant, a DERA maximizes its profit while providing competitive services to its customers with higher consumer/prosumer surpluses than those offered by the distribution utilities or community choice aggregators. A constrained profit maximization program for aggregating behind-the-meter generation and consumption resources is formulated, from which payment functions for the behind-the-meter consumptions and generations are derived. Also obtained are DERA's bid and offer curves for its participation in the wholesale energy market and the optimal schedule of behind-the-meter resources. It is shown that the proposed DERA's aggregation model can achieve market efficiency equivalent to that when its customers participate individually directly in the wholesale market., Comment: 9 pages, 3 figures

The rapid growth of the behind-the-meter (BTM) distributed generation has led to initiatives to reform the net energy metering (NEM) policies to address pressing concerns of rising electricity bills, fairness of cost allocation, and the long-term growth of distributed energy resources. This article presents an analytical framework for the optimal prosumer consumption decision using an inclusive NEM X tariff model that covers existing and proposed NEM tariff designs. The structure of the optimal consumption policy lends itself to near closed-form optimal solutions suitable for practical energy management systems that are responsive to stochastic BTM generation and dynamic pricing. The short and long-run performance of NEM and feed-in tariffs (FiT) are considered under a sequential rate-setting decision process. Also presented are numerical results that characterize social welfare distributions, cross-subsidies, and long-run solar adoption performance for selected NEM and FiT policy designs., Comment: 20 pages, 11 figures, 6 tables

We introduce NEM X, an inclusive retail tariff model that captures features of existing net energy metering (NEM) policies. It is shown that the optimal prosumer decision has three modes: (a) the net-consuming mode where the prosumer consumes more than its behind-the-meter distributed energy resource (DER) production when the DER production is below a predetermined lower threshold, (b) the net-producing mode where the prosumer consumes less than its DER production when the DER production is above a predetermined upper threshold, and (c) the net-zero energy mode where the prosumer's consumption matches to its DER generation when its DER production is between the lower and upper thresholds. Both thresholds are obtained in closed-form. Next, we analyze the regulator's rate-setting process that determines NEM X parameters such as retail/sell rates, fixed charges, and price differentials in time-of-use tariffs' on and off-peak periods. A stochastic Ramsey pricing program that maximizes social welfare subject to the revenue break-even constraint for the regulated utility is formulated. Performance of several NEM X policies is evaluated using real and synthetic data to illuminate impacts of NEM policy designs on social welfare, cross-subsidies of prosumers by consumers, and payback time of DER investments that affect long-run DER adoptions., Comment: 14 pages, 6 figures, 3 tables

Load points are one of the most vital parts of power systems. Due to the new load forms and programs introduced in the demand side, the load-serving entities (LSEs) no longer deal with lump loads, but rather with more dynamic, rational and price elastic loads. The high inter-temporal and behavioral variability of the load profile makes it almost impossible for utilities and system operators to expect the demand curve with the needed accuracy. A sound granularity of the load compositions and consumption percentages and patterns throughout the year is essential for avoiding energy losses, designing demand-side management programs, and ensuring proper adjustments of electricity rates. In this paper, a simplistic model that can be followed by system operators to initially understand the customers' consumption pattern and the household load structure is proposed. A top-down approach is combined and matched with a detailed bottom-up one, to extract load compositions and percentages. Real and local load profiles integrated with household statistical data such as device time of use (ToU), number of device units per house, and activities exercised in households are all included in the model. The main results of the paper show the load composition in residential demand and the percentage of such composition under seasonal-based scenarios., Comment: 6 pages, 6 figures