Market-Clearing Mechanism for Demand Aggregation at the distribution level through Transactive Energy

Demand aggregators work as service providers for both demand- and supply-side agents. Thus, they can add value to all the electric sector and link solutions across the complete power systems infrastructure. However, their implementation faces challenges related to outdated regulatory and market frameworks and customers’ uninterest. Indeed, the traditional hierarchical grid structure, which considers consumers as passive agents, does not incentivize the appearance of demand aggregators. This condition is currently changing due to Transactive Energy (TE) mechanisms that empower customers to contribute to grid management. Therefore, TE could be the appropriate environment to incentive demand aggregators to provide their services. In this context, the present paper analyzes a market-clearing mechanism in local distribution markets for demand aggregators to benefit from TE features coordinating flexible residential resources. The proposed configuration is a Stackelberg game where the aggregator parametrizes the residential demand to formulate an optimal pricing strategy. Simulations of the transactions show the feasibility of using an approximate model to parametrize and flatten the aggregated demand.