Microgrids and local markets

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Today’s electricity grids are being challenged by profound changes in operational conditions, shifting from centralized generation, served by transmission and distribution networks, to one with embedded distributed energy resources (DERs). Without appropriate operational and control layers, DERs can impose power quality and stability challenges. Conversely, coordinated and controlled use of DERs can provide substantial benefits for networks such as deferring or avoiding investments in the electricity network, and providing ancillary services. There are currently limited opportunities for DERs to provide these additional benefits to networks, or to be rewarded for providing these benefits. The increasing penetration of DERs aligned with grid digitization are changing electricity grids from a centralized structure to a decentralized one with geographically distributed generation resources. Due to various barriers, it is challenging to design a centralized market that could serve customers in distributed locations. The concept of the local market is an auspicious option to manage DERs locally and to handle local problems associated with the integration of DERs. Microgrids could provide a framework for establishing local markets in order to actively involve prosumers and consumers in a local energy system through financial incentives. The microgrid is a promising approach to help DERs to participate in different markets and to access the value from the services they provide to broader grids. Local markets in microgrids improve microgrid customers’ and operators’ capacity to access the economic values of controlling their distributed energies. This chapter reviews the concept of local markets for microgrids. In particular, different definitions of local markets are reviewed, and benefits and services which can be provided by local market are discussed. Then, three different models for local markets are presented, followed by a discussion on market settlement methods in local markets. Case studies are employed to demonstrate different attributes of local markets. The chapter is concluded with remarks and challenges for microgrids markets that can be explored in future.

Original languageEnglish
Title of host publicationMicrogrids
Subtitle of host publicationAdvances in Operation, Control, and Protection
EditorsAmjad Anvari-Moghaddam, Hamdi Abdi, Behnam Mohammadi-Ivatloo, Nikos Hatziargyriou
Place of PublicationCham Switzerland
Number of pages27
ISBN (Electronic)9783030597504
ISBN (Print)9783030597498
Publication statusPublished - 2021

Publication series

NamePower Systems
ISSN (Print)1612-1287
ISSN (Electronic)1860-4676


  • Business model
  • Flexibility market
  • Local market
  • Market design
  • Market settlement
  • Microgrid energy management
  • Peer-to-Peer trading
  • Virtual bidding

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