Transactive Energy Implementation Challenges

Increased demands on the electricity grid pose a significant threat to the energy system—particularly as climate disasters occur with greater frequency. Proper energy management must take this into account. With high demand and a need to adapt power grids to a changing world, transactive energy establishes itself as an important solution.

Still, evolving the smart grid and implementing transactive energy poses many challenges. While an understanding of transactive energy may paint it as the strongest solution, some barriers to widespread implementation still exist. In order to establish a decentralized power grid, it is important to first comprehend the difficulties of implementing a transactive energy system.


Model Simulations for Transactive Energy

Before developers and policymakers implement transactive energy, understanding the potential of this technology is essential. By utilizing model simulations, researchers can better assess the impact of transactive energy on the grid.

What Model Simulations Show About Transactive Energy

Between 2015 and 2018, the National Institute of Standards and Technology (NIST) ran a Transactive Energy Modeling and Simulation Challenge. This challenge aimed to identify the way modeling could improve transactive energy, raise awareness of any benefits, and apply any knowledge to future transactive energy demonstrations. By examining the ways weather may impact a distribution grid, the researchers could examine the efficacy of transactive energy. Overall, the results from the simulations indicated that transactive energy improved grid operation, though these results varied.

How Model Simulations Expose Challenges for Transactive Energy

While all of the model simulations performed in the challenge resulted in improved grid operation, their findings differed in several areas. These points of variation included voltage violations, customer comfort, power flows and losses, and other key measures. Additionally, there are various ways to implement transactive energy, each of which comes with a unique set of implementation challenges. The results of these simulations, though promising, highlight a need for further theoretical development before implementation.


Primary Adoption Barriers to Transactive Energy

Transactive energy may offer a pathway to individual participation and dynamic pricing within the electric power system, but several barriers stand in the way of widespread adoption.

Technological Barriers

Many of the barriers to transactive energy adoption relate to technological capabilities. These barriers include data latency, issues with co-simulation accuracy, and the interoperability standards for devices.

Within the existing electrical grid, efficient usage of energy requires incredibly quick and accurate transmission of data. Significant data latency between supply and demand can be costly, and with transactive energy, this is especially true. For transactive energy to be efficient, the flow of information must be as close to real-time as possible.

In the same way, interoperability of the network is essential to allow parties to communicate levels of energy generation and consumption. Developing an interoperable system with minimal data latency can make a transactive energy framework possible.

Industry Barriers

Transactive energy may be a boon for grid functionality, consumers, and society, but some stakeholders may not be as open to the concept. With the traditional grid system, electric companies require an immense fixed cost to develop power generation and power lines. Adaptation to energy needs has included upgrades to this grid over time. However, traditional electric companies may see less incentive to introduce a transactive energy framework and allow consumers to be involved in the energy market. They’ve already spent money on the current framework and would need to make further investments for transactive energy.

In abandoning the traditional model, electric companies may incur stranded assets and less profitability. As key players in the energy industry, this could pose a barrier to the widespread implementation of transactive energy.

Economic Barriers

With transactive energy, the connected devices make decisions based on economic incentives, allowing for real-time transactions. Some fear that real-time pricing may benefit larger corporations as opposed to residential consumers because of the variation of energy consumption. In addition, the financing risk of implementing distributed transactive energy resources is relatively high, requiring both financial and time investments.

Security Barriers

The multitude of digital devices in a transactive energy network means that assets could be vulnerable to attacks, requiring strong security. A cybercriminal can manipulate energy requests, take excess power, and hamper transactions with false data. The risk of security breaches may lower trust in the distribution network and create a barrier to implementation.


Location Requirements for Transactive Energy Frameworks

Participants looking to engage in a transactive energy system must make several important considerations. Location can impact the implementation of transactive energy frameworks and should factor into any plans for updating the electrical grid.

Location Requirements for Transactive Energy

While there are many ways for consumers to generate power, location can affect their participation in a transactive framework in several different ways. Technological capacity, as previously indicated, can be a barrier. Additionally, location can impact the value of energy and potentially remove the incentives for transactive energy adoption. Finally, different areas may have different policies in effect, which can also impact adoption.

For a transactive energy framework to yield positive results, participants need incentives to engage in the market. Much of this incentive comes in the form of financial benefit. Energy users would save money by using less electricity when prices are high and more when they are low. They would then redistribute generated energy to those in need for a profit. In locations where potential savings are high and regulations allow for redistribution, transactive energy is much a more likely to have a positive impact.

How Location Requirements Constrain Implementation Efforts

In order to engage in a transactive energy market, participants must use a distributed energy resource (DER). A DER is the small-scale unit of power generation that is essential for a decentralized energy model. For distribution systems, DERs will be located at a specific point on the grid, which can affect its locational value.

Additionally, the price of energy itself varies moment to moment and by location based on local grid needs. Prices may fluctuate based on the availability of power plants and fuels, local fuel costs, and pricing regulations. In areas where the price of energy or the locational value of DERs are low, participants have less incentive to engage with transactive energy.

For a transactive energy market to be effective, reliable pricing signals are necessary to establish the market. Line capacity constraints can impact the pricing signal, which incentivizes participation in the transactive energy framework. Depending on the physical location of the consumers in the network, line capacity will vary and potentially impact adoption.

How to Expand Location Requirements for Transactive Energy

The potential locational restrictions on transactive energy implementation can be mitigated in a few ways. The primary methods include increasing technological capacities and implementing policies that favor transactive energy.

Improved technology like smart appliances allow potential participants to engage in the transactive energy market, no matter their location. They correspond directly with the grid to determine the necessary amount of energy to use.

Local legislation that prioritizes smart energy solutions will make it easier to overcome barriers to implementation, particularly when they come from within the industry.


Demands on Transactive Energy

Though the implementation of transactive energy involves many challenges, the prospective benefits are likely to outweigh them. Transactive energy has the potential to help with current and future energy demands.

How Transactive Energy Handles Current Energy Demands

Transactive energy decentralizes both energy production and the balance of the grid. Any home or building will correspond with the smart grid to determine the best amount of energy to use using dynamic pricing. For example, the grid will inform a building to use less energy during peak demand periods when the grid is stressed. Conversely, the building will use more energy when demand—and prices—are lower.

With the aid of smart meter systems, energy consumers can have confidence. They can rest easy in the knowledge that their home or business will only use the necessary amount of energy at the lowest price point.

The Impact of Climate Change on Transactive Energy Demands

Extreme weather events already pose significant challenges to the existing electric power grid. The advancement of climate change has led to increased occurrences of events such as hurricanes, droughts, and cold snaps destabilizing the electric grid. Due to the current centralized nature of electrical grids, this can result in widespread power outages, endangering those who live in affected regions. This is especially true if the electrical grid in a region finds itself unprepared for power demands caused by extreme weather events.

The implementation of a transactive energy system may alleviate these issues. First, the transactive energy system utilities can signal consumers to adjust energy usage while the grid is stressed and prices are high. Second, the decentralized energy system is less vulnerable to external threats. Finally, transactive energy can provide the tools to accommodate more renewable energy, which can have long-term impacts on the advance of climate change.

Addressing the Challenges of Energy Demand for Transactive Energy

A transactive energy approach to handling energy demands could potentially yield several benefits to consumers and society, but not without some challenges. In NIST’s Transactive Energy Modeling and Simulation Challenge, which simulated weather events, challenge participants still found potential issues as the transactive energy framework coped with simulated incidents. Improved technology to improve communication throughout the system can alleviate this issue, but as extreme weather events increase, quicker implementation of the framework may be necessary.


System Readiness for Implementing Transactive Energy

Though some noteworthy barriers to implementing transactive energy exist, implementing this framework holds great potential. To cross the final hurdle and begin adoption, we must first determine the readiness of current systems to integrate the new model.

Systems to Update Before Implementing Transactive Energy

System readiness refers to the ability to integrate transactive energy into the existing electrical system. At the moment, transactive energy has not achieved true implementation. However, experiments simulating the framework in the real world indicate both user and system readiness as challenges.

Some technical barriers highlighted in experiments included home technology such as internet connectivity problems and technical limitations of the previously installed smart meter for real-time, two-way communication. Other barriers included homes with multiple thermostats, thermostat locations lacking Wi-Fi communication, combined heating and air conditioning ventilating systems, and equipment compatibility with the real-time pricing system. These issues, along with a lack of user preparedness for this technology, indicate potential difficulties with future implementation efforts.

Resources Required to Upgrade Systems

Given the issues in system readiness, an increase in educational materials stands as the most important effort required to upgrade these. Beyond this, the average home requires upgraded infrastructure to allow the average energy consumer to participate in this market. Without these efforts, a transactive energy framework will fail to achieve successful implementation.


Find the Best Ways to Address Transactive Energy Implementation Challenges

An understanding of the transactive energy concept teaches the benefits of decentralized energy sources. With the rising threat of climate change impacting grid reliability, transactive energy proves itself as a vital solution, even with the challenges to implementation. To learn more about the importance of distributed generation across the electrical grid, read this informative paper from IEEE.

Interested in learning more about transactive energy implementation challenges? Get involved with IEEE Blockchain-Enabled Transactive Energy (BCTE). This program is series of regionally diverse virtual forums addressing Blockchain-enabled transactive energy in the domain of electrical power and energy application development. To learn more about IEEE Blockchain, join the IEEE Blockchain Technical Community to stay informed of latest activities.