SPRING 2014 MEMBERS MEETING !MAY 5-8, 2014 ⏐ DENVER, COLORADO

Transactive Energy A Sustainable

Business and Regulatory Model for Electricity

!!

Ed Cazalet

SPRING 2014 MEMBERS MEETING !MAY 5-8, 2014 ⏐ DENVER, COLORADO © 2014 Baker Street Publishing, LLC.  All Rights Reserved.

The Transactive Energy business model.

Forward transactions are used to !coordinate investments and manage risk.

There are two products: energy and transport.

Spot transactions are used to !coordinate operating decisions.

All parties act autonomously.

SPRING 2014 MEMBERS MEETING !MAY 5-8, 2014 ⏐ DENVER, COLORADO © 2014 Baker Street Publishing, LLC.  All Rights Reserved.

The Transactive Energy process is straightforward. There are tenders and transactions. There are two kinds: “forward” and “spot.”

SPRING 2014 MEMBERS MEETING !MAY 5-8, 2014 ⏐ DENVER, COLORADO © 2014 Baker Street Publishing, LLC.  All Rights Reserved.

There are two products: electric energy and transport.

Electric energy (produced at a place and time)

Transport Electric energy (delivered at a different place and same time)

SPRING 2014 MEMBERS MEETING !MAY 5-8, 2014 ⏐ DENVER, COLORADO © 2014 Baker Street Publishing, LLC.  All Rights Reserved.

Here’s an example of how Transactive Energy works for a consumer.

My energy management system (EMS) automates this process for both energy and transport.

• Based on my typical usage, I automatically transact with a supplier for delivery of a fixed quantity of energy in each hour of the year(s) for a fixed monthly payment (subscription.)

• If I use less than I subscribed for in each hour then I am paid for the difference at the hourly spot price.

• If I use more than I subscribed for then I pay for the difference at the hourly spot price.

• At any time I can automatically buy or sell a quantity of energy at current tendered prices.

SPRING 2014 MEMBERS MEETING !MAY 5-8, 2014 ⏐ DENVER, COLORADO © 2014 Baker Street Publishing, LLC.  All Rights Reserved.

kW

0

25

50

75

100

Hour1 3 5 7 9 11 13 15 17 19 21 23

Forward Positions

Spot market transactions are used to buy or sell the difference between forward positions and actual demand.

Actual Delivery

SPRING 2014 MEMBERS MEETING !MAY 5-8, 2014 ⏐ DENVER, COLORADO © 2014 Baker Street Publishing, LLC.  All Rights Reserved.

Overseen by Grid Custodians, Parties Interact on TE Platforms.

Transaction Platform Providers

!

Energy Services Parties

!!!

Intermediaries - Exchanges - Marketers - Retailers - System

Operators !Transport

Services Parties

!-Transmission Operators

(TO) - Distribution Operators

(DO)

TE Service

Interface

- Consumers - Producers - Prosumers - Storage Owners

Tenders and Transactions

Grid Custodians: Congress, DOE, EPA, FERC, NERC, Legislatures, PUCs, Munis, CCAs, PMAs, Coops

Tender and Transaction Data Bases

SPRING 2014 MEMBERS MEETING !MAY 5-8, 2014 ⏐ DENVER, COLORADO © 2014 Baker Street Publishing, LLC.  All Rights Reserved.

High Volume, High !Speed Protocols!

TCP/IP Data!FIX Financial Transactions!TeMix Electricity Transactions

The “open and free” TeMix protocol covers the required process and content.

TeMix ProfileEMIX

!EI

ContentProcess

Catalog of Standards

SPRING 2014 MEMBERS MEETING !MAY 5-8, 2014 ⏐ DENVER, COLORADO © 2014 Baker Street Publishing, LLC.  All Rights Reserved.

Each party in the Transactive Energy network has a TE Service Interface that communicates between management algorithms, physical devices, and the transaction platforms.

Management algorithms (EMS)

Device State

Physical Devices

Control Signals

!

Weather forecasts

Objectives

Transaction Platforms

Benefit

TransactionsTenders

TE Service Interface

Energy in/out

SPRING 2014 MEMBERS MEETING !MAY 5-8, 2014 ⏐ DENVER, COLORADO © 2014 Baker Street Publishing, LLC.  All Rights Reserved.

We have all the connections we need. Home, office, mobile. People, devices, data.

You can buy a thermostat at the Apple Store that is remotely programable with your iPhone. The thermostat knows where you are, how you behave when you are at home, and what the weather forecast is.

SPRING 2014 MEMBERS MEETING !MAY 5-8, 2014 ⏐ DENVER, COLORADO © 2014 Baker Street Publishing, LLC.  All Rights Reserved.

A fully-equipped home looks like this in the Transactive Energy model.

TE Service

Interface 0321

Grid

HVAC!System

Water!Heater

Battery

Smart Appliances

Interval!Meter

Transactive Energy Platforms

EMS

Forward Tenders

and Transactions

SPRING 2014 MEMBERS MEETING !MAY 5-8, 2014 ⏐ DENVER, COLORADO © 2014 Baker Street Publishing, LLC.  All Rights Reserved.

Transactive Energy can be incrementally deployed to work with current systems and entities.

Consumers, Prosumers, and DERs

Device

TE Service Interface

DeviceDevice

Retail Transactive Energy Platforms

Energy Distribution Transport

Forwards and Futures

Existing Wholesale Platforms

System Operators

One year

Tenders and Transactions

Tenders and Transactions

One hour

Five minute

One month

wOne year

One hour

Five minute

One month

Device

Transactive Retail Tariff

SPRING 2014 MEMBERS MEETING !MAY 5-8, 2014 ⏐ DENVER, COLORADO © 2014 Baker Street Publishing, LLC.  All Rights Reserved.

Transactive Energy is a “Silver Bullet.”• It will spur innovation.

• It is fair and transparent.

• It will provide incentives for efficiency.

• It addresses many current vexing problems:

• renewables integration,

• net metering,

• investment, reliability and fixed cost recovery,

• dynamic pricing and price responsive demand,

• decentralized generation, storage and microgrid integration,

• wholesale/retail market coordination, and

• regulatory models.

SPRING 2014 MEMBERS MEETING !MAY 5-8, 2014 ⏐ DENVER, COLORADO © 2014 Baker Street Publishing, LLC.  All Rights Reserved.

What role can and should SGIP play in standards and pilots for Transactive Retail Tariffs?

• Encourage Transactive Retail Energy pilot projects and monitor results.

• Transition existing retail tariffs to “Transactive Retail Tariffs” with forward and spot transactions.

• Deploy transaction platforms to facilitate buying and selling by retail customers, prosumers and DERs of energy and cost-of-service transport.

State Legislatures, Public Utilities Commissions, and municipal and coop boards can do the following to enable Retail Transactive Energy:

SPRING 2014 MEMBERS MEETING !MAY 5-8, 2014 ⏐ DENVER, COLORADO © 2014 Baker Street Publishing, LLC.  All Rights Reserved.

For more information on Transactive Energy go to :

www.tea-web.org

SPRING 2014 MEMBERS MEETING !MAY 5-8, 2014 ⏐ DENVER, COLORADO © 2014 Baker Street Publishing, LLC.  All Rights Reserved.

The Transactive Energy concepts are developed further in a forthcoming eBook.