PNNL issues report on the benefits of a transactive energy system

The Department of Energyʻs Pacific Northwest National Laboratory (PNNL) released a report this week that examines the benefits of a transactive energy system.

A transactive energy system allows consumers to coordinate with their electric utility operator to dynamically control big energy users, like heat pumps, water heaters, and electric vehicle charging stations. It is called transactive because it relies on an agreement between consumers and utilities.

However, a transactive energy system has never been deployed on a large scale. That is why the Department of Energy’s Office of Electricity called upon experts at PNNL to study how such a system might work in practice.

PNNL conducted the largest-ever simulation of such a system, modeled on the Texas power grid as part of the study. The study concluded that consumers stand to save about 15 percent on their annual electric bills by partnering with utilities.

“Because Texas’s grid is quite representative of the nation’s energy system, it not only enabled the modeling and simulation of transactive concepts but provided a reliable extrapolation of the results and potential economic impacts to the broader United States grid and customers,” said Hayden Reeve, a PNNL transactive energy expert and technical advisor who led a team of engineers, economists and programmers that designed and executed the study.

The simulation showed that if a transactive energy system were deployed on the Electric Reliability Council of Texas (ERCOT) grid, peak loads would be reduced by 9 to 15 percent, translating to $5 billion annually in Texas alone. If deployed across the continental United States, the result would be $50 billion annually in savings. The savings would equal the annual output of 180 coal-fired power plants nationally.

“A smart grid can act as a shock absorber, balancing out mismatches between supply and demand,” Reeve said. “Through our study, we sought to understand just how valuable effective coordination of the electric grid could be to the nation, utilities and customers. Working with commercial building owners and consumers to automatically adjust energy usage represents a practical, win-win step towards the decarbonization of the electrical, building, and transportation sectors without compromising the comfort and safety of participating homes and businesses.”

A key component of this strategy is the adoption of smart appliances and load controls. In a transactive energy system, the power grid, homes, commercial buildings, electric appliances, and charging stations are in constant contact. How it works is smart devices receive a forecast of energy prices at various times of day and develop a strategy to meet consumer preferences while reducing cost and overall electricity demand. Then, a local retail market coordinates overall demand with the larger wholesale market. All parties negotiate energy procurement and consumption levels, cost, timing, and delivery.

This may seem futuristic, but it is already being deployed on a smaller scale in a demonstration project in the city of Spokane’s Eco-District.

“These findings make a strong case for investment in scaled deployments of transactive energy systems,” said Christopher Irwin, a program manager for the Office of Electricity, Department of Energy, in its Smart Grid standards and interoperability efforts. “As the nation moves towards a zero-carbon future, a more adaptable energy system could help accelerate the broader deployment of electric vehicles, solar energy and the conversion of homes and buildings to clean electricity sources.”