How electricity costs and carbon dioxide emissions can be can be reduced through decentralized energy systems

Prof. Dr. Jens Strüker, Professor of Information Systems and Digital Energy Management, and his team have investigated the market integration of decentralized consumption and generation units for the German Energy Agency (dena). The study shows: If customers with PV systems, e-cars, heat pumps or battery storage units participate in peer-to-peer (P2P) electricity markets, the matching of electricity supply and demand improves, leading to falling electricity costs as well as CO₂ emissions.

Researchers from the University of Bayreuth, the Future Energy Lab of the German Energy Agency (dena), and Fraunhofer FIT, in collaboration with the start-up Grid Singularity, have produced the study "The decentralized energy system in 2030—A systematic bottom-up approach to the market integration of decentralized consumption and generation units".

For the first time, the study simulates how these flexible units, i.e., systems such as electric vehicles, battery storage, or heat pumps, can participate in fictitious local, regional, and national electricity trading markets and exchange electricity on a peer-to-peer basis. Various scenarios are analyzed and compared with a baseline scenario. The study can be downloaded free of charge from the dena Future Energy Lab website.

"Decentralized consumption and generation units, such as PV systems, electric cars, heat pumps, and battery storage systems, cannot currently participate directly and flexibly in the energy system. Our study is the first to evaluate the previously unutilized flexibility potential."

"To this end, P2P electricity trading markets are simulated that enable prosumers, i.e., those who produce and consume electricity at the same time, and pure electricity consumers, to trade electricity with each other. As a result, P2P electricity trading helps to reduce electricity costs and CO₂ emissions and thus accelerate the decarbonization of the energy system," says Prof. Strüker, who supervised the study.

A central point of the simulation study is to analyze and quantify the effects of P2P electricity trading markets in different geographical areas. As a result, the electricity costs for consumers fall with increasing geographical expansion of P2P electricity trading. In addition, larger P2P electricity markets are characterized by an increasing degree of autonomy and a shift in trading volume from conventional electricity markets to P2P electricity markets.

This shift ranges from over 15 percent for local P2P electricity trading to almost 70 percent of the trading volume if P2P electricity trading is enabled nationally. P2P electricity trading markets can thus significantly improve the synchronization of electricity consumption and renewable generation.

"The study provides a contribution to the economic and ecological evaluation of P2P electricity trading," explains Prof. Strüker, who also conducts research at Fraunhofer FIT and the Bavarian Centre for Battery Technology (BayBatt) at the University of Bayreuth. "For the introduction of these new markets, however, a digital data infrastructure for the active participation of millions of PV systems, e-cars, heat pumps and battery storage systems must be created quickly in addition to the legal and regulatory requirements."

Provided by Bayreuth University