Design of Market Clearing Mechanisms for Flexibility Markets in Distribution Grids

Activity: Examinations and supervisionSupervisor activities


The energy transition promotes the integration of renewable energies as distributed energy resources (DERs). Because of them, distribution networks are expected to operate closer to their capacity limits. Moreover, lines congestion may occur if wholesale markets overlook distribution network constraints when clearing. Instead of investing in grid reinforcement, these situations can be handled by harnessing system’s flexibility. Local flexibility markets (LFMs) are a tool to trade flexibility in limited areas such as small towns.

This thesis analyzes the implications of continuous and auction­based clearing in LFMs. We design an energy multi­period LFM that matches flexibility requests from the DSO with flexibility offers from prosumers or aggregators. It considers network constraints by performing a DC power flow to ensure the technical feasibility of the trades. Our LFM also includes block bids trading under an all­or­nothing condition to model the rebound effect of flexibility providers such as thermal­electrical loads. Within this framework, two models are created. The continuous model is a novelty since there are not references of a continuous LFM explicitly including network constraints and block bids. The algorithm clears the market every time two bids match, with the first­come first­served principle. In contrast, the auction­based model clears once for the whole market time span. It is an optimization problem formulated as a MILP with binary variables to account for block bids.

We compare both outcomes with the same study case. The LFM operates in a 33 buses radial distribution grid with consumption acting as flexible loads and small­scale renewable generation representing DERs. For the continuous clearing the social welfare is 2% lower and the energy volume traded is 3% higher than for the auction­based. In both cases, the acceptance ratio of block bids is around 60% and the needs for curtailment and load shedding are reduced around 25%­30%. Whereas auction­based clearing is not affected by the arrival time of the bids, continuous clearing highly depends on it. To further develop our analysis, the best and worst scenarios for continuous clearing should be considered.

We also conduct a qualitative analysis on the payment methods of both mechanisms. The payment rule used in continuous markets is quite standardised and applies to our LFM. However, due to the binary variables in auction­based clearing, the common methods that use dual variables of balance constraints cannot be directly applied. Thus, we present five different payment methods for the LFM that approach this challenge. The choice between them depends on the market clearing properties that the LFM wants to address.

We conclude that the use of one or the other clearing mechanism in a LFM depends on the target of the market operator. Using auction­based clearing the maximum social welfare is obtained, whereas continuous clearing may end up with higher volume traded depending on the bids’ arrival order. Moreover, while implementing block bids considerably complicates the continuous model formulation, in the auction­based model implies that the usual payment rule does not apply. In any case, the flexibility trade alleviates network congestion and decrease the need of curtailment and load shedding.
Period1 Jan 20211 Aug 2021
ExamineeAlicia Alarcón Cobacho
Degree of RecognitionNational