Solar and Home Battery Based Electricity Spot Market for Saudi Arabia

Transcription

1 34 Int'l Conf. Information and Knowledge Engineering IKE'18 Solar and Home Battery Based Electricity Spot Market for Saudi Arabia Fathe Jeribi, Sungchul Hong Computer and Information Sciences Department, Towson University, Towson, MD, USA Abstract - With the rise of technology, electronic market has shown growth potential recently compared to the traditional market. It is difficult to imagine people s lives without electricity, so the availability of electricity can do an important role in modern life. The electricity market discussed in this paper is a proposal of developed Saudi Arabia s electricity market. Due to the gap between electricity supply and demand, for example, the hot places in Jazan, Saudi Arabia experience the interruption of electricity. The demand of electricity increases in the summer season because of increasing of hot weather [1]. The supply of electricity during a peak time can be solved by building a large-scale power plant but it costs the government a lot of money. Instead, an electricity market can provide electricity for that gap. Furthermore, consortium of smaller sellers and individual large sellers can form an electricity market more efficiently and provide electricity when it is needed during the peak time. This paper will show the possibility of generating electricity through consortium of small sellers who have solar panels and home batteries by simulation. Keywords: consortium, electricity market, home battery, Saudi Arabia, solar power, trading. 1 Introduction 1.1 Electricity market Electricity can be considered a commodity. It is the stream of electrons and it is derived from other energy sources such as solar, wind, nuclear energy, natural gas, oil, or coal. Normally, electricity is measured by two terms: kilowatts for a small usage or megawatts for a large usage. An electricity market can be classified as retail and wholesale. In the retail market, electricity can be sold directly to the consumers and in the wholesale market electricity can be sold to traders by a utility company before delivering it to consumer [2]. In terms of trading, an electricity market could be a virtual or physical place where the buyers and the sellers can trade electricity. In an electricity market, producers or sellers could be small, medium, or large according to their capacity. Each type of producer can provide electricity to the different types of consumers. producers, such as solar and wind turbines can provide electricity to a house or small business. Medium producers, such as gas turbines and solar energy farms can provide electricity to medium size businesses or villages. Large producers such as a power plant can provide electricity to large businesses or a city. Overall, there are three types of producers that can contribute to the electricity market. In terms of benefits of using solar panels with home batteries, there are five advantages: First, people can use electricity if they need it or sell it to the electricity company if they don t need it. Second, if there is extra electricity collected from sellers, people who don t desire to use solar panels with home batteries can buy electricity from the electricity company. Third, people s electricity bill will be decreased. Fourth, decreasing the government s cost to build a new power plant. Fifth, stopping the electricity blackouts. 1.2 U.S. electricity market Facilities of electricity in the U.S. are controlled by state and federal regularity organizations. Federal Energy Regulatory Commission (FERC) controls the wholesale electricity market as well as services of interstate transmission. States control rates of retail electricity as well as services of distribution. In the U.S., some states follow a regulated model and some of them follow a restructured model. Facilities in the regulated states follow vertical integration and create strategies of integrated resources to assist the electricity load. In addition, economic regulation establishes rates of distribution and supply. In restructured states, market establishes rates of distribution and regulations of generation are exempt. Unlike generation, services of distribution are regulated. Compared to the regulated states, the restructured states don t make plans of integrated resources; however, they have the right to manage the generation as well as demand-side resources [3]. The FERC approved that PJM (Pennsylvania, New Jersey, and Maryland Power Pool) matched the four essential characteristics of RTO (Regional Transmission Organization) [4] [5]. These characteristics are operational authority, independence, shortterm reliability, and scope and regional configuration. Overall, FERC plays an important role in electricity market. 1.3 Solar electricity in U.S. and battery According to Solar Market Insight Report of 2 nd quarter in 2017, 2044 MW of solar photovoltaic (PV) was installed in the USA market in 1 st quarter in In Q1, solar power generation ranked as the second source of electricity generation which weighted 30% of the total new electric generating capacity [6]. The solar power forms 0.5% of overall electricity generation in U.S. in 2016 [7].

2 Int'l Conf. Information and Knowledge Engineering IKE'18 35 Over the next 5 years, researchers forecast the total volume of solar PV installed in the U.S. will be increased by approximately three times. There will be over 17 GW of solar PV installed in In Q1 2017, the capacity of installed residential PV was 563 MW. The capacity of installed nonresidential PV was 399 MW [6]. Compared to 2015, the solar market in the U.S. increased by 95% in Solar electricity generation in 2015 was 7,493 MW and 14,626 MW in 2016 [8]. Solar power increases fast in the USA. It also could be an attractive and clean resource for the economy as well as the environment [9]. 1.4 Consortium Consortium in business is an association of individuals or organizations for investments or business and there are three basic frameworks to initiate consortium. First, the negotiation process and initiating the collaboration s essentials. Second, arranging documents to establish consortium. Third, describing consortium s organizational and management framework. The documents that can be used for consortium initiations are a strategic plan, objective s letter, consortium agreement for initiation, and legislations of consortium. Time of occurrence of consortium could be temporary or permanent, where temporary occurs in the case there is only one specific job and permanent occurs in the case there is a group of members share together in a commenced investment. The consortium agreement (CA) is an independent rule of trade, which is generated in the commercial operations for mutual execution of huge investments projects and so on. CA can control the rights and obligations such as work partition, execution times, charges sharing, and consortium s decision making [10]. 1.5 Selling electricity to a company from home battery Structure of selling solar electricity to an electricity company be shown in Figure 1. This figure contains 4 items which are home battery, home i.e. sellers, a smart grid, and solar panel. Electricity can be generated using solar panels and stored in home batteries. In the electricity market, an inventory can be done through home battery; otherwise, the electricity must be consumed as soon as it is generated. Selling electricity to an electricity company can happen in two different ways. Number 1 in Figure 1 shows the first way of selling electricity where it can be sold directly to a smart grid from a solar panel. On the other hand, number 2 in Figure 1 shows the second way of selling electricity where electricity can be stored in home battery then it can be sold to a grid. The advantage of home battery is that it can help to store the generated electricity and sell it later. This paper also shows how the electricity market with consortium can help small sellers to sell electricity to a big buyer who wants to deal with a certain amount of electricity. In addition, it demonstrates that consortium can help the efficiency of the electricity market. Fig. 1. Selling solar electricity to a utility company. 1.6 Mechanism of electricity market model with consortium The electricity market s trading with a consortium can occur between sellers and a buyer (SEC) that can be shown below in Figure 2. could be small and large. Large sellers can participate in the electricity market directly, but small sellers need to do consortiums to be able to participate in the electricity market if there is a threshold to enter a market. In this paper, the objective of the electricity market is finding out the minimum price for certain amount of electricity to cover the gap between peak demand and electricity generation. Large Seller Consortium Consortium Electricity Market Fig. 2. The electricity market structure with a consortium Buyer (SEC) In the electricity market, the bidding price should be set by buyers and the asking price should be listed by sellers. A seller s minimum asking price and a buyer s maximum bid price can result in the best matching case. There are many examples of the electricity market such as a real-time-balancing market, a day-ahead market, etc. A buyer should consider the following factors: setting the market s bid price, determining the required electricity, buying electricity involves the peak time, and if needed altering the market s bid price. A seller should consider the following factors: determining the time of selling, checking the availability of electricity, determining asking price, and finding out the index price in the market. Determining the time of selling could be an opportunistic and risky simultaneously. For example, if a seller waits for a long time, he or she could make an additional profit; however, he or she could lose a deal if the demand is achieved and the market is closed before selling electricity. Also, setting the bidding price could be risky. For example, selling electricity will not

3 36 Int'l Conf. Information and Knowledge Engineering IKE'18 happen if the buyer sets the price too low. Overall, a consortium is useful because it allows small sellers to participate in the market. 1.7 Electricity market model without consortium Trading in the electricity market without consortium can occur between sellers and a buyer (SEC), which is shown in Figure 3. If there is a threshold value to participate in the market, small sellers can t contribute in the electricity market trading because they need enough volume of electricity to participate. However, large sellers can be able to participate in the electricity market directly because they have enough volume electricity. Compared to an electricity market with a consortium, an electricity market without a consortium could be less efficient because it doesn t allow smaller sellers to participate in the market. Jazan can avoid blackouts without building expensive power plant. 2.1 Math models According to Saudi Arabia s Ministry of Economy and Planning, in 2014 in the Jazan region, the peak load was 2510 MW and electricity subscribers was 231,390 [13]. According to MESIA (Middle East Solar Industry Association), in Jazan (2014), the gap between covered peak times and SEC s power generation capability could be up to 25 percentage i.e. the gap was MW [14] (Figure 4). Peak demand = 2510 MW Blackout 1 PM 3 PM Gap (K) = MW Production capacity = MW Time Fig. 4. Blackout occurrence in Jazan during the summer Large Seller Electricity Market Fig. 3. The electricity market structure without a consortium Buyer (SEC) 2 A Proposal of an Electricity Market Model in Jazan, Saudi Arabia Some regions in Saudi Arabia, such as Jazan, need more electricity for the period of blackouts. Saudi Electricity Company (SEC) can produce more electricity by using small, medium, and large producers such as gas turbines and people s solar panel with home battery. A gas turbine is an engine that generates electricity in large volumes. It is an internal combustion engine which converts natural gas or any other fuels to mechanical energy then produce electricity [11] [12]. People with solar panels and home batteries could be small, medium, or large producers based on their capacity. If producers are small but they want to deal with a large demand, they can form a consortium to deal with that large demand, but they don t need to form a consortium if they can produce enough electricity to meet the buyer s large demand. Among electricity consumers in Jazan, some will have solar power, some will have solar power with home batteries or some do not have solar power. In the current situation, because of the lack of electricity production by the SEC, there are blackouts during the summer due to the high electricity usage of air conditioning. If the collection of solar power with batteries provide enough electricity, then all the electricity consumers in In a typical electricity market, a buyer (SEC) wants to deal with a large volume. To meet this requirement, small volume sellers may form a consortium. Electricity consortium is important because it help individuals to group together and allow them to do business with large volume. In the proposed model in this paper, sellers in the electricity market can form consortiums to meet the gap (K) amount of electricity between the peak demand and production capacity. Steps to form a consortium are identifying the opportunities, seeking out the possibilities of a relationship, risk assessment and due diligence, creating a relationship, communications, relationship s resourcing, follow up with a relationship, and exiting a relationship [15]. The proposal model is explained below. A simulation was built using Java programming language. It generates consortiums out of 30 random sellers with volumes and prices then checks the combined consortiums volume that are greater than or equal to K (gap capacity), using the following formula: (1) In equation (1), is th consortium of volumes of sellers and K is a difference between the peak demand and the production capacity. A consortium is made of sellers which has volumes, and prices. (selected sellers in the consortium ). The goal of this model is showing the consortiums that have enough electricity that can cover K. At the same time, the market algorithm attempts to find out the minimum price, which can be calculated by multiplying volumes and prices, using the following formula:

4 Int'l Conf. Information and Knowledge Engineering IKE'18 37 Minimum (Volumes Prices) (2) In equation (2), the sum of volumes meets the K. From the buyer s view (SEC), Figure 5 below shows the consortium s behavior in a market i.e. it shows how a minimum price in the electricity market with a set of consortiums is selected. The shaded section in Figure 5 shows the excessive volume of each group of consortiums. In this figure, there are goal and constraint. In equation (3), the goal is finding out the minimum of multiplying consortium volumes and prices. In equation (4), the constraint is the sum of consortium of volumes, which is greater than or equal to K. Start Finds out K (Gap) Forms a consortium Receives agent s bid, consortium of volumes and prices Select Consortiums Goal: Min (3) Finds minimum by multiplying volumes and prices Minimum (volumes prices) Constraint: (4) In equation (3) and (4), is the number of consortiums those are selected to trade. Trading End Fig. 6. The process of the electricity market with a consortium Fig. 5. Selection of consortiums with a minimum price can be formed by the following process: in a consortium, selected sellers ( ) should agree on a price that is based on the market index price and individual seller s reserved price. If a consortium s combined electricity volume is large enough then this consortium can participate in a market biding. The flowchart below shows how an electricity market with consortium can be formed and operated (Figure 6). In the electricity market, sellers and a buyer (SEC) should find a matching price. In terms of price, similar to other trading, there are issues for the price finding: 1. With the market index price (MP) for short, a buyer cannot find its trading partners if their reserved price is too low. For example, if a buyer (SEC) sets its price too low then no sale will happen and there will be no sufficient electricity for a peak time. Consequently, it will lead to a blackout. 2. If a seller s reserved price is too high, then there will be no sales and sellers will lose sales opportunity. For consortium in this electricity market, there could be two cases: 1. where { MP} In this case, some seller s reserved price is less than or equal to MP. 2. where { >MP} In this case, usually these sellers are not selected, but a consortium might need this seller s volume to meet the buyer s volume if sellers still can make a profit. In this case, individually a seller s price is greater than MP, but as a group it will meet the required volume and price as well as generating profit to sellers. Each has (Seller s reserved price). After sales, profit will be distributed among sellers by using following three formulas:

5 38 Int'l Conf. Information and Knowledge Engineering IKE'18 1. MP In this case, is less than or equal to MP ( MP), where is a set of sellers in a consortium. In this case, will receive extra profit from the difference between the MP and consortium s reserved price. Table 1 below shows an example of this case. For example, if MP= $50, total of ( MP) is $7000 and total of ( ) is $4650, this means there is a gap ($7000-$4650= $2350). The solution to cover this gap is dividing the gap among sellers whose reserved price is lower than MP except where { >MP}. This seller made profit it more than MP. TABLE 1: CASE 1, WHEN MP. Volume ( ) MP Reserved Price ( ) S1 45 $2,250 $40 $1,800 S2 50 $2,500 $30 $1,500 S3 45 $2,250 $30 $1,350 Total 140 $7,000 $4, > MP In this case, is greater than MP ( > MP), where is a set of sellers in a consortium. Table 2 below shows an example of this case. For example, if MP= $30, total of ( MP) is $2700 and total of ( ) is $3700. In this case no sale will happen. Also, if S1, S2 and S3 don t make a deal, their profit will be zero. TABLE 2: CASE 2, WHEN > MP. Volume ( ) MP Reserved Price ( ) S1 40 $1,200 $40 $1,600 S2 40 $1,200 $45 $1,800 S3 10 $300 $30 $300 Total 90 $2,700 $3, Mixed Case: In this case, some will have ( MP) but some will have ( > MP), which results a mixed case. For example, in Table 3, if MP is $30, total of ( MP) is $3000 and total of (V i ) is $2800, this means there is a gap ($ $2800 = $200). In this case, will get and the value of the gap will be divided between sellers whose reserved price is lower than MP. In Table 4, for example, if MP is $30, total of ( MP) is $3900 and total of ( ) is $4000. In this case, the consortium can t take S3. It needs a different seller with lower price. TABLE 3: MIXED CASE, WHEN MP AND >MP. Volume ( ) MP Reserved Price ( ) S1 40 $1,200 $20 $800 S2 40 $1,200 $30 $1,200 S3 20 $600 $40 $800 Total 100 $3,000 $2,800 TABLE 4: MIXED CASE, WHEN MP AND >MP. Volume ( ) MP Reserved Price ( ) S1 40 $1,200 $40 $1,800 S2 40 $1,200 $30 $1,200 S3 50 $1,500 $40 $2,000 Total 130 $3,900 $4,000 3 Electricity Market Simulation System and Results The main focus of this paper is providing a model and showing simulations of possible electricity trading in the electricity market to prevent blackouts. This model is designed for Jazan in Saudi Arabia; however, it can be generalized to other markets easily. This simulation shows the comparisons of results of trading with a consortium and trading without a consortium in the electricity market. Simulation system and results are explained below. 3.1 Simulation system In this paper, the electricity market simulation shows how trading can occur between sellers and a buyer (SEC). The objective of this simulation is demonstrating the possibility of preventing blackouts during the peak time in Jazan, Saudi Arabia. This simulation generates 30 random sellers ( ) with volumes ( ) and prices ( ) for simplicity. In reality, Jazan needs 231,390 potential sellers [20]. In this simulation, the target volume of electricity (K=100), range of volumes is and range of prices is The reason for this price s range is assuming that the last known MP (Market Price) is 7 or 10. This simulation has two cases of trading: sellers with consortiums and sellers without consortiums. The same sellers volumes and prices are used for both cases to show the difference. In Table 5, one unit represents MW. Stored electricity can be sold by each seller or group of sellers (5-100) units. For example, based on Tesla Powerwall s capacity, if every subscriber contributes 10 kwh, the availability of electricity will be 2,3139 MW. Simulation and real demand are summarized in Table 5. TABLE 5. SIMULATION AND REAL DEMAND SUMMARY. Simulation Real Demand Gap (K) MW Capacity of Seller 5~ MW (5) ~ MW (100)

6 Int'l Conf. Information and Knowledge Engineering IKE'18 39 Case 1: without consortiums. In this case, only sellers that are greater than the threshold value (30) can participate in the market. The reason for excluding sellers less than the threshold value is that the buyer (SEC) may not be interested in small sellers, but it may be interested in large sellers. Taking off small sellers from the market can lead to a shortage of electricity or inefficient price discovery. In this case, only sellers that are greater than the threshold value can be used to find out a minimum price of K. The threshold value was selected as random and it can be any number. Case 2: with consortiums. In this case, sellers that are greater than the threshold value (30) and consortiums of small sellers that have trading volume less than the threshold value can participate in the market. Consortium volumes of smaller sellers should be greater than threshold value to be able to participate in the market. The advantages of consortiums are: Fig.7. Comparison between trading with a consortium and trading without a consortium based on minimum price. Allowing small sellers to participate in the market and increasing the number of market participants. If there are more participants, then it is likely to get the minimum value of and 3. Increasing participation of the total volume of small sellers. In this case, the simulation combined of individual sellers i.e. large sellers that are greater than the threshold value and consortiums of small sellers that are less than the threshold value, which can be used to find out a minimum price of K. 3.2 Simulation system s result In this paper, 45 simulations have been completed and they show results of trading with consortiums and trading without consortiums based on a minimum price and participating seller numbers. Figure 7 shows that out of 45 simulations, there are 12 simulation results that have the same minimum prices for both trading with a consortium and trading without a consortium. In addition, 33 simulations have lower prices in trading with a consortium. In 73% of cases, trading with a consortium can help to get K volume with the lowest price. This means trading with a consortium is more efficient than trading without a consortium. On the other hand, Figure 8 shows that all 45 simulations demonstrate that trading with a consortium has more participating sellers than trading without a consortium. Also, consortiums can help to avoid disallowing small sellers from market activity. Increasing sellers number can lead to providing more electricity to the electricity market rather than trading without consortiums. Fig. 8. Comparison between trading with a consortium and trading without a consortium based on seller numbers. 4 Conclusion The availability of electricity can make people s daily life activities easy and more flexible. Frequent interruption of electricity can make day-to-day life activities more difficult as well as causing damage for the electronic appliances such as air conditioning devices and refrigerators. In addition, people can make money from trading in the electricity market. The gap between generation of electricity and the peak load causes blackout in the Jazan region especially in the summer season. Consequently, people can get electricity using solar panels with home batteries. Using a math model and simulations for an electricity market, a regional electricity market is proposed and tested. In the simulations, consortiums are tested and a market with consortiums shows an improved market performance. It is also demonstrated that if electricity subscribers in Jazan, Saudi Arabia install solar panels and home batteries like Tesla Powerwall, they can produce enough electricity to cover the lack of electricity during summer peak hours without building a large, expensive power plant. 45 simulations demonstrate that by adopting a consortium the market model is more efficient.

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