April 8, 2022

LEM - Do you want to do a project with us?

The need for Local Energy Markets which balance renewable generation with local demand is growing.

The large, monolithic applications like the Advanced Distribution Management Systems (ADMS) which have been used to manage our energy grid are now not entirely adequate on their own. To assist the grid transitioning from having consumers to prosumers, it has been augmented with the recent evolution of the Distributed Resource Management Systems (DERMS) inclusive of Virtual Power Plant (VPP), microgrid and Network Application solutions. However, they still are not able to cater to the increasing number of distributed energy resources (DERs) that are being onboard to the grid.

DERMS applications are the latest in the trend and are available from a handful of vendors. ADMS and DERMS alone cannot help promote DERs or their integration into the grid. Market-based solutions, like Local Energy Markets (LEM), are the new and emerging technologies which can. Market-based solutions  are needed in tandem with other network apps as part of the market-grid interaction to manage the growing impact of DERs.

For simplicity, take an example of operating a wholesale market system. We need transmission management for performing power flow and contingency analysis, running SCADA operations and managing outages. We need generation management to control generators, limit tie-line flows and do energy accounting. We need a day-ahead or a real-time market management system for creating a least-cost dispatch order.

At the distribution level, distribution management (ADMS or DMS) does a similar function to transmission management. DERMS is like generation control. But there is not a marketplace for coordinated distribution management control. Such a marketplace can be added to relieve network congestion – operated by the distribution utility – and deployed to the created market-based solution. Another level of the marketplace can be added for allowing the DERs to trade among themselves – 24/7, 365 days a year. Such a market-based solution provides added value to the grid-based solutions such as ADMS, DERMS including VPP and microgrids.  

Unlike DERMS or ADMS that utilise the same paradigm and are deployed in similar infrastructure, LEM provides distinct use cases that are relevant to an ADMS or DERMS. Marketplaces, like LEM, are the missing piece in today’s distribution system.

The change has been gradual. The need for generation management has grown in tandem with the popularity of DERs. Hence, ADMS, a legacy system, has slowly evolved to become aware of DERMS. Now it is the time for DERMS to become aware of marketplace-based solutions like LEM. Just as the wholesale market system cannot operate fully without a marketplace, ADMS and DERMS alone cannot enable the DERs to achieve their full potential. This is not only a technological issue, but a philosophical and architectural one as well.  Marketplaces like LEMs are separate from DERMS and ADMS and they balance the DERs locally. They are designed to integrate with ADMS and DERMS and share data with them.

LEMs enable consumers and prosumers (those who can generate solar photovoltaic energy, for instance), within a defined network topology, to trade renewable energy amongst each other  peer-to-peer (P2P). Through a distributed trading platform, participants can match buy and sell offers in forward-facing time intervals. Since the growth of DERs is expected to be exponential, Powerledger developed this platform using blockchain technology, in order to handle increasing volume of transactions, giving all types of consumers access to more affordable renewable energy.

Let's look at some of the primary use-cases of ADMS and DERMS vs LEM.

Top three use-cases of ADMS

  • Conducting SCADA operations and situational awareness of the network.
  • Conduct outage management functions.
  • Conduct network application functions for reliable and secure operation.

Top three use-cases of DERMS

  • Manage DERs life cycle.
  • Conduct Demand Response (DR), VPP and microgrid functions.
  • Manage DER specific information flow.

Top three use-cases of marketplaces like LEM

  • Market-based solution for balancing generation with local demand which drives down the electricity costs. Participants in communities can better utilise installed distributed energy resources by allowing them to trade the  excess energy they produce at rates better than prevailing Feed-in Tariffs (FiT), reducing energy consumption which in turn incentivises the customer to add more DER and manage them without curtailment.
  • Reduction in maximum power input (peak wattage) over the medium and low-voltage grids, which is the key driving cost factor for transmission and distribution feeders. A decentralised marketplace helps to reduce or delay costs of transmission grid expansion, while better utilising available capacity and improving the scores related to exports like Customer Export Curtailment Value and expanding the Dynamic Operating Envelope.
  • Marketplaces promote innovation and regulator’s requests to demonstrate how distribution networks are incorporating more DERs into the grid while encouraging democratisation of power.

We have conducted a number of simulations for Business as Usual (BAU) systems with FiT and consumers with limited local export. In BAU, the prosumers sell their excess solar energy via FiT and consumers buy energy from the grid. Most of the BAU system also has existing DMS/ADMS/DERMS.

To see how a LEM can enable you to balance generation with demand, get in contact with us for a customised desk-top study or a live demonstration project within your network. To facilitate this we will need you to share secure anonymised meter data from any location with customers that have a high concentration of PV and batteries. In doing so, it will allow us to run the simulations in a secure, anonymised way, showcasing why a LEM is beneficial to you.

To bring a market-based solution to your business, contact us here or email us at


Dr Vivek Bhandari is the Chief Technical Officer at Powerledger. By creating marketplaces to keep customers connected to the grid and empowering them to control their energy future, Powerledger removes the barriers to achieve a decentralised, digitalised, decarbonised and democratised future.

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