Bottom-up Modeling of Local Energy Markets Within a Pan-European Wholesale Electricity Market Model

The energy system decarbonization and decentralizationrequire coordination schemes for distributed generatorsand flexibilities. One coordination approach is local energy markets for trading energy among local producers and consumers. The resulting local coordination leads to the questions of how the interaction between local and wholesale markets will be designed and of how the introduction of local energy markets influences the wholesale market system. Therefore, this paper proposes a bottom-up modeling method for local markets within a pan- European wholesale market model. Furthermore, an aggregation-disaggregation method for local markets is developed to reduce computational effort. A case study for local markets in Germany shows the computational advantages of the aggregation-disaggregation method. Preliminary results indicate the impact of different interaction designs between local and wholesale markets on the wholesale market and show the need for further research.