IEEE Power & Energy Magazine - May/June 2016 - 31

needs and the cost of power in the incentive signal. If price
and quantity match in a node, then no additional information
is exchanged until the next time period. If there is a disagreement, for example, if power will cost more in a future interval
than expected, then the estimate of quantity consumed in that
time period is updated and a new load estimate provided to
neighboring nodes. This process iterates until there is convergence between price and quantity to be consumed. This
represents a distributed, iterative form of market.

discussions, the importance of architecture was highlighted
through the need to clearly define the interfaces and information to be exchanged between wholesale and retail systems. Through the course of these workshops, which took
place during 2013 and 2014, and based on feedback on the
draft TE framework, the definition of TE was refined, the TE
system principles were defined, and the need for a high-level
document to introduce the TE concepts to executives and
other industry decision makers was discussed.

What's Happening and What's Next

Decisions Maker's Checklist

TE Systems Workshops and Conferences

One of the results of the GWAC's TE workshops in 2011
and 2012 was recognition of the need to discuss and understand the relationship between TE and the already existing
practices of the independent system operators and regional
transmission operators. Early on in the GWAC's discussions, we recognized that the use of forward, hourly, and
spot markets as a part of the balancing of the bulk power
system was directly related to the workshop discussions on
TE systems. There was clearly a need to understand the relationship between the ideas coming from projects such as the
GridWise Olympic Peninsula Demonstration's and PowerMatcher's double-auction markets, TeMix's distributed marketplace, and the Pacific Northwest Demonstration Project's
nodal, iterative approach and existing practices within the
bulk power system. The GWAC held workshops focused
on engaging the bulk power system community and understanding the relationship between these approaches at Edison Electric Institute, PJM, and the California Independent
System Operator.
A key outcome of these workshops was recognition of
the distinction between TE systems in a bulk power system as compared to those in a distribution system, in other
words, the difference between wholesale and retail. In these

The decision maker's TE checklist (see Figure 3) is a tool
being currently developed by the GWAC to help decision
makers evaluate options such as capital asset investments
or new information technology opportunities to determine
whether they conform to the principles and attributes that
encapsulate evolving changes in the electric system's operations due to TE. It is a tool that will help a decision maker
reflect on and assess the best long-term value for all parties
relative to a possible investment in a TE system. Decision
makers can use the checklist to review electricity-related
policy or asset investment proposals, including the purchase of new distribution and transmission equipment, the
design of a new demand response or distributed generation
program, grid automation and control, the adoption of new
energy end-use devices, system software, or the adoption of
new market protocols. While the list of key decision makers
is the primary audience, other parties, such as technology
developers, system integrators, and system engineers, will
find value in the concepts and approaches discussed.
TE System Valuation

In 2015, the U.S. Department of Energy tasked the Pacific
Northwest National Laboratory (PNNL) to develop a valuation methodology for TE systems, considering various
stakeholders' perspectives and applying the methodology in

Regulators

Utilities

Service Providers

* Developing Policy
Decisions
* Relating to Energy
Assets, Energy
Production,
Distribution, and
Consumption
* Evaluating Which
Transactive Approach
May Offer Significant
Program Benefits
* Implementing Best
Practices and Improved
Value for All Parties

* Connecting with
Customers, ISOs, and
Partners
* Developing a ValueBased Approach to
Energy Supply
* Providing Value with a
Transactive Approach so
All Parties Have a Fair
Mechanism to Assess
Value Based on Time of
Use and Costs

* Partnering with
Customers to Provide
a Consistent Value
Proposition for Their
Offerings
* Ensuring the Highest
Quality/Cost Value for
Their Contracts with a
Transactive Approach

Consumers/Prosumers
* Engaging with Energy
Providers and Service
Organizations Through
Transactive Value
Programs, Incentives,
and Partnerships
* Delivering Demand
Response, Load
Shedding, or Similar
Programs to Service
Providers and Utilities

figure 3. The decision-maker's TE checklist.
may/june 2016

ieee power & energy magazine

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