IEEE Power & Energy Magazine - September/October 2019 - 60

nature of generation and consumption prescribes a decentralized system that enables coordination and optimization. As a result, decentralized intelligent control and coordination mechanisms are required, with the help of complex
system theory and the application of state-of-the-art information and communication technology (ICT) to confront
this challenge.
When designing a new system, all aspects must be
considered, such as market design, business model, ICT
infrastructure and investment, customer mix and participation, and privacy and security. Consequently, a holistic
system approach is needed to prevent the risk of massive
stranded assets or, even worse, massive system failures. In this
article, we present the real-life application of a bottom-totop smart grid software stack from the flexible devices in
homes upward to the wholesale markets and newly defined
distribution-level ancillary service markets. This real-life
smart grid pilot, called energy front runners (EFRs), "Energiekoplopers" in Dutch, took place in the Dutch town of
Heerhugowaard, situated 25 mi north of Amsterdam. Initiated by Alliander, the local distribution system operator
(DSO) (see "Roles in the European Electricity System"),
the pilot project investigates the operation of a distributionlevel energy and ancillary services market to ease strains
on the energy system's ability to maintain system stability
and reliability.

Bottom-Up, Market-Based
Control Mechanism
The goal of the pilot project was to deploy a market-based
control framework and mechanism, using bottom-up pricing/
bidding strategies and auctions, to coordinate the customers' smart appliances with the broader energy system. As a
result, a decentralized energy market vision was implemented
based on a layered-decomposition optimization structure.
In this case, every layer would have only limited visibility at
the interface points with other layers, without knowing what
is inside those layers, creating virtual resources at each interface point affecting other layers.
The conceptual framework is based on the PowerMatcher
transactive energy mechanism, which combines market-based
microeconomic theory with system control theory, relying on
agents to match demand and supply. The coordination mechanism uses a tree-shaped architecture of distributed agents to
match supply and demand within the controlled zone or area,
as shown in Figure 1.
The cycle starts from the leaves of the tree, i.e., the local
device agent, with the objective of operating the in-home
appliance in an economically optimal way on behalf of its
owner. Each device agent efficiently coordinates its transactions (buying or selling electricity) with all other agents
in the local cluster through an electronic market. To do
so, the device agent communicates its bid directly to the

Device
De

v
De

nt

Price

Age

ce

Device

i

vic e A g e n

t

Business
Logic

Bid

Objective
Agent

Bid
Price
Bid

De
v

Price
Bid

Concentrator
Agent
Bid

Agent
ice

Price

Price

Device

Bid
De

gent
eA
vic

Device

Auctioneer
Agent

Price
Bid

Concentrator
Agent

Price

figure 1. A schematic representation of what a coordinated cluster of agents could look like, connecting device agents,
concentrator agents (optional), and a central auctioneer agent.
60

ieee power & energy magazine

september/october 2019



IEEE Power & Energy Magazine - September/October 2019

Table of Contents for the Digital Edition of IEEE Power & Energy Magazine - September/October 2019

Contents
IEEE Power & Energy Magazine - September/October 2019 - Cover1
IEEE Power & Energy Magazine - September/October 2019 - Cover2
IEEE Power & Energy Magazine - September/October 2019 - Contents
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IEEE Power & Energy Magazine - September/October 2019 - Cover3
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