This book is about transactive energy (TE) and its role in achieving California’s goal of 100 percent clean energy and electrification of buildings and transportation. It describes how TE works, the RATES project, and the TE roadmap for California. The authors are pioneers in the development of the modern electric power system. Stephen Barrager and Edward Cazalet have made groundbreaking contributions to electric power research and development.

TE allows for fully decentralized real-time buying and selling of renewable energy, directly placing control of energy transactions in the hands of individual energy producers and consumers.

TE retail markets enable all parties – customers, solar and storage operators, utilities, and community choice aggregators – to buy and sell electricity with each other. Transactions can be in real time or days, months, or years ahead (forward) of actual energy generation and use. Real-time transactions coordinate the operation of distributed generation, storage, customer devices and central generation. Forward transactions put distributed and central investment decisions on a level playing field and reduce risk.

The California Energy Commission sponsored a pilot of the TE approach in 2018. The RATES project proved that TE is eminently feasible and low cost.

In Stock November 13, 2020

Stephen Barrager, Ph.D.

Steve Barrager is the founder and publisher at Baker Street Publishing. He is a pioneer in developing the profession of strategic decision coaching. He works with Fortune 500 companies, research institutes, and government, and has led multidisciplinary, multinational teams in Asia, Europe, South America, and the Middle East.

Dr. Barrager was a founding partner of Decision Focus, Inc. (DFI) in Silicon Valley. At DFI, he worked with the Electric Power Research Institute (EPRI) to develop the first framework and tools to enable utility planners to do demand-side planning, that is, to use conservation and customer-demand modification to avoid the need for new power plants.

Dr. Barrager earned his doctorate at Stanford University from the Management Science and Engineering Department (formerly Engineering-Economic Systems). He has an BSME degree from Northwestern University.

Edward Cazalet, Ph.D.

Edward Cazalet is the founder and CEO of TeMix, Inc. Previously, he was a governor of the California Independent System Operator. He was also the founder and CEO of Automated Power Exchange (APX), the first online wholesale power exchange, and CEO and founder of Decision Focus, Inc.
Dr. Cazalet is a leader in the design of transactive services for electricity, the commercialization of electricity storage, and the analysis of energy decisions.

He has extensive experience in designing, building, and operating high-speed, reliable transaction systems for electric power that interface with existing transaction systems and markets.

Dr. Cazalet holds a Ph.D. from Stanford University in Management Science and Engineering. He also holds B.S. and M.S. degrees in engineering from the University of Washington.

Table of Contents

About the Authors

Acknowledgments

Preface

CHAPTER 1 – INTRODUCTION

California is a leader in renewables and electrification

The digital transformation is happening in California and everywhere

The rest of this book

CHAPTER 2 – THE DUCK CURVE

Storage and load shifting

Customer-owned battery storage

EVs

Water heating

HVAC

Clothes dryers, dishwashers, refrigerators, and pool pumps

Storage optimization and load shifting require look-ahead pricing

Subhourly flexibility

Summary

CHAPTER 3 – THE TRANSACTIVE ENERGY VISION

The three systems

SECTION 1: Overview of the transactive energy model

The two products

Three important principles

Storage decisions

The TE process: tenders, transactions, and deliveries

The TE platform

Summary

SECTION 2: The customer in a transactive energy model

How the flexible loads connect with the TE system

Summary

SECTION 3: The transactive energy platform

Transport

Web services and payload

Market-making process and clearing

Scalable and parallel platforms

Summary

SECTION 4: Retail operation with a transactive energy platform

Palo Alto’s utility services

Converting to TE

Summary

CHAPTER 4 – THE AGENT

What the agent is

The agent’s objective

Agents in the TE system

Machine learning

How the agent determines forward transactions for the next 24 hours

Agents working with months-ahead or years-ahead transactions

CHAPTER 5 – THE RATES PROJECT

Purpose of the RATES project

Project results

Customer recruitment and participation

The California PUC granted SCE an experimental transactive subscription tariff

The RATES system was highly automated

The rest of this chapter

SECTION 1: RATES architecture and interfaces

SECTION 2: The TeMix agents

Battery storage agent

Pool pump agent

Electric vehicle agent

HVAC agent

Residual load

SECTION 3: The RATES platform, tenders, and subscriptions

The informational architecture of RATES

Summary

CHAPTER 6 – TRANSACTIVE ENERGY ROADMAP FOR CALIFORNIA

What is the path forward?

Retail market design and tariffs

Investment and risk management

Wholesale market design

Regulation

Digital technology

Standards

Will customers be comfortable with high-tech automated energy agents?

Summary

CHAPTER 7 – SUMMARY: IN A NUTSHELL

Glossary

References