Energy Service Aggregation via Iterative Probe Pricing
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Solution Overview
Problem
In traditional electricity markets, small and medium-sized energy consumers face challenges in providing high-quality energy services due to their inability to predict load 24 hours in advance, leading to difficulties in interacting with aggregators and optimizing decisions, and existing economic mechanisms often result in poor convergence and performance degradation.
Innovation Solution
A system that provides a probe price to participants, receives supply-function approximations, and iteratively calculates a purchase price to aggregate energy services, allowing for rapid determination of purchase prices and facilitating the aggregation of energy services from multiple participants, enabling efficient interaction and optimization between aggregators and participants.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If participants bid 24 hours in advance to provide energy services, then the quality and reliability of energy services improve, but the complexity and risk for participants increase due to inability to predict load
Solution Approach 1:
The patent segments the energy service provision into two distinct time horizons: long-term aggregation (24-hour bids from participants to aggregators) and short-term execution (real-time or near-real-time dispatch by aggregators to ISO). This segmentation allows participants to commit to quality 24 hours in advance while aggregators handle the operational complexity and real-time adjustments, isolating the risk and complexity from individual participants.
Solution Approach 2:
The patent introduces aggregators as intermediary entities between participants and the ISO. Aggregators receive energy services from multiple participants, aggregate them to meet ISO requirements, and manage the complexity of real-time dispatch and pricing. This intermediary layer protects participants from direct exposure to market volatility and operational complexity while maintaining the quality and reliability of services.
2Adaptability or versatility
If aggregators use traditional economic mechanisms to interact with participants, then market-based pricing is achieved, but convergence is poor and performance degrades due to oscillations
Solution Approach 1:
The patent employs dynamic pricing mechanisms where aggregators adjust prices in real-time based on actual supply conditions, participant responses, and system needs. Rather than static bid-ask spreads, the system dynamically adapts prices to reflect current market states, enabling faster convergence and reducing oscillations while maintaining market-based pricing flexibility.
Solution Approach 2:
The patent implements feedback loops where aggregators continuously monitor participant responses to price signals, aggregate supply levels, and system performance. This feedback enables real-time price adjustments and control actions that stabilize the market, improve convergence properties, and prevent oscillations while preserving adaptability to changing conditions.
3Ease of operation
If participants directly interact with aggregators using the same mechanism as aggregators use with ISO, then interaction simplicity is improved, but the quality of service and aggregation capability deteriorate
Solution Approach 1:
The patent applies local quality by allowing different interaction mechanisms at different levels of the hierarchy. Participants interact with aggregators using simplified mechanisms appropriate for their scale and needs, while aggregators use sophisticated mechanisms when interacting with the ISO. Each level uses the most suitable mechanism for its specific role, optimizing both simplicity at the participant level and capability at the aggregation level.
Data Source
AI summary
Embodiments of a system, a method, and a computer-program product (e.g., software) for aggregating an energy service from a number of participants for use by a power-system operator is described. This aggregation may be performed by an aggregator, which is between the participants and the power-system operator. In particular, the aggregator may use an embedded economic mechanism to calculate a price that matches supply (or cutback) of power and/or load from the participants with a desired supply of the power-system operator. Because the aggregator typically does not know the participants' exact propensity to respond as a function of price (supply function), the aggregator calculates the purchase price using one or more iterations in which an initial probe price is provided to the participants, and the participants respond with supply-function approximations that are valid in proximity to the current probe price.