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Energy Market Platform and Communication Network for Smart Energy Management System

With the modernization and automation of energy trading between suppliers and consumers, the energy market is moving more in the direction of an intelligent energy management system that is highly dependent on a smart communication network.

This blog describes an overview of a Smart Energy Market platform and the associated communication network.

Overview of Smart Energy Market Platform

The market platform is formed from a complete and comprehensive plan containing definitions for all the participants within energy trading market. Each individual element should also have its roles and responsibilities defined. An independent decentralized market operator is required to coordinate all the tasks associated with each element, to make sure the energy market operates smoothly and efficiently. A market platform should ease the process for reaching the goal, with minimum cost, energy, and time.

Many different types of Distribution Energy Resources (DERs) exist such as Renewables, Hydrogen, Nuclear, Battery Storages (BS), Dispatchable Load (DL). In addition, End Prosumers (Smart Appliances, Micro Solar, Smart Meter, Micro Storage, Electric Vehicles (EVs)) etc. are going to play a role in the operation of the energy market.

To coordinate the mixture of generation and energy demands efficiently with multiple energy sources, a comprehensive energy market platform solution is required. District Energy Network (DEN) should be able to work in Islanded mode during the time when the area is not importing or exporting energy from other Energy Distribution Network Owners (EDNOs). Moreover, energy market platform will benefit from being connected to other energy networks, where they are available, to improve efficiency, safety, reliability and resilience of energy services.

The overall structure of the proposed market platform should be based on independent operability of Energy Market Platform (EMP) in connection with future neighboring Energy Market Platforms (EMPs). Future Energy Distribution System Operators (EDSOs) are also going to be linked together via Energy Distribution Network Database (EDND). The main purpose for each individual energy distribution network is to bridge between distribution assets, and their associated market platform, to provide enhanced visibility of the energy system, as shown below in figure 1.

Figure 1. The structure of energy trading in combination with local EDNOs and other Energy Distribution Networks.

In addition to satisfying the requirements of a solution to the energy trilemma, the other focus of this type of market platform structure is to eliminate the cost associated with including brokers, by removing the requirement for them completely; thus, maximising the revenue for DERs participating in this energy market.

Energy Trading Mechanism

Peer-to-Peer (P2P) energy trading represents direct energy trading between peers – where energy from small-scale Distributed Energy Resources (DERs) in dwellings, offices, factories, etc., is traded among local energy prosumers and consumers [1].

To be able to provide a multidirectional system for trading energy within, a Peer-to-Peer (P-2-P) energy trading mechanism needs to be deployed [2].

Some of the elements within Energy market platform require communicating with distribution network assets via EDSO, as can be seen from figure 1. To facilitate the access to information, Market Platform needs to be embedded into the EDSO Control System, as an add-on, as depicted in the control system shown in Figure 2.

Figure 2. Example of District Energy Network Control System.

Energy will permit multi-directional energy trading, based on the concept of prioritising Distributed Energy Resources (DERs) after considering the balance of lowest carbon output, lowest cost, and dispatchability capabilities. When energy demand is higher than energy supplied, an energy shortfall request would be sent to Energy Distribution System Operators (EDSOs) to meet the energy shortfall. When there is more energy supplied than energy demanded, the surplus signal would be sent to a peer-to-peer parallel auctioning system, to trade the extra generation to external consumers (DSOs). As a last resort option, under rare circumstances where no external DSOs are unable to assist with under or over generation scenarios, load or generation shall be constrained off accordingly.

Figure 3 (P-2-P market platform diagram, adapted from the diagram show in the report by Ning Wang, 2018) illustrates how different elements of the system could be brought together to operate the energy market trading platform.

Figure 3. P-2-P Energy Market Architecture.

Communication Network for Smart Discreet Energy Management System

There are three levels of communication networks from energy production to end use customers as it shows in figure 4.

  • Wide Area Network
  • Field Area Networks
  • Home Area Networks

Wide Area Network (WAN):

WAN is the backbone of smart energy management communication system which connects the distributed small area network. It get data from measuring devices such as Phasor Measuring units (PMUs) and transfers data to SCADA system.

The main requirements for WAN system is to transfer data within the frequency of sampling of the measuring devices (PMUs). It also requires high bandwidth and low latency.

Field Area Networks (FAN):

FAN includes field based applications such as SCADA and DER monitoring & control system. It also covers costumer based applications such as Advanced Metering Infrastructure (AMI) and Demand Response (DR).

The field applications mainly work on basis of real time monitoring which is time sensitive. The dedicated robust network is compulsory and provides extra security.

However, costumer based application is a highly scalable network which is not time sensitive and doesn’t need dedicated network. It’s less expensive than field application and security need to be provided.

Home Area Networks (HAN):

HAN contains monitoring and control of smart devices, demand response and real time pricing. It requires secure two-ways communication and uses utility public broadcast for event and price signals.

Communication Technology

Existing wired and wireless communication technologies for smart system are fibre optics, GPRS, UMTS, ADSL, WiMAX, 3G/LTE, FTTH, GSM and PLC in all three communication layers (Wan, FAN and HAN) mentioned above. In near future 5G will be used utilities to speed up the communication of signals based on their applications and severities.

However, for interconnection between different things or people/humans within smart energy management system for smart and accurate decision making, a huge dynamic global network infrastructure such as IoT required.

IoT enables all types of information technologies such as GPS, RFID tag devices, sensors, smartphones, actuators to sense, track, connect, monitor identify, manage, cooperate and control in digital, physical and virtual world.

Figure 4. Smart energy communication system example [3].


In order to operate a mixture of DERs, manage the load profile, and provide a low carbon, low cost, and secure energy solution, a peer-to-peer market platform solution will be required.

An independent market operator has to be selected to operate the energy trading platform. The Market Operator will need to communicate with other energy distribution market operators in order to balance the energy flow across the network, develop a competitive energy market, encouraging private sector investment in decentralized area, and improve energy pricing efficiency for end user consumers. By improving the data exchange between all decentralized energy market participants, greater energy transparency is provided for each individual decentralized area. For instance, energy end users have an appropriate visibility on energy trading behaviors, which makes it easier for them to analyze their energy usage and selections.

The decentralized market platform would operate with three layers of architecture – Scheduling and Bidding, Exchange, and Settlement. Each one of these three elements have their own subsections, which link the main layers and support the overall energy market to operate securely and smoothly.

The schedule and bidding mechanism gathers information from DERs and confirms energy demands within the decentralized area. It analyses the data and works out how to maintain the energy equilibrium. Where it can’t meet the balancing requirement – either shortfall or surplus of energy – then it communicates with external markets to address the imbalance. The decentralized market platform network operators make the energy exchange decision and execute after considering regulation and energy flow measurements.

The final element deals with financial aspects of energy trading amongst the decentralized energy market participants. This is achieved through the settlement layer subsections, with profits, penalties, and tariffs being specified. Suppliers will remain the direct point of contact with the energy end users, and will set defined tariffs (such as DSM) to control different energy vector usage.

There are some limitations to adequacy of information available at this stage of the project. For instance, roles and responsibilities of stakeholders (such as energy suppliers, energy users, public sectors, and regulators) need to be determined, before a comprehensive and detailed decentralized market platform design can be completed.

A comprehensive communication system required for managing the data transformation between all three layers of smart energy communication systems (WAN, FAN and HAN).

To minimise the cost of developing such a smart communication system, existing communication methods has be utilised and new technologies such as 5G need to be added in some extent based on sensitivity, and severity of the applications.

IoT integrates the communications network of smart energy communication system to collect and analyse data that are acquired for all three before-mentioned communication layers. [4]


[1] J. W. Y. Z. M. C. C. L. Chenghua Zhang, „Peer-to-Peer energy trading in a Microgrid,“ Applied Energy, pp. 1-12, 2018.
[2] W. X. ,. Z. X. a. W. S. Ning Wang, „Peer-to-Peer Energy Trading among Microgrids with Multidimensional Willingness,“ Energies, pp. 1-22, 2018.
[3] W. X. E. W. a. M. J. Md Masud Rana, „IoT Infrastructure and Potential Application to Smart Grid Communications,“ 2017.
[4] A. Ghasempour, „Internet of Things in Smart Grid: Architecture, Applications, Services, Key Technologies, and challenges,“ 26 March 2019.


About the Author: Arash Nateghi

Arash Nateghi graduated in electrical and power engineering MEng from University of Bath, UK on 2016. He has previously worked for the UK electrisity transmission system operator (SO), National Grid, as a SCADA and data intefrerences engineer from 2014 to 2015. He also worked for National Grid electricity transmission owner (ET) as a system desgin enineerer from 2016 to 2018. Then he joined Burns & McDonell T&D as a power system consultant working mainly on smart energy solotions from 2018 to 2019.