Impact of preference-based electricity products on local energy markets

When buying electricity, consumers have preferences for green or regional energy. In Local Energy Markets (LEMs), these preferences can be integrated in the market design by trading certain electricity products instead of homogeneous electricity. The impact of these preference-based electricity products on the LEM is not clear. To study this impact, we propose a linear optimization model to simulate the trade in LEMs considering the preferences for electricity products in the LEM as well as the assets (static and flexible generation and load, storages, and electric vehicles) of the participants. We define three products: green electricity, regional electricity, and green regional electricity that make use of different preferences and can only be traded restrictedly. A case study on a demonstrator region in the Allgäu (Bavaria, Germany) shows that electricity products can make use of the willingness to pay for and increase the local consumption for the LEM participants to up to 97 %. By adding the electricity products, the electricity mix for the participants can change and reduce the amount of non-renewable energy generated. However, it shows that overly strict preferences cannot be served and thus no longer lead to an increased use of green electricity.