Commercial buildings, residential homes, and other structures in the United States (U.S.) account for more than 70 percent of electricity use and power-sector carbon dioxide emissions. To reduce energy consumption, costs, and carbon, the built environment must focus on wider application of energy-efficiency measures and demand-management techniques. This approach would help position the electrical power grid for better response to extreme events, such as hurricanes and wildfires, that lead to blackouts.

In the case of demand management, some U.S. utilities already interact on a limited basis with smart appliances in buildings and homes, turning the devices on and off briefly to help reduce demand when electricity use spikes. This “demand flexibility” can mitigate transmission and distribution congestion, often without affecting the comfort of home or building occupants. It also can deliver a range of economic and environmental benefits.

What if demand flexibility was taken to an entirely new level, where it was combined with an electricity price signal and real-time, two-way communications? That’s the vision for transactive energy.

Transactive energy essentially is an intelligent, multi-level communications method that coordinates energy generation, consumption, and delivery. Under the transactive energy scenario, electricity suppliers, energy markets, the power grid, homes, commercial buildings, and distributed energy resources (DERs), such as electric vehicles and batteries, would “talk” directly or indirectly with each other to negotiate energy needs and costs. The electronic process would rapidly and automatically harmonize energy availability, consumer needs, cost preferences, and other factors, enhancing overall energy system efficiency.  

Researchers at Pacific Northwest National Laboratory (PNNL), in partnership with the Department of Energy (DOE), recognize the potential of transactive energy and are helping realize the vision and a range of economic, environmental, and security benefits. This potential drives PNNL’s transactive energy strategy, which focuses on delivering technologies that not only help buildings and homes achieve benefits of efficiency and demand flexibility today, but also serve as key building blocks of a future transactive energy system.

The graphic above provides a basic illustration of how a transactive energy system might work. Under this scenario:

• Individual smart devices (lower right) within homes or buildings would electronically communicate energy needs and the preferred price to a transactive "node," which serves as a general interface between buyers and the electricity market. In this example, the Eclipse VOLTTRON™ technology enables node operations.
• The node aggregates requests, with the process repeated perhaps at campus, city, and regional levels. These requests would eventually reach the market, which would calculate and communicate back an energy price based on current supply and demand.
• The entire process, as envisioned, would occur extremely quickly over a period of minutes or even seconds multiple times per day, with smart devices choosing to accept the price or perhaps deferring operation until a more preferable price comes along.

Transactive energy—a promising solution for national needs

The nation’s security, economy, and modern lifestyle choices require an adaptable and resilient electricity system. Increasingly, this system also must meet public desires for clean energy sources, such as wind and solar power, to reduce the nation’s carbon footprint and mitigate climate change. In situations when the wind stops blowing or clouds suddenly roll in, the grid must manage these variations and quickly pivot to bring other energy resources online.

The transactive energy approach provides a coordination and control methodology that more effectively balances energy supply and demand across the grid, enabling increased integration of clean energy sources. Additionally, transactive energy is designed to enhance energy system efficiency, which means the power grid becomes more resilient and can meet more needs with its existing infrastructure.

PNNL has made significant progress in creating techniques and tools that will be needed for the future transactive energy system. For example, PNNL has developed and successfully demonstrated its Transactive Coordination and Control (TCC) technology on the PNNL campus and is expanding deployment to other test sites. TCC has shown that building systems and devices, such as smart air-handling units, can successfully bid on and buy electricity, producing warm or cool air that’s “sold” to meet a specific building zone’s comfort and cost requirements.

Another advancement, Intelligent Load Control (ILC), now deployed in multiple field tests, has demonstrated an ability to respond to peak power load stress on the grid by quickly and temporarily managing heat pump operation in buildings in a way that reduces energy consumption but is not noticeable to occupants. This juggling capability, which also can be linked to cost incentives, absorbs the sudden loss of energy sources, such as wind, or responds to other challenges the grid may be experiencing.

PNNL’s transactive energy history

PNNL, with its expertise in power grid operations and building controls, was an early thought leader and pioneer in the field. PNNL’s Gridwise Initiative in 2000 began exploring dynamic pricing-based transactions as a key coordination scheme. The effort subsequently prompted the term “transactive” to describe PNNL’s approach.

The initiative was followed by formation of the Gridwise Architecture Council and a series of seminal projects, led by or involving PNNL:

• Gridwise® Olympic Peninsula Demonstration (2006–2007). Funded primarily by DOE and helmed by PNNL, this effort at locations in Washington and Oregon pioneered the transactive approach, showing how advanced information-based technologies can be used to increase power grid efficiency, reliability, and flexibility while reducing the need to build additional infrastructure.
• American Electric Power Ohio gridSMART® Demonstration Project (2010–2013). For the first time, a utility and its public utility commission were formally engaged in developing and approving a fair and equitable transactive rate design that effectively rewards consumers who respond to a dynamic price signal, saving energy and costs. PNNL was a partner in the project, funded under the American Recovery and Reinvestment Act (ARRA).
• Pacific Northwest Smart Grid Demonstration Project (2010–2015). Also funded under ARRA, the project spanned five states and extended the transactive approach to a regional level, involving the Bonneville Power Administration and 11 utilities. The effort employed a transactive signal to engage a wide range of assets, including homes and buildings, batteries, and DERs. Battelle, operator of PNNL, led the project, with experts at PNNL in key leadership roles.

PNNL also launched internally funded, five-year research projects that further informed transactive concepts. The Future Power Grid Initiative (GridOPTICS), which created the foundational Eclipse VOLTTRON™ technology that enables transactive methods, and the Control of Complex Systems Initiative marshaled large, multidisciplinary teams to provide new transactive insights and tools.

Realizing transactive energy

Although substantial progress has been made, getting to the future transactive energy system won’t be easy. It will require advanced and automated tools and methods, as well as extensive field testing. Further, customers and society at large must be convinced that they will benefit, and there must be a clear value proposition for grid operators.

To make further progress against these challenges, PNNL has developed a core set of publicly available capabilities and tools that have enabled the effective design, evaluation, and demonstration of transactive energy schemes.

In addition to combining economic theory and control theory to understand the theoretical foundations of transactive energy and alternative coordination approaches, PNNL has developed a methodology for transactive energy research that maps and evaluates the value of coordination schemes so that benefits and costs can be determined from various stakeholder perspectives. This valuation methodology includes identifying value exchanges among all the relevant actors within a system, determining the metrics and the data required to calculate the exchanges, and modeling the exchanges within the system operations.

Another advancement, PNNL’s Transactive Energy Simulation Platform (TESP), enables large-scale multisystem, multidisciplinary simulations of transactive energy implementations. The open-source platform reduces the software development effort for simulating new transactive systems and mechanisms and provides a consistent basis for analysis. TESP includes domain-specific simulation tools, sample transactive agents for controlling DERs such as heating, ventilation, and air conditioning units and electric water heaters, data collection and post-processing libraries, and a co-simulation platform to tie software components together and create and integrate models and analysis.

PNNL is also working to standardize and accelerate field demonstrations through tools that reduce the effort required to establish and participate in a transactive energy system. The Transactive Energy Network Template was developed to facilitate the setup and operation of a transactive node, which serves as the interface for a variety of communications between energy suppliers and consumers.

Promising PNNL developments in transactive energy

PNNL’s early field projects and newer efforts continue to lay the groundwork for transactive systems. More recent endeavors include:

Distribution System Operations Transactive Energy—This national impact study employed grid modeling and simulation to understand how DERs can become more effectively integrated into the electricity distribution system and contribute to grid reliability and resilience. PNNL researchers conducted large-scale modeling, simulation, and analysis based on the infrastructure footprint of Texas’s primary power grid, with results extrapolated to reflect national impact.

Clean Energy and Transactive Campus Project (CETC)—Initiated in 2016, the CETC was the first of its kind to test demand-side transactive controls at a scale involving multiple commercial buildings and devices. The project has developed the ILC and TCC technologies that have been deployed and tested in a network of PNNL campus buildings and at sites around the nation, helping meet the objectives of DOE’s Grid-Interactive Efficient Buildings Initiative.

Residential Load Flexibility—For existing homes, researchers are developing a system that establishes two-way communications between home devices—such as heating and cooling units, water heaters, household appliances, and electric vehicle chargers—and the grid to enable transactive benefits.

Eclipse VOLTTRON™—This PNNL-developed distributed sensing and control software platform provides the basis for a growing number of efficiency and transactive energy applications. The technology has been used nationally and internationally in commercial buildings and smart neighborhoods.

Collaboration and expertise

PNNL’s transactive energy research and development activities include collaboration with a wide range of grid entities and utilities, government agencies, national laboratories, universities, building services providers, and more. PNNL continues to identify and partner with organizations working toward a transactive energy future.

Collaborative activities are underpinned by PNNL’s internationally recognized experts, who expand the horizons of transactive energy. These researchers build upon the work of early PNNL visionaries who include Don Hammerstrom, Srinivas Katipamula, Ron Melton, Robert Pratt, and Steve Widergren.