To promote the carbon-neutral community, the European Union (EU) is committed to placing the consumer at the centre of the energy transition. EU initiatives encourage energy-active citizens and a consumer-centric energy transition. Hence, many national and EU projects are ongoing that focus on consumer-centric local energy systems, networks, and communities. For example, through the collaborative R&D calls, the EU supports projects on the development of solutions and tools for the optimisation of the local energy network (LEN) [1
]. Under this theme (LEN), the ongoing and future proposed projects also consider the concept of local energy communities, renewable energy communities and citizen energy communities. These terminologies are also defined in EU directives [3
The shift towards a consumer-centric energy transition has placed particular emphasis on decarbonising the low-voltage distribution networks. The concept of the microgrid is one of the advancements in the electricity distribution network that supports such decarbonisation using distributed energy resources (DERs) that are independent of or only partially dependent on the main grid. It has also empowered consumers to support the grid by activating their assets for energy services whenever required. Consumers can also support each other by forming a microgrid that can be managed or operated by the users of a community with or without the support from an operational entity, thereby creating a community-based microgrid (C-MG).
The microgrid concept is well established and has been the subject of significant research efforts in recent years. With the advancement of technologies, consumers’ interest in participating in energy trading/sharing with neighbours, the local or wholesale energy market, and community-based microgrid solutions are thus getting more important. However, open questions remain regarding microgrid system integration, structure, energy sharing and trading mechanisms, technical performance of micro-grids in relation to the local distribution system constraints, micro-grid management and operation, cost efficiency, and socio-economic factors relating to consumer empowerment and engagement. From the microgrid system structure point of view, DERs can be placed anywhere in the microgrid networks either near to the central controller or dispersed to the consumers’ end, as shown in Figure 1
. From the active consumers’ participation point of view, we are considering the C-MG solutions, where DERs are mostly placed behind the meter at the consumers’ end, as shown in Figure 1
From a system integration point of view, the energy network solution for communities can be non-place based (i.e., specific geographic location) or place based (i.e., within a geographic location) [4
]. As the solutions are consumer-centric and consumers’ active participation in the energy management/energy market is important, the local energy system for communities is in general considered to be the local energy network, mainly the local electricity distribution network. Local energy/electricity network solutions are variously termed microgrids, local area energy networks [5
], community-based microgrids [6
], community grids [8
], logical energy networks [9
], smart local networks [10
], etc., with all being represented in some form of microgrid structure.
One of the key socio-economic objectives for moving towards community-based microgrids is to ensure affordable electricity to all users and the provision of low cost/non-economic electricity to vulnerable customers [11
]. In addition, the common objective of these networks is to empower consumers. The Council of European Energy Regulators (CEER) [12
] also presents the strategy of empowering consumers for energy transition by:
DER integration and innovative incentivisation;
Making consumers active to deliver to and get support from the flexible energy system;
New consumer-centric market and business models.
This energy transition will be successful if consumers are well informed and supported throughout this transformation, which will increase the responsibility and accountability of governments, utilities and relevant stakeholders [13
]. Consumer-focused smart integration of renewable resources leads to increased active consumer participation that consequently brings added advantages such as a better choice of supply, the possibility to produce and sell electricity and access to energy markets, making the overall system more transparent. In this regard, community-based microgrids have gained popularity in recent years. The benefits of allowing community microgrids, such as cheaper energy prices for the community, decarbonisations, and enhanced ancillary services to the utility grid, have been highlighted in [14
] and in [15
]. As the community microgrid brings together critical loads and dispersed energy resources from various owners, the authors of the articles [16
], introduce substantial new operational and commercial concepts. Using a community microgrid distribution system, this paper aims to address essential features, operational issues, and viable solution techniques for future community microgrid distribution networks.
One of the key elements to developing DER rich C-MG is the structure or topology in which the assets and users in the community can be well integrated and connected. Given the heterogeneity of households (care homes, students, family, tenants) with different electricity consumption profiles, the real-time management of local generation and consumption must be maintained at all times and the network should be able to carry the power flow satisfactorily without violating the system’s constraints [18
]. There remain significant challenges in developing the community network in such a way that it can accommodate all the community-owned resources and control the whole system reliably. The common technical challenges include voltage level and generation variability, harmonic distortion, resonance, stability, low inertia system stability, islanding detection, network protection, etc. A review of these technical issues and possible solutions concerning community-based grid/microgrids is presented in [8
Community-based microgrids must be operated and managed in an adaptable and flexible manner considering the common interests of all the key stakeholders [19
]. Some of the key energy trading challenges are balancing local generation and demand, prosumer participation and interaction, secure transactions, resilient communication infrastructure, and prosumer welfare [20
]. In addition, apart from the technical benefits derived at the local level, it is crucial to ensure the cost efficiency of the local energy system. Since the community users will not be fully utilising the whole transmission and distribution network, but rather a part of the low-voltage network, the network utilisation tariff must be considered and benefits such as reduced grid fee should be directed to the community [18
]. In light of the increased penetration of solar and battery energy storage systems, a micro-energy market is suggested in [21
] for smart household energy trading in low-voltage distribution systems. Additionally, a microbalance market is also proposed by the authors to alleviate congestion caused by unanticipated energy imbalances. The topology of the C-MG will play an important role in deciding the network tariff based on the complexity and management of the whole system. Furthermore, focus should also be given to the alleviation of energy poverty amongst the non-members of the community, especially individuals who cannot afford to make investments in renewables [19
]. The community can support all the consumers of this group by equally dividing their net profit and avoiding social discrepancy.
Exploration to find the solution to the challenges gives rise to evolving the architectures of community microgrids in a way that the facilitation of DERs becomes easier and prosumers can benefit from the best network design topology. In this respect, the C-MG structure development has focused on the following, showing that the architecture should consider DER integration/control and market operations simultaneously:
Ancillary services to the grid/inter-community microgrids;
Multi-scale storage management (small, medium, large scale storage);
Computational complexity on network trading and simulations;
Maximum power injection limit on inverters;
Regulation and grid code compliance on max capacity installation (prosumer with large storage installed capacity can earn more revenue);
Network tariff based on the utilisation of part of the network;
Avoiding conflicts among stakeholders (DSO, Retailer) based on personal interests;
Real-time coordination from the top level (DSO, C-MG operator) to the bottom level (prosumer assets);
The state of the art of the C-MG design is geared at resolving local community-based peer-to-peer (P2P) energy trade challenges, with the complexity and requirements of the community varying from one another. The purpose of this article is to offer a thorough review of the evolution of C-MG. In this respect, the key contributions of the article are:
A systematic evaluation of the existing literature and construction of a generalised framework for C-MG.
All feasible C-MG structure/topology on the basis of DER and grid integration are summarised and evaluated.
The investigation of interoperability in the context of the development of a C-MG.
In contrast, this review also provides a comprehensive understanding of the consumer-centric local electricity market that would be suitable for C-MG structures.
The opportunities and constraints of socioeconomic elements in the context of creating C-MG are also explored.
In summary, this study presents a comprehensive analytical assessment as well as recommendations for the development of C-MGs.
The rest of the article is organised as follows considering the above-mentioned contributions. The formation of the research questions to be addressed in this review article is provided in the methodology, Section 2
. The architectural evaluation of the C-MG is reviewed and described in Section 3
, and a generalised C-MG structure is proposed. Section 4
addresses the opportunities and problems associated with DERs and grid integration in the context of C-MG topological evaluation. Section 5
highlights the relevant interoperability issues. Section 6
discusses the limitations and opportunities associated with the consumers’ participation in LEM and WEM through the C-MG solutions. Section 7
briefly reviews the evolution of C-MG in light of its societal implications and the importance of a Living Lab. Section 8
presents a summary of the findings and recommendations, which is followed by the conclusion in Section 9
Interoperability represents the ability to exchange information in a timely and actionable manner, and, although this aspect is critical, it has not been in the focus of most of the recent smart grid research. Grid modernisation has been extensively progressing in recent years, but the production of technology and associated standards have only modestly improved interoperability [49
]. The state of the art of the interoperability issues is not well discussed and standardised for the MGs/C-MGs. This section attempts to establish a correlation between current power system standards and the limits imposed by interoperability difficulties in C-MG. The connectivity of C-MG and SGAM architectures are also proposed through the interoperability layer.
Divergent and convergent factors may be found on the route to interoperability. On the one hand, bottom-up microgrid structures are set up by different stakeholders getting help from specific manufacturers, which may or may not use open standards [50
]. While proprietary solutions might serve the purpose of a particular implementation, the lack of interoperability often forms a blocking factor for maintaining, extending or replicating the microgrid architecture. When non-proprietary solutions are chosen, there is often a multitude of standards to choose from: some standards come from the power system domain, others from the communication domain, and others from home automation systems or smart energy applications. Especially if existing assets are integrated into microgrids, wrappers need to be added to translate protocols into other protocols and to ensure a certain level of interoperability between different assets from different developers, to allow a microgrid to function. Similar protocol-to-protocol translations and custom-built interfaces emerged, e.g., when small DSOs (distribution system operators), each with their own vendor-specific SCADA systems (supervisory control and data acquisition systems) merged into bigger ones, where a unified supervisory control application needs to become operational. Having such a multitude of protocols and APIs—with all types of one-to-one translations—is not the way forward for a wide deployment of microgrids. A structured, interoperable approach is needed to mitigate this divergence.
On the other hand, top-down authorities and policymakers try to funnel the different approaches and to harmonise the standards, to converge the protocols and infrastructures that are used, and this is without influencing markets. In smart grids, this has been driven to a large extent by the CEN/CENELEC/ETSI Smart Grid Coordination Group, in which three standardisation organisations are active (generic—CEN, electrical—CENELEC and communication oriented—ETSI). They published the “Smart grid reference architecture” [22
] as a framework for interoperability (with the SGAM model mentioned earlier) in November 2012. The European Commission has an even longer history of calling to action the different involved standardisation organisations to set forward best practices and guidelines towards interoperability. Similarly, The Institute of Electrical and Electronics Engineers (IEEE) develops Standard such as IEEE 1547, which is the foundational document for the interconnection of DERs with the grid. With the recent advancement of modern power system solutions to enhance the integration of DER and loads with the smart grid intelligence, IEEE 2030 informs the grid interoperability issue to achieve the greater implementation and visualisation of information and communication technologies [51
]. Table 4
summarises the key issues that are addressed in the interoperability-related standards.
An overview of all related smart grid standards is maintained by the IEC (International Electrotechnical Commission) as an interactive map linking to all underlying standards, as indicated in Figure 7
Going down to the level of microgrids and energy communities, it is also recommended to take these standardisation and harmonisation approaches into account and to adopt an open system philosophy, because the future proofness of standardised solutions often outweighs the slightly better performance of proprietary solutions, due to the limitations from vendor lock-in. Obviously, during proof-of-concept studies and research demonstrations of microgrid architectures, standardised and interoperable setups are not often a primary concern. Nevertheless, interoperability and standardisation are critical for having a good replication potential and for upscaling microgrids in wide deployment.
Microgrids with a wide range of interoperability capabilities will enhance the operation and control of the overall system [63
]. However, the full interoperability issues that affect the grid have not been completely explored in the microgrid context. Interoperability issues can directly impact grid resiliency and the reliability of the MGs. Accountable information related to the interoperability concerns between systems and components that originated at the physical layer must be followed up by the entity responsible for controlling both the microgrid and the external grid [64
]. The added advantage of good interoperability would be that it can facilitate a trading mechanism for resiliency-enhancing services between affected and unaffected domains. Better information sharing would allow for faster response times and quicker restoration of services [64
]. Interoperability will improve the overall coordination to supply the residual loads at the edge locations [64
]. Rapid integration of DERs in the microgrid brings a challenge for utilities in terms of maintaining the reliability of the system in what-if scenarios such as what would happen if the entire microgrid goes down. In addition, interoperability facilitates enhanced decentralised control. However, it depends upon the utilities and how they adopt the better interoperability framework to understand the predictability of DERs and minimise adverse impacts on the main grid [49
Further, interoperability is considered to be the most important feature for the development of the smart grid. As a consequence of this, the proposed SGAM architecture also addresses interoperability. Definition and prerequisites for attaining interoperability are provided in Figure 8
, for understanding interoperability in the context of smart grid and architectural models. This framework validates smart grid use cases and supports them with standards, which is in line with the M/490 initiative.
In the proposed architecture, the regulatory layer reflects the corporate perspective on the information exchange connected to smart grids. In addition, this layer of SGAM may be used to map the regulatory and economic (market) frameworks and regulations, as well as the new business models. The market and business layers, on the other hand, were depicted as being separate from actors and physical implementations in applications, systems, and components. It assists market operators in making judgments about new business practices for LEM (P2P) energy trading. Data communication between functions, services, and components of SGAM is handled by the proposed control layer. The data model developed in the control layer is responsible for the interoperable information exchange through the ICT layer. ICT layer employs communication channels for interoperability between components in the context of the underlying use case, function or service and the corresponding information objects or data models. Finally, the physical layer uses the existing smart grid infrastructure (including power system equipment, protection devices, communication channels, etc.) for participating in interoperability operations.
6. Market Integration
In relation to consumer engagement and community market participation, the local energy/electricity market (LEM) can be defined as a socially close community of residential energy-active users (prosumers, consumers) that have access to a joint market platform for trading self-produced energy/electricity among themselves. The mechanism may support the consumers/communities to participate in the wholesale electricity market (WEM) in the future. Such consumer/community-centric markets can be classified as (i) peer-to-peer markets (P2P), an online platform where active consumers and producers “meet” to trade electricity directly, with/without the need for an intermediary, (ii) transactive energy markets (TE), a set of mechanisms where economic-based instruments are used to achieve a dynamic balance between the generation and consumption without violating the operational constraints of the power system, and (iii) community self-consumption (CSC), a framework that facilitates the sharing of clean electricity generation within a community to achieve collective self-sufficiency. The physical community energy system can be connected to the distribution network or can form an isolated network. In these cases, they can also operate as virtual or physical microgrids.
The consumer-centric P2P energy trading (without any aggregator) mainly depends on decentralised C-MG architecture, where all peers cooperate according to the energy availability and economic structure, which eventually ensures the consumer’s flexibility. The community-based P2P energy trading mainly depends on community economic structure and regulation. However, lots of research projects and campaigns are initiated to encourage consumers to participate in this future market transition. Most of the countries still have regulatory constraints for consumer-centric energy trading. One of the most important reasons is that analysing the impact of LEM on the distribution network is still in its early stages. Reviewing the literature shows that most of the studies are based on theory and simulation, some have lab-scale experimental validation and very few are known from the real-world demonstration [65
]. None of the reviewed articles yet concentrate on the system integration level (within the physical layer), where it can be shown that the different integration methods of DER (as shown in Figure 6
) could reduce the grid impact. The current concerns for implementing the new energy market models are legal and regulatory issues, potential grid congestions, cyber threats, consumer engagement, and the poorly designed market structure. In the following section, the potential constraints for developing a consumer/community-centric market model are briefly reviewed.
6.1. Prosumers beyond Self-Consumption
Engaging the consumers and adjusting their random behaviour is a huge challenge for new energy solution implementation. Smart grid technologies are often conceived, designed, and developed without the end-user being the central concern. This leads to poor participation and engagement from the communities using it or further developing it [68
]. Consumer demand for the sourcing of local electrical energy and the potential barriers to a trusted and open energy market is a widely raised research question [69
Research has shown the socio-technical and economic impact potential resulting from increased prosumer engagement in the community and local energy markets. Such markets have the potential to:
Trigger local sustainability projects that drive energy independence, reduce emissions, reduce fuel poverty and generate local jobs [72
Encourage investment in new projects by increasing democratic control over energy investments [73
]. This can increase the acceptance of RES installations and simplify the planning process in communities.
Generate financial returns by creating a mechanism for reinvestment or reallocation of energy revenues directly in host communities, for example, by profit sharing or dividends.
Mobilise citizens by enabling joint action for addressing local issues, for example, climate change or air pollution.
Increase the visibility of energy use among consumers, thereby driving the uptake of energy efficiency measures.
Reduce energy costs and lower network tariffs, as well as improve fairness in relation to the socialisation of grid costs [74
Improve social cohesion.
6.2. Impact of LEM on Microgrids and Possibility to Improve by Integrating It into the Wholesale Market
LEMs can be used to balance local demand to match intermittent supply, manage congestion and transmission/distribution constraints, support the financial management of participants that takes into account location and network needs and replace/postpone grid investments with the utilisation of local flexibility [75
]. Interactions and interfaces between local and wholesale central markets are still undetermined. Therefore, different options for interfaces need to be considered when modelling LEMs. Wholesale aggregators either can operate directly on the local market platform and neutrally offer energy at wholesale market clearing prices, or the LEM is operated by a market operator/C-MG operator/aggregator that competes in the local market and has the opportunity to trade between the local and wholesale markets.
When it comes to P2P-based LEM, agents with intelligence are benefited from the lowest overall average electricity price [76
]. The authors in [77
] also evaluated the performance of a fully integrated TE-based LEM while modelling the energy resource management problem of a microgrid under uncertainty considering flexible loads and market participation, and coupling these with LEM and WEM. It was concluded that introducing LEM provides an efficient mechanism to reduce costs. An enhanced security management system for LEM is also proposed in [78
], where model-based system architecture was designed for an interoperable blockchain-based LEM for prosumers in a residential microgrid setting. It shows the confidentiality and integrity required for energy trading to sustain continued energy supply and sales, the ability to track energy sources during energy generation and energy dispatch so that renewable energies are separately identified from non-renewables, and access for customers to energy data transaction details so that the type of energy provisioned to their premises is known. LEM incorporating multiple energy carriers and bid structures suitable for representing flexibility is also presented in [79
]. The incorporation of multiple energy carriers in the market clearing leads to potential synergies and increased efficiency in the use of existing resources. The authors in [80
] also discuss a Swiss example of LEM specifically based on P2P energy trading within a regulatory sandbox and investigate a TE system that manages the exchange and remuneration of electricity between consumers, prosumers and the utilities. The smart meters send bids to both consumers and prosumers, which contains the price limit determined by each household. This allows the end-users to be more involved in the market use. However, it was confirmed that the behaviour of peers was not influenced so much by the market prices as it was from personal relationships and friendships. This brief review confirms that the research and demonstration on LEM/WEM market models and their integration have already been established at some level and also included in the microgrid research.
It is also expected that these new LEM models can provide flexibility to all consumers to participate in the power system transition. Where the retail energy market lacks competition, the consumer-centric P2P/TE/CSC-based energy market could be an alternative solution. The IEA task “Global Observatory on Peer-to-Peer, Community Self-Consumption and Transactive Energy Models” [81
] is collaborating internationally to understand the policy, regulatory, social and technological conditions necessary to support the wider deployment of P2P/TE/CSC models. It has thus generalised the LEM framework in five layers, which also aligns with the proposed C-MG architectural framework, as shown in Table 5
. It is also noted that, in order to facilitate the LEM introduction, this IEA global observatory has come forward with valuable policy recommendations, including the prioritisation of the uptake of advanced metering infrastructure (“smart meters”), allowing consumers to have several energy suppliers at the same time and demand response to compete fairly with storage capacity mechanisms, recognising and enabling community energy groups to become service providers on the grid and reducing social and environmental taxes and charges from consumers’ electricity bills. Figure 9
provides an example of possible energy market designs based on the proposed C-MG structures in the previous section (Section 4
, Figure 5
). In this structure, individual/community-based peers are engaged in energy transactions between themselves/communities through the community manager interacting with the designed energy market.
7. Social Aspects
There is no doubt that the community-based microgrid solutions can not only bring lots of benefits to the community but also support achieving the national clean energy targets, mitigate greenhouse emissions and ultimately provide a healthier environment for society. A recent review of the existing real-life C-MG demonstration projects [44
] finds that while utilities are playing a central role in developing the C-MGs, creating social capital is critical for the successful implementation of C-MGs. It also often requires a radical change in institutions and special support from the government. Since the structure of C-MGs is technically complex and the development process is somehow challenging, the success depends on the implementer’s ability to increase the social value of implementing and operating the C-MGs, which in turn will increase social acceptance. Hence, this study very briefly reviews the literature on the social aspects of the operational phase of C-MGs to give insight into how the local energy communities develop into methods for stakeholder engagement, participation and social acceptance.
Authors in [47
] proposed a methodology that is based on the concept of a community as a socio-ecological system affected by the technological intervention. They identify how technology can be accepted when participation and co-design are used in the technological intervention. A four-stage methodology for community engagement is described and is validated by testing in a real-life setting in Chile. The paper describes how participation builds trust and adaptability as well as social learning and reflexivity.
To quantify the social benefits, stakeholder mapping was also used to match the relevant benefits in [82
]. It identifies the multi-objective and multi-stakeholder engagement nature of microgrids and their benefits and the large number of different assumptions that could impact microgrid benefits. The Huatacondo project is demonstrating real-life examples in South American countries located in isolated mountain regions where the community are involved in the operation of the smart grid and participated in its co-design [83
]. The positive impact of community participation implies better energy management and economic and social benefits.
The authors of this review paper recognise that the ongoing needs and barriers faced by local energy communities are also complex. Hence, microgrids that were developed and operated through innovative participative methodologies have been given particular attention in this review. Comparisons with the Living Lab approach were considered here to identify the potential for future applied research to find novel ways to address the social problems of C-MGs.
A Living Lab is an innovation intermediary, which orchestrates an ecosystem of actors in a specific region. Its goal is to co-design products and services, iteratively, with key stakeholders in a public–private people partnership and in a real-life setting. One of the outcomes of this co-design process is the co-creation of social value (benefit). To achieve its objectives, the Living Lab mobilises existing innovation tools and methods or develops new ones [84
]. The Living Lab Integrative Process involves empathising with users and defining problems, as well as integrating stakeholders using methods such as community-based social marketing. It is well accepted that the co-design of solutions with users is an important step in the process prior to prototyping and testing. Hence, the literature on microgrids is assessed here to identify the social research methods associated with the development process to help propose how a Living Lab methodology could benefit local energy community operations.
The challenges of energy consumption for end-users in microgrids are described in [85
] and help identify that the need to ensure better buy-in at the design and planning stages of project development is important to facilitate stronger social acceptance and cooperation from the outset. It also discusses the consequences and possible scenarios for stakeholder engagement. The Living Lab approach should identify the early participation of users to support co-design and better acceptance and participation in the operational phases.
The local issues/factors also influence the development of local energy systems and include the social aspects. A framework for the design of microgrids including social analysis in a multi-objective way using criteria such as the inhabitants’ cost of living and intercultural aspects, instead of traditional technical and economic analysis, is proposed in [86
]. The results show how the proposed framework can be applied in a real-life setting and therefore provide useful case scenarios when considering how a Living Lab approach could be used in the development of local energy communities.
Engaging the community in microgrid operation and maintenance (O&M) is another important issue to explore within the context of the long-term sustainability of microgrids [87
]. In this case, the development of business models for covering investment and O&M costs helps to identify if local stakeholders and social capital are needed. This approach is also presented in [88
], where macro and micro levels of analysis and tools are implemented in Living Lab to improve long-term sustainability. However, the need for co-design to involve users in operational phases of Local Energy communities is not specifically identified as a potential way to improve the long-term sustainability of microgrids.
The literature shows a lack of social research on the operational and earlier phases of microgrids and the need for methodologies to better understand the context, needs and barriers faced by the communities, so that successful operational strategies can be implemented and lead to better acceptance, and long-term sustainability of C-MGs. At the same time, the operation of C-MG should technically be supportive to the utilities, so that the smart grid network operators do not face any technical difficulties in maintaining the network stability.