New Roles in Peer-to-Peer Electricity Markets:Value Network Analysis

Mehdi Montakhabi∗, Fairouz Zobiri†, Shenja van der Graaf∗, Geert Deconinck†,Domenico Orlando‡, Simon Vanhove§, Raf Callaerts§, and Mustafa A. Mustafa¶‖

∗imec-SMIT, Vrije Universiteit Brussel, Pleinlaan 9, Brussels, 1050, Belgium†Electa, KU Leuven, Kasteelpark Arenberg 10 - bus 2445, 3001, Heverlee, Belgium‡CiTiP, KU Leuven, Sint-Michielsstraat 6 - box 3443, 3000, Leuven Belgium

§IEEL, KU Leuven, Tiensestraat 41, 3000, Leuven, Belgium¶Department of Computer Science, The University of Manchester, Manchester, M13 9PL, UK‖imec-COSIC, KU Leuven, Kasteelpark Arenberg 10 - bus 2452, 3001 Heverlee, Belgium

Email: mehdi.montakhabi@vub.be, fairouz.zobiri@kuleuven.be

Abstract—This paper performs a value network analysis on theelectricity market. The study introduces current value networksetting in the electricity market. Critical roles and activities andtheir setting in the value network are introduced. Based on fourfuture scenarios built by business model matrix analysis, changesin the value network, new roles, and emerging/evolving activitiesare discussed. The outcome of the study yields to the introductionof two new emerging roles (brokers and representatives) in thefuture peer-to-peer electricity markets. These roles are discussedfrom legal, data protection and grid structure perspectives.

Index Terms—peer-to-peer, smart grid, grid structure, valuenetwork, electricity market.

I. INTRODUCTION

Peer-to-Peer electricity trading is a new paradigm that en-ables citizens to trade the electricity produced from renewablesources at their sites with other citizens in the same localgeographic region [1]. Considering the increasing share ofrenewable resources in electricity production, the rationalefor an increasing interest in peer-to-peer trading points to theintertwined trend of keeping the electricity produced at a locallevel as well as decreasing transmission losses so renderingthe local communities more robust to grid failures. Acceptingthis, peer-to-peer electricity trading is said to offer the promiseof more efficient use of dispersed resources, increases socialresiliency and enhances sustainability [2].

In this view, the peer-to-peer trading of electricity possibilityis changing the value creation paradigm in electricity mar-kets [3], thereby challenging the current activities of variousstakeholders in the value network and, likely, to evolve/disruptsome existing and lead to the emergence of some new rolesin electricity markets [4]. Currently technological, economicaland legal barriers still exist for a smooth roll-out for such oftenmarket disruptive (local) trading paradigms.

The novel contributions of this paper are two-fold. First,it identifies status quo and future setting of players in theelectricity market using value network analysis to identifycritical roles and activities. Second, by comparing the currentcondition and future scenarios, the study introduces two newroles, brokers and representatives, and discuss them from legalas well as grid structure perspectives.

The paper is organised as follows. Section II gives detailson the methodology to study current and future electricitymarkets, critical roles, and activities. Section III explains theresult of value network analysis on the current electricitymarket, introduces future scenarios and introduces changes inthe value network and emerging new roles and activities thanksto peer-to-peer trading of electricity. Section IV investigatestwo new emerging roles (brokers and representatives) fromlegal and data protection perspectives, while Section V - fromgrid structure perspective. Section VI concludes the paper.

II. METHODOLOGY

The analysis presented in our study makes use of a compar-ative approach by examining the status quo and future scenariostructuring, conducted by the business model matrix analysisso as to yield insights into the prospect of the value networkin the electricity market in Belgium [5], [6].

A. Value Network Analysis

While the value creation paradigms in the industrial agewas more linear in compare to more intertwined setting ofstakeholders today, value chain analysis was able to showthe way value was being generated and delivered. Valuechain thinking is gradually being replaced by new modelsof the value network to analyze value creation when thereis a network of stakeholders involved in generating value forconsumers [7]. Consumers themselves are also involved invalue creation.

Value network analysis is a generally accepted techniquefrom organization science, the roots of which can be tracedback to Porters value chains [8], combined with the morerecent insights from the schools of Industrial Organizationand Resource Based Management [9], [10]. Value networksgenerate value through complex dynamic exchanges betweenone or more stakeholders. These networks engage in more thanjust transactions around goods, services, and revenue. The twoother currencies are knowledge value and intangible value orbenefits. Revenue-generating value exchanges are just a partof the picture in a value network. The flow of knowledge value

and intangible value is of equal importance [7]. The outcomemap of the value network analysis shows how critical busi-ness interactions occur between the concerned stakeholdersthroughout the entire business ecosystem and what meaningfulservice streams are recognizeable.

B. Roles, Transactions and Deliverables

Transactions are represented by a one directional arrow inthe value network map. The arrow represents the directionalmovement of the deliverable from one role to another. Trans-actions are temporary and transitory in nature.

Deliverables are the actual things that move from one roleto another. A deliverable can be something physical or non-physical. In the analysis of the electricity market, it could beelectricity, money or information.

III. STATUS QUO VERSUS FUTURE ELECTRICITY MARKET

In this section, we first briefly describe the roles andactivities of the current electricity markets and apply a valuenetwork analysis, before defining future market scenarios andreapplying the value network analysis to define two new rolesin such future markets: broker and representative.

A. Roles and Activities in Current Electricity Markets

In the past, the entire process of electricity delivery wasmanaged and controlled by a single (usually state-owned)company. This company was responsible for generating, trans-porting, delivering and selling electricity to consumers, aswell as keeping the grid in balance. However, in recent yearsliberalised electricity markets have been introduced. The aimis to bring in a market competition (i.e., to have different actorsundertaking different roles in the electricity delivery process)which could lead to an increased quality of service anddecreased electricity prices. The main actors are as follows.

• Consumers are parties that are connected to the grid andconsume electricity. If the consumers also owe electricitygeneration units (e.g., solar panels) so they can notonly take off but also inject electricity to the grid, theyare called prosumers. Consumers/prosumers can be twotypes: residential or non-residential.

• Suppliers are responsible for buying and selling electric-ity. They buy the electricity from the producers, with whothey have a bilateral contracts. Then, they will resell thiselectricity to their customers, i.e., consumers, which theyinvoice individually.

• Distribution System Operators (DSOs) manage, developand maintain the medium to low voltage grid, called thedistribution network, for a specific territory. They providenew connections to the network and are responsiblefor reading consumers’ electricity meters. They receiveelectricity from the transmission networks, the local pro-duction sites or neighbouring DSOs and distribute it tosmall businesses and residential premises.

• Transmission System Operator (TSO) transfers electricityat high voltages, via transmission lines from generatorsand across borders to the distribution network. The TSO

develops, builds and maintains the transmission gridaccording to long term needs. It monitors the electricitysystem in real time. It offers market players opportunitiesto optimise their electricity management by selling theirsurplus electricity or temporarily reducing consumption.It develops services and mechanisms allowing the marketto trade on different platforms, which promotes economiccompetitiveness and the well-being of society.

• Producers are the generators of electricity, ranging fromlarge nuclear, gas or coal power plants, to smallerdistributed generators such as residential solar panels.Generators are usually rated by their generating capacityand the flexibility with which they can be operated [11].

• Aggregators are the parties that support the TSO inbalancing the grid by managing the available flexibility(assets) of large consumers in return for monetary re-wards.

• Regulators monitor and regulate the liberalised electricitymarkets, ensuring their efficient and reliable operation aswell as compliance with environmental and social publicservice obligations.

B. Status Quo Value Network of the Electricity Market

Considering the above-mentioned roles and their responsi-bilities in the current electricity market, three service streamsare recognized: 1) Electricity stream, 2) Infrastructure/gridconnectivity, and 3) Flexibility stream. Critical activities anddeliverable are shown in Fig. 1. Figure 2 shows the same valuenetwork by assigning the activities to current market playersto identify their roles better in the value generation.

C. Value Network of Future Electricity Market Scenarios

In order to discuss the future of the electricity market, wemake use of scenarios built by use of the business modelmatrix [12]. Based on customer involvement and customerownership as sources of uncertainty in the future, four differentscenarios can be distinguished for future electricity tradingmarkets. The four scenarios are as follows:

(S1) Direct peers: Active citizens and direct customer owner-ship.

(S2) Direct customers: Passive citizens with direct customerownership. Representatives trade on behalf of clients.

(S3) Indirect customers: Passive citizens with intermediatedcustomer ownership. Trade is facilitated by an interme-diary party (i.e., broker) who access the involved parties’information.

(S4) Indirect peers: Active citizens with intermediated cus-tomer ownership.

Considering these future scenarios, Fig. 3 and 4 representimportant possible changes in the value network setting. Thefollowing section introduces and discuss emerging new rolesand their functions in the peer-to-peer electricity markets.

D. New Roles and Activities in the Future Electricity Market

Considering the above-mentioned scenarios, there are newemerging roles in the electricity market. Next we highlight two

Fig. 1. Service streams, critical activities and deliverables in the current electricity market

Fig. 2. Roles in the current electricity market

Fig. 3. New activities and deliverables in the future electricity market.

Fig. 4. New roles in the future electricity market.

new important emerging roles (broker and representative) andtheir key activities in the electricity market.

• Broker is an intermediate actor which facilitates (i.e.,supports prosumers to perform) trading in the peer-to-peer electricity markets. It has access to information of allinvolved parties in the peer-to-peer trading of electricityand their transactions. It is reasonable to assume thatbrokers share this information with the DSOs and theTSO, contributing towards balancing the grid. There areseveral candidates to undertake this role, amongst thecurrent players, we can mention suppliers.

• Representative represents its clients (prosumers) in elec-tricity markets (including the peer-to-peer electricity mar-kets). To do so, they manage their clients’ assets (i.e.,battery, solar panels, flexibility) and information. In otherwords, they transform passive citizens to active players inthe market. Amongst the current market players, aggre-

gators and suppliers seem to have the required expertisefor this role.

IV. LEGAL PERSPECTIVE ON EMERGING ROLES

From a regulatory point of view, it remains to be seenhow the actors and their tasks, as delineated in the abovescenarios, will be translated in the legal frameworks governingthe electricity markets. On the one hand, both in the federal aswell as regional legislations, the evolution of the markets led tocertain market roles and tasks being currently more strictly de-fined (e.g. ‘DSO’, ‘consumer’, ‘supplier’, ...), whereas recentdevelopments have induced more broadly defined roles (e.g.‘energy service providers’). On the other hand legal conceptssuch as for example ‘active citizenship’ for which behaviouralaspects seem detrimental, have not yet materialised.

It is probable of course that the recent developments willlead to changes in these legal frameworks. The EU’s CleanEnergy for all Europeans package envisions increased con-sumer participation and amended certain provisions as well asseveral new concepts to the electricity market in this regard.An electricity user may either act as an individual (‘activecustomer’), or collectively. When acting in a group, the activecustomer will be considered as ‘jointly acting’, or as part ofa citizen energy community.

Firstly, it could be considered how the role of a broker canbe qualified, acting as an interface between the user and themarket. With regards to the gird operators taking up this role,it could be noted that since the electricity market liberalization,the grid operators have evolved to a more neutral role in theoperation and management of the electricity grid. As such,it seems at this moment rather unlikely that these operatorswill soon be involved in more commercial energy servicessuch as aggregation and demand response without the properregulatory framework enabling this more clearly. At least,as the DSO would presumably be aware of all electricityconsumption and generation on its grid from a more valueoriented perspective, proper consideration should be givento the power of this information in a competitive marketenvironment.

Legal questions may further rise as to whether such abroker activity can be performed by electricity customerseither jointly acting or an energy community. In principle, agroup of customers can be considered ‘jointly acting’ if it islocated on the same premises. Generally, such an associationwould not be organized as a separate legal entity, but thismight need to be reconsidered in view of the role of a broker.In contrast, a citizen energy community is a legal entity, withstricter membership and control requirements.

Secondly, the representative is an agent of the user, to whichcontrol over the user’s assets is delegated. As described above,it might be envisioned that an aggregator or supplier willtake up this role. At first sight it does not seem that thelegal framework surrounding these actors would preclude themtaking up such role. However, they might not be the onlypotential actors. A similar argument could be made for theenergy communities.

A. Data Protection Application

Electricity data may encompass a wide array of types ofdata: names, addresses, account number, smart meter ID/IPaddress, consumers’ profile, billing data, electrical appliances,generation and storage devices, production, consumption (loadgraphics), messages’ metadata, kind of data (metering ortampering alert) [13], [14].

These data do often fall under the definition of ‘personaldata’ under the General Data Protection Regulation (here-inafter ‘GDPR’) [15]. Personal data are qualified by Arti-cle 4.1 GDPR as “any information relating to an identifiedor identifiable person”. The identification can be direct orindirect. As hinted at Recital 26 of the GDPR, the conceptof identification of an individual is not limited to knowing hername or address, but expands to the concept of ‘singling out’,or isolating. Article 29 Working Party in Opinion no. 5/2014states that not even pseudonymization (encryption included)prevent from assigning the ‘personal data’ label [16].

B. Roles provided by Data Protection Law

Coming to the roles identified by the GDPR in the scope ofprocessing such data, they are respectively the data controllerand the data processor.

• Data controller: is the one who “alone or jointly with oth-ers determine[s] the purposes and means of the processingof personal data” (Article 4.7 GDPR). A controller’sdecision establishes why and how data shall be processed.

• Data processor: is someone who processes personal dataon behalf of a controller (Article 4.8 GDPR). The ac-tivities entrusted to a processor may be limited to avery specific task or context or may be quite generaland comprehensive. Data controller and data processorrelation must be embodied by a contract or other legalact (Article 28.3 GDPR).

The role assignment is not trivial, as to each different rolecorresponds different legal obligations. The European DataProtection Supervisor Opinion of 8 June 2012 urged for aclarification on the terminology of the actors involved in thesmart metering roll out, indicating in the Data ProtectionImpact Assessment (‘DPIA’) Template the right documentwhere to accomplish such a task [17]. The DPIA Templateincludes a comprehensive list of subjects that might handlepersonal data, with the caveat that it could change dependingon the different Member States’ electricity system. In eachdistinct system, in fact, some entities could cover multiplepositions or even not exist at all. The list includes the DSO, theTSO, the generator, i.e. the decentralized electricity producer,the centralized electricity supplier and the metering operator,focused only on the meters’ reading and management. Finally,there are the Energy Services Companies (ESCs) [18]–[20], anincreasing category of companies offering their consultancy inelectricity supply to the public [13].

It is fair to say that representatives and brokers, as providersof services different from electricity production, transportationand distribution or metering, would be classified as ESCs.

In this regard, Article 29 Working Party states that “wherepersonal data are disclosed to the ESCs in order for them toprovide a service either to the consumer or to another party,such as a supplier, then the ESCs will assume the role of adata controller” [21]. As data controllers, then, actors suchas brokers and representatives would have to comply with allthe due obligations. Among them some are particularly centrallike: ensuring compliance and the existence of a legal basis(Articles 5 and 6 GDPR), provide information (Articles 12-14 GDPR), making contracts with eventual processors (Article28 GDPR), keeping records of processing activities (Article 30GDPR), taking adequate security measures (Article 32 GDPR),and follow-up and effectively addressing of data subjectsrequests (Articles 15-22 GDPR). The data controller must actas a prompt contact point for the data subjects to exercise theirrights.

The activity of representatives and brokers as envisaged inthe presented scenarios could, if operated by third parties, addmore than one layer between the customers and the actors incharge of distribution and transportation of electricity, them-selves data controllers for different activities and purposes.Such a plurality of data controllers could be an inconvenience,generating fragmentation and confusion in the data subjectswilling to advance their legitimate requests. To this wouldalso be added a constant stream of information regarding dataprotection from a number of firms [22].

V. CHALLENGES TO THE GRID

The increasing share of renewable energy sources and theappearance of new roles in the electricity market presentsmany challenges from the grid perspective. As the numberof prosumers is expected to grow with the introduction of thechanges mentioned in this work, the grid is expected to faceproblems of congestion, security of supply, and grid reliability.Congestion occurs when too much electricity flows along thesame path [23]. It can be caused by either an excess in demandor generation [24]. Congestion leads to exceeding the thermalcapacity of transmission lines, and violation of the frequencyand voltage constraints of the grid. On one side, congestioncan be an impediment to local electricity trading and peer-to-peer electricity trading. On the other side, it can lead to greaterlosses in the transmission lines due to electricity dissipated asheat. This phenomenon, along with problems tied to securityof supply, are enhanced by the stochastic nature of renewablegeneration.

One way to address these issues is to use demand re-sponse [25]. Demand response, also called flexibility, is a shiftin the volume or scheduling of consumption from the user side,to provide services to the grid, for example. Each of the newplayers introduced here can provide such services. Costumerrepresentatives, as well as brokers, can trade flexibility offeredby their portfolio of costumers, by either offering that theircustomers increase their consumption in times of high renew-able generation, or that they decrease their consumption intimes of scarce production or if the risk of congestion is high.Customer representatives can also aggregate the flexibility

from individual customers, then brokers can take over to tradeit on the wholesale market.

The authors of [25] identify several issues that representa-tives and brokers can run into when offering demand responseservices. As the number of subscribed customers grows, thequantity of flexibility grows, but learning their flexibility andoptimizing its allocation become more complex, and may runinto difficulties to scale to the increasing number of prosumers.Then, there is the problem of the control paradigm to use todispatch flexibility. Local control may suffer from a lack ofcoordination between the users, whereas centralized controlmay be too complex. An additional issue is related to theuncertain behavior of customers, renewable sources, and thegrid.

Another way to deal with grid issues is to impose restric-tions on the regulatory level. In this framework, economicmeasures are used to relieve the congestion of the network.For example, some electrical markets use locational marginalprices to set the price of electricity. In locational marginalprices, the cost of electricity also depends on the locationwhere electricity is bought or sold. The price of electricityis then composed of electricity price, congestion cost, andlosses [26]. In some markets, DSOs also argue that gridcosts should shift from electricity consumption to electricconnection capacity [27].

VI. CONCLUSIONS

Through the outcomes of the value network analysis, thearticle explains how peer-to-peer trading challenges and seem-ingly changes roles and activities in the future electricitymarkets. It likely opens up opportunities for the emergenceof new roles and requires policy makers to consider therequirements and current market players to reconsider theirbusiness models. These various avenues of future scenarios aredrawn out and the article concludes with a critical reflection,such as in terms of impacts on the structuring of the valuenetwork in the electricity market.

ACKNOWLEDGMENT

This work was supported in part by the Research CouncilKU-Leuven: C16/15/058 and by the Flemish Governmentthrough FWO SBO project SNIPPET S007619. Mustafa A.Mustafa is funded by the Dame Kathleen Ollerenshaw Fel-lowship awarded by The University of Manchester.

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