A thriving community powered by decentralized renewable energy sources.

Unlocking Energy Savings: How Decentralized Energy Markets Can Power Your Community

Samir D’Costa in Climate & Environment June 2025 • 4 min read.

"Discover how transactive energy markets (TEMs) and intergrid systems are paving the way for cheaper, greener, and more reliable energy solutions."

The global energy landscape is undergoing a dramatic transformation. Traditional power systems, reliant on centralized fossil fuel-based generation, are giving way to a new paradigm: distributed renewable energy. This shift is driven by growing environmental concerns, technological advancements, and the decreasing costs of renewable energy sources like solar and wind.

However, integrating high levels of renewable energy into existing grids presents significant challenges. The intermittent nature of these sources, coupled with the limitations of traditional network architectures, can lead to grid instability and increased energy prices. As a result, researchers are exploring alternative network designs and market mechanisms to facilitate a smoother transition to a cleaner energy future.

One promising solution is the concept of decentralized energy markets (DEMs) operating within an 'intergrid' architecture. These innovative systems allow local communities to trade energy directly, fostering greater efficiency, resilience, and affordability. This article delves into the potential of DEMs and intergrids, examining how they can empower consumers, reduce energy costs, and accelerate the adoption of renewable energy sources.

What are Decentralized Energy Markets and Intergrids?

A thriving community powered by decentralized renewable energy sources.

Imagine a local community where homes with solar panels can sell excess energy directly to their neighbors, or businesses with energy storage systems can provide grid support services to nearby buildings. This is the vision of a decentralized energy market. Unlike traditional systems where energy flows from large power plants through a one-way distribution network, DEMs enable peer-to-peer energy trading within a localized area.

The intergrid is a specific type of network architecture designed to support these decentralized energy markets. Proposed by researchers like Boroyevich, the intergrid involves breaking down complex power systems into smaller, more manageable 'cells,' interconnected through power electronic devices. This modular approach offers several advantages:

Controlled Energy Exchange: Each cell can control the import and export of energy, facilitating economic integration and grid stability.
Dynamic Decoupling: The intergrid dynamically isolates subsystems, preventing disturbances from propagating throughout the entire network.
Modularity & Flexibility: The modular design allows for gradual migration and easier integration of new technologies.
Simplified System Management: By breaking the network into smaller subsystems, the overall system becomes easier to manage and optimize.

In essence, the intergrid provides the physical infrastructure for a decentralized energy market to operate effectively. Power electronic converters act as intelligent gateways, controlling energy flow and ensuring grid stability, while a transactive energy market (TEM) facilitates the buying and selling of energy between participants.

The Future of Energy is Local

Decentralized energy markets and intergrid architectures represent a compelling vision for the future of energy. By empowering local communities to trade energy directly, these innovative systems can unlock significant cost savings, promote the adoption of renewable energy, and enhance grid resilience. As technology continues to advance and regulatory frameworks evolve, decentralized energy markets are poised to play an increasingly important role in creating a cleaner, more sustainable, and affordable energy future for all.

About this Article -

This article was crafted using a human-AI hybrid and collaborative approach. AI assisted our team with initial drafting, research insights, identifying key questions, and image generation. Our human editors guided topic selection, defined the angle, structured the content, ensured factual accuracy and relevance, refined the tone, and conducted thorough editing to deliver helpful, high-quality information.See our About page for more information.

This article is based on research published under:

DOI-LINK: 10.1109/icrera.2018.8566753, Alternate LINK

Title: Decentralised Energy Market For Implementation Into The Intergrid Concept - Part I: Isolated System

Journal: 2018 7th International Conference on Renewable Energy Research and Applications (ICRERA)

Publisher: IEEE

Authors: Matthew Davison, Jesse Cranney, Terry Summers, Christopher D. Townsend

Published: 2018-10-01

Everything You Need To Know

What are decentralized energy markets and how do intergrids facilitate them?

Decentralized energy markets (DEMs) are local systems that allow communities to trade energy directly with each other, unlike traditional systems with one-way energy flow from large power plants. This peer-to-peer trading happens within a defined local area. Intergrids are network architectures that support DEMs by breaking down complex power systems into smaller, manageable 'cells' interconnected through power electronic devices. This allows controlled energy exchange, dynamic decoupling, modularity, flexibility, and simplified system management.

How does an intergrid support the functioning of decentralized energy markets?

An intergrid supports decentralized energy markets (DEMs) through controlled energy exchange where each cell manages import and export, dynamic decoupling which isolates subsystems to prevent network disturbances, modularity and flexibility allowing gradual upgrades, and simplified system management. Power electronic converters act as intelligent gateways, controlling energy flow, ensuring grid stability. The intergrid needs a transactive energy market (TEM) to facilitate the buying and selling of energy.

Why are transactive energy markets important in the context of decentralized energy systems?

Transactive energy markets (TEMs) are crucial for decentralized energy markets (DEMs) because they facilitate the actual buying and selling of energy between participants within the intergrid architecture. TEMs leverage power electronic converters as intelligent gateways to control energy flow and maintain grid stability. Without TEMs, the decentralized system would lack the mechanism for efficient and economically viable energy trading.

How can decentralized energy markets help reduce energy costs and increase grid resilience?

Decentralized energy markets (DEMs) have the potential to reduce costs by allowing local communities to trade energy directly, bypassing traditional energy distribution networks. This peer-to-peer trading can lead to more competitive pricing and reduce reliance on potentially more expensive sources. Furthermore, intergrid architectures enhance grid resilience by dynamically isolating subsystems, preventing disturbances from spreading throughout the network, thus minimizing potential disruptions and associated costs.

In what ways do decentralized energy markets encourage the adoption of renewable energy sources?

Decentralized energy markets (DEMs) and intergrids can facilitate the adoption of renewable energy sources by allowing homes or businesses with solar panels to sell excess energy directly to their neighbors. This incentivizes investment in renewable energy, as it creates a revenue stream for excess generated power. The modularity and flexibility of intergrids also allow for easier integration of new renewable energy technologies into the existing energy infrastructure. This gradual migration path accommodates the intermittent nature of solar and wind power through dynamic decoupling that manages the system's exchange of power.