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Comparison of Two Approaches for Managing Building Flexibility Using Energy Market Prices



David Holmberg, Farhad Omar, Thomas Roth


Transactive energy promises to support customer distributed energy resources (DER) integration into the electric grid, better accessing DER flexibility to support distribution system and bulk grid needs. This includes real-time regulation in response to 5-minute prices, peak shifting via forward market prices, and potentially voltage regulation via distribution nodal prices. The work presented here compares two different approaches for managing building flexibility and providing grid services: a rule-based controller that manages and pays for power using a real-time price, and a model-based controller that forecasts load to manage power consumption based on a day-ahead price. These two approaches are evaluated side-by-side in the same houses on the same grid (the IEEE 8500 reference grid simulated in GridLAB-D) with the same weather and price information. Simulation results show that the real-time controller, which manages heat pump operation based on 5-minute real-time market prices, can respond well to the volatile price signal to manage heat pump operation, reducing homeowner energy use and energy costs. However, the power quality on the local distribution grid suffers, with increased voltage violations and wear and tear on grid hardware. The model-based controller, designed to use day-ahead price signals, can plan for optimal pre-cooling and minimizing of energy use during peak price times. This results in cost savings for homes that are more willing to allow temperatures to move farther from the desired setpoint. Because this controller does not respond to real-time price volatility, there are no cost savings during price spikes, but there are also no rapid temperature setpoint changes and thus a lower incidence of voltage violations.
Technical Note (NIST TN) - 2241
Report Number


co-simulation, day-ahead market, distribution grid, dynamic pricing, energy flexibility, load forecasting, GridLAB-D, heat pump controller, real-time market, real-time prices, transactive energy, voltage violations


Holmberg, D. , Omar, F. and Roth, T. (2022), Comparison of Two Approaches for Managing Building Flexibility Using Energy Market Prices, Technical Note (NIST TN), National Institute of Standards and Technology, Gaithersburg, MD, [online],, (Accessed April 14, 2024)
Created October 19, 2022, Updated November 29, 2022