This article presents a simulation framework to evaluate how strategic bidding in competitive local electricity markets (LEMs) interacts with grid constraints and distributed flexibility resources. The framework supports decentralized decision-making by self-interested while accounting for market clearing and distribution network validation. Energy storage systems (ESS) and combined heat and power (CHP) units as alternative flexibility options, analyzing their impact on market outcomes and grid performance. Results show that ESS adoption reduces electricity costs and helps alleviate grid issues, although benefits remain modest under certain operational conditions. In contrast, limited CHP deployment significantly reduces voltage violations and losses while providing substantial revenue to unit owners. These findings highlight the potential of targeted CHP integration as a cost-effective alternative to widespread ESS deployment in specific contexts. The proposed approach provides practical insights for system operators, service providers, and energy communities aiming at reliable and efficient local energy systems.
Lezama et al. (Sun,) studied this question.