Distributive energy justice in local electricity markets: Assessing the performance of fairness indicators

Local electricity markets are increasingly seen as a key factor in democratising the energy system. While there has been a significant amount of research on the technical and economic aspects of these markets, it is still not clear how well they align with the social acceptance of potential participants. The concept of fairness in these markets has been gaining attention, but there has not been a clear discussion or definition of what constitutes fairness in a local electricity market context. Furthermore, some fairness indicators have become popular in the literature on local electricity markets, but have yet to be fully analysed on how well they capture fairness in these markets. This study aims to address these issues by formally defining distributive energy justice in the context of local electricity markets and evaluating how well popular fairness indicators perform based on this definition. The indicators are tested on a simulated local electricity market using real consumption data from Norwegian households. The results of this extensive evaluation lead to proposed adjustments to the indicators to make them more suitable for local electricity markets, and a discussion on future research directions for fairness in local electricity markets. When indicators are appropriately aligned with local electricity markets and their definition of fairness, they can trigger changes to market designs that improve distributive energy justice and avoid bias against market participants.