IDEAS home Printed from https://ideas.repec.org/a/gam/jeners/v17y2024i8p1863-d1375190.html
   My bibliography  Save this article

Strategic Behavior of Competitive Local Citizen Energy Communities in Liberalized Electricity Markets

Author

Listed:
  • Hugo Algarvio

    (LNEG—National Laboratory of Energy and Geology, Est. Paço Lumiar 22, 1649-038 Lisbon, Portugal)

  • António Couto

    (LNEG—National Laboratory of Energy and Geology, Est. Paço Lumiar 22, 1649-038 Lisbon, Portugal)

  • Fernando Lopes

    (LNEG—National Laboratory of Energy and Geology, Est. Paço Lumiar 22, 1649-038 Lisbon, Portugal)

  • Ana Estanqueiro

    (LNEG—National Laboratory of Energy and Geology, Est. Paço Lumiar 22, 1649-038 Lisbon, Portugal)

Abstract

The liberalization of energy retail markets empowered consumers with the ability to be part of new emerging entities, such as Citizen Energy Communities. With the increasing penetration of decentralized variable generation, communities have the advantage of incentive local carbon neutrality and sustainability. Local generation reduces transport grid usage and costs to consumers. Furthermore, worldwide legislation incentives energy communities by providing them discounts to other fee parts of the tariff apart from wholesale prices. This paper presents a model of strategic behavior, investment, and trading of energy communities. The model comprises the investment in local renewable generation, the design of competitive tariffs, and strategic bidding on wholesale markets. Consumers have an optimization model that selects the retail tariff that minimizes their costs with energy. These models are tested using data from Portuguese consumers and the Iberian electricity market. Results from the study indicate that inflexible consumers may reduce their costs by 29% by being part of the community. Furthermore, they have the potential to reduce their costs above 50% when using demand–response, adapting themselves to local production and wholesale prices.

Suggested Citation

  • Hugo Algarvio & António Couto & Fernando Lopes & Ana Estanqueiro, 2024. "Strategic Behavior of Competitive Local Citizen Energy Communities in Liberalized Electricity Markets," Energies, MDPI, vol. 17(8), pages 1-23, April.
    • Handle: RePEc:gam:jeners:v:17:y:2024:i:8:p:1863-:d:1375190
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1996-1073/17/8/1863/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1996-1073/17/8/1863/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Stadler, Michael & Cardoso, Gonçalo & Mashayekh, Salman & Forget, Thibault & DeForest, Nicholas & Agarwal, Ankit & Schönbein, Anna, 2016. "Value streams in microgrids: A literature review," Applied Energy, Elsevier, vol. 162(C), pages 980-989.
    2. Georgios Yiasoumas & Lazar Berbakov & Valentina Janev & Alessandro Asmundo & Eneko Olabarrieta & Andrea Vinci & Giovanni Baglietto & George E. Georghiou, 2023. "Key Aspects and Challenges in the Implementation of Energy Communities," Energies, MDPI, vol. 16(12), pages 1-24, June.
    3. John Bistline & Geoffrey Blanford & Maxwell Brown & Dallas Burtraw & Maya Domeshek & Jamil Farbes & Allen Fawcett & Anne Hamilton & Jesse Jenkins & Ryan Jones & Ben King & Hannah Kolus & John Larsen &, 2023. "Emissions and Energy Impacts of the Inflation Reduction Act," Papers 2307.01443, arXiv.org.
    4. Bernath, Christiane & Deac, Gerda & Sensfuß, Frank, 2021. "Impact of sector coupling on the market value of renewable energies – A model-based scenario analysis," Applied Energy, Elsevier, vol. 281(C).
    5. Vernay, Anne-Lorène & Sebi, Carine & Arroyo, Fabrice, 2023. "Energy community business models and their impact on the energy transition: Lessons learnt from France," Energy Policy, Elsevier, vol. 175(C).
    6. Henrik Nordström & Lennart Söder & Damian Flynn & Julia Matevosyan & Juha Kiviluoma & Hannele Holttinen & Til Kristian Vrana & Adriaan van der Welle & Germán Morales-España & Danny Pudjianto & Goran S, 2023. "Strategies for Continuous Balancing in Future Power Systems with High Wind and Solar Shares," Energies, MDPI, vol. 16(14), pages 1-43, July.
    7. Hong, Qiuyi & Meng, Fanlin & Liu, Jian & Bo, Rui, 2023. "A bilevel game-theoretic decision-making framework for strategic retailers in both local and wholesale electricity markets," Applied Energy, Elsevier, vol. 330(PA).
    8. Francesca Ceglia & Elisa Marrasso & Giovanna Pallotta & Carlo Roselli & Maurizio Sasso, 2022. "The State of the Art of Smart Energy Communities: A Systematic Review of Strengths and Limits," Energies, MDPI, vol. 15(9), pages 1-28, May.
    9. Lowitzsch, Jens & Kreutzer, Kaja & George, Jan & Croonenbroeck, Carsten & Breitschopf, Barbara, 2023. "Development prospects for energy communities in the EU identifying best practice and future opportunities using a morphological approach," Energy Policy, Elsevier, vol. 174(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Georgios Yiasoumas & Lazar Berbakov & Valentina Janev & Alessandro Asmundo & Eneko Olabarrieta & Andrea Vinci & Giovanni Baglietto & George E. Georghiou, 2023. "Key Aspects and Challenges in the Implementation of Energy Communities," Energies, MDPI, vol. 16(12), pages 1-24, June.
    2. Emely Cruz-De-Jesús & Alejandro Marano-Marcolini & José Luis Martínez-Ramos, 2024. "Participation of Energy Communities in Electricity Markets and Ancillary Services: An Overview of Successful Strategies," Energies, MDPI, vol. 17(18), pages 1-18, September.
    3. Tiruwork B. Tibebu & Eric Hittinger & Qing Miao & Eric Williams, 2024. "Adoption Model Choice Affects the Optimal Subsidy for Residential Solar," Energies, MDPI, vol. 17(3), pages 1-19, February.
    4. Andoni, Merlinda & Robu, Valentin & Flynn, David & Abram, Simone & Geach, Dale & Jenkins, David & McCallum, Peter & Peacock, Andrew, 2019. "Blockchain technology in the energy sector: A systematic review of challenges and opportunities," Renewable and Sustainable Energy Reviews, Elsevier, vol. 100(C), pages 143-174.
    5. Ahmed Y. Hatata & Mohamed A. Essa & Bishoy E. Sedhom, 2022. "Implementation and Design of FREEDM System Differential Protection Method Based on Internet of Things," Energies, MDPI, vol. 15(15), pages 1-24, August.
    6. Aouss Gabash & Pu Li, 2016. "On Variable Reverse Power Flow-Part II: An Electricity Market Model Considering Wind Station Size and Location," Energies, MDPI, vol. 9(4), pages 1-13, March.
    7. Qiuyi Hong & Fanlin Meng & Jian Liu, 2023. "Customised Multi-Energy Pricing: Model and Solutions," Energies, MDPI, vol. 16(4), pages 1-31, February.
    8. Konečná, Eva & Teng, Sin Yong & Máša, Vítězslav, 2020. "New insights into the potential of the gas microturbine in microgrids and industrial applications," Renewable and Sustainable Energy Reviews, Elsevier, vol. 134(C).
    9. Thomas Sachs & Anna Gründler & Milos Rusic & Gilbert Fridgen, 2019. "Framing Microgrid Design from a Business and Information Systems Engineering Perspective," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 61(6), pages 729-744, December.
    10. Miguel Carpintero-Rentería & David Santos-Martín & Josep M. Guerrero, 2019. "Microgrids Literature Review through a Layers Structure," Energies, MDPI, vol. 12(22), pages 1-22, November.
    11. El-Sharafy, M. Zaki & Farag, Hany E.Z., 2017. "Back-feed power restoration using distributed constraint optimization in smart distribution grids clustered into microgrids," Applied Energy, Elsevier, vol. 206(C), pages 1102-1117.
    12. Diana Bottger & Philipp Hartel, 2021. "On Wholesale Electricity Prices and Market Values in a Carbon-Neutral Energy System," Papers 2105.01127, arXiv.org.
    13. Fridgen, Gilbert & Kahlen, Micha & Ketter, Wolfgang & Rieger, Alexander & Thimmel, Markus, 2018. "One rate does not fit all: An empirical analysis of electricity tariffs for residential microgrids," Applied Energy, Elsevier, vol. 210(C), pages 800-814.
    14. Francesca Ceglia & Elisa Marrasso & Chiara Martone & Giovanna Pallotta & Carlo Roselli & Maurizio Sasso, 2023. "Towards the Decarbonization of Industrial Districts through Renewable Energy Communities: Techno-Economic Feasibility of an Italian Case Study," Energies, MDPI, vol. 16(6), pages 1-23, March.
    15. Nurkhat Zhakiyev & Ayagoz Khamzina & Svetlana Zhakiyeva & Rocco De Miglio & Aidyn Bakdolotov & Carmelina Cosmi, 2023. "Optimization Modelling of the Decarbonization Scenario of the Total Energy System of Kazakhstan until 2060," Energies, MDPI, vol. 16(13), pages 1-14, July.
    16. Sirviö, Katja & Motta, Sergio & Rauma, Kalle & Evens, Corentin, 2024. "Multi-level functional analysis of developing prosumers and energy communities with value creation framework," Applied Energy, Elsevier, vol. 368(C).
    17. Guetlein, Marie-Charlotte & Schleich, Joachim, 2024. "Empirical insights into enabling and impeding factors for increasing citizen investments in renewable energy communities," Energy Policy, Elsevier, vol. 193(C).
    18. Maxwell Brown & Matthew Irish & Daniel Steinberg & Tamar Moss & Daniel P. Cherney & Travis Shultz & David Morgan & Alexander Zoelle & Thomas Schmitt, 2024. "Representing Carbon Dioxide Transport and Storage Network Investments within Power System Planning Models," Energies, MDPI, vol. 17(15), pages 1-24, July.
    19. Giovanni Gino Zanvettor & Marco Casini & Antonio Vicino, 2024. "Optimal Operation of Energy Storage Facilities in Incentive-Based Energy Communities," Energies, MDPI, vol. 17(11), pages 1-20, May.
    20. Krkoleva Mateska, Aleksandra & Borozan, Vesna & Krstevski, Petar & Taleski, Rubin, 2018. "Controllable load operation in microgrids using control scheme based on gossip algorithm," Applied Energy, Elsevier, vol. 210(C), pages 1336-1346.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jeners:v:17:y:2024:i:8:p:1863-:d:1375190. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.