Welfare implications of renewable energy communities. Individual versus collective approach

Decentralized solutions of resource consumption build on the theory of commons to define governance rules for resource usage and remuneration (Ostrom, 2010). This paper identifies the energy surplus as being the common to be regulated within a community by means of decentralized sharing rules, and by the State with supporting schemes. Collective self-consumption is described analytically by the relationships between taxes, feed-in-tariffs and market prices to highlight the main attractiveness of communities that is the energy in excess from the other participants. Yet the welfare improves only if the excess of energy is sold within the community below the market price, and outside the community at feed-in tariffs that are not regressive with the community size. By using French solar data and user profiles for residential and tertiary sectors, the model shows divergent interests when based only on the long-run cost of the common: the tertiary sector records net benefits if household selling price all taxes included is below market rates, while households find no financial motivation to join the community compared to an individual self-consumption case. The welfare improves if the sharing rule of the common includes also the opportunity cost, which adapts in this way the current one-size-fits-all policy to the performance of the community.