Dynamic participation in local energy communities with peer-to-peer trading [version 1; peer review: 1 approved]

Abstract

Background: Energy communities and local electricity markets (e.g., as peer-to-peer trading) are on the rise due to increasingly decentralized electricity generation and favorable adjustment of the legal framework in many European countries. Methods: This work applies a bi-level optimization model for dynamic participation in peer-to-peer electricity trading to determine the optimal parameters of new participants who want to join an energy community, based on the preferences of the members of the original community (e.g., environmental, economic, or mixed preference). The upper-level problem chooses optimal parameters by minimizing an objective function that includes the prosumers' cost-saving and emission-saving preferences, while the lower level problem maximizes community welfare by optimally allocating locally generated photovoltaic (PV) electricity between members according to their willingness-to-pay. The bi-level problem is solved by transforming the lower level problem by its corresponding Karush-Kuhn-Tucker (KKT) conditions. Results: The results demonstrate that environment-oriented prosumers opt for a new prosumer with high PV capacities installed and low electricity demand, whereas profit-oriented prosumers prefer a new member with high demand but no PV system capacity, presenting a new source of income. Sensitivity analyses indicate that new prosumers' willingness-to-pay has an important influence when the community must decide between two new members. Conclusions: The added value of this work is that the proposed method can be seen as a basis for a selection process between a large number of potential new community members. Most important future work will include optimization of energy communities over the horizon several years.