On the Different Fair Allocations of Economic Benefits for Energy Communities

Gabriele Volpato (), Gianluca Carraro, Enrico Dal Cin and Sergio Rech
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Gabriele Volpato: Industrial Engineering Department, University of Padova, Via Venezia 1, 35131 Padova, Italy
Gianluca Carraro: Industrial Engineering Department, University of Padova, Via Venezia 1, 35131 Padova, Italy
Enrico Dal Cin: Industrial Engineering Department, University of Padova, Via Venezia 1, 35131 Padova, Italy
Sergio Rech: Industrial Engineering Department, University of Padova, Via Venezia 1, 35131 Padova, Italy

Energies, 2024, vol. 17, issue 19, 1-26

Abstract: Energy Communities (ECs) are aggregations of users that cooperate to achieve economic benefits by sharing energy instead of operating individually in the so-called “disagreement” case. As there is no unique notion of fairness for the cost/profit allocation of ECs, this paper aims to identify an allocation method that allows for an appropriate weighting of both the interests of an EC as a whole and those of all its members. The novelty is in comparing different optimization approaches and cooperative allocation criteria, satisfying different notions of fairness, to assess which one may be best suited for an EC. Thus, a cooperative model is used to optimize the operation of an EC that includes two consumers and two solar PV prosumers. The model is solved by the “Social Welfare” approach to maximizing the total “incremental” economic benefit (i.e., cost saving and/or profit increase) and by the “Nash Bargaining” approach to simultaneously maximize the total and individual incremental economic benefits, with respect to the “disagreement” case. Since the “Social Welfare” approach could lead to an unbalanced benefit distribution, the Shapley value and Nucleolus criteria are applied to re-distribute the total incremental economic benefit, leading to higher annual cost savings for consumers with lower electricity demand. Compared to “Social Welfare” without re-distribution, the Nash Bargaining distributes 39–49% and 9–17% higher annual cost savings to consumers with lower demand and to prosumers promoting the energy sharing within the EC, respectively. However, total annual cost savings drop by a maximum of 5.5%, which is the “Price of Fairness”.

Keywords: energy community; operation optimization; economic benefit allocation; fairness; Shapley value; nucleolus; Nash bargaining (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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