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

Hugo Algarvio (), António Couto, Fernando Lopes and Ana Estanqueiro
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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

Energies, 2024, vol. 17, issue 8, 1-23

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.

Keywords: citizen energy communities; decentralized renewable generation; electricity markets; energy tariffs; local consumers; strategic bidding (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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