# An Exchange Mechanism to Coordinate Flexibility in Residential Energy Cooperatives

## TL;DR

This paper proposes a novel exchange mechanism for residential energy cooperatives that coordinates diverse flexible resources, improves system efficiency, and promotes fair profit distribution, thereby supporting renewable integration at the local level.

## Contribution

It introduces a fair, efficient exchange mechanism with a payment structure that incentivizes prosumer participation and enhances cooperation among distributed energy resources.

## Key findings

- Increases system efficiency and social welfare.
- Promotes fair profit sharing among prosumers.
- Effective in real demand and generation scenarios.

## Abstract

Energy cooperatives (ECs) such as residential and industrial microgrids have the potential to mitigate increasing fluctuations in renewable electricity generation, but only if their joint response is coordinated. However, the coordination and control of independently operated flexible resources (e.g., storage, demand response) imposes critical challenges arising from the heterogeneity of the resources, conflict of interests, and impact on the grid. Correspondingly, overcoming these challenges with a general and fair yet efficient exchange mechanism that coordinates these distributed resources will accommodate renewable fluctuations on a local level, thereby supporting the energy transition. In this paper, we introduce such an exchange mechanism. It incorporates a payment structure that encourages prosumers to participate in the exchange by increasing their utility above baseline alternatives. The allocation from the proposed mechanism increases the system efficiency (utilitarian social welfare) and distributes profits more fairly (measured by Nash social welfare) than individual flexibility activation. A case study analyzing the mechanism performance and resulting payments in numerical experiments over real demand and generation profiles of the Pecan Street dataset elucidates the efficacy to promote cooperation between co-located flexibilities in residential cooperatives through local exchange.