Dynamic Net Metering for Energy Communities

TL;DR

This paper introduces a dynamic net metering mechanism for energy communities that optimizes social welfare by aligning individual incentives with community benefits, adapting prices based on aggregated resources.

Contribution

It presents a novel Dynamic NEM mechanism that dynamically sets prices, ensuring individual incentives align with community welfare and outperform existing benchmarks.

Findings

D-NEM increases community welfare compared to traditional methods.

The mechanism ensures no subgroup benefits from leaving the community.

Empirical results show improved operational efficiency and responsiveness.

Abstract

We propose a social welfare maximizing market mechanism for an energy community that aggregates individual and community-shared energy resources under a general net energy metering (NEM) policy. Referred to as Dynamic NEM (D-NEM), the proposed mechanism dynamically sets the community NEM prices based on aggregated community resources, including flexible consumption, storage, and renewable generation. D-NEM guarantees a higher benefit to each community member than possible outside the community, and no sub-communities would be better off departing from its parent community. D-NEM aligns each member's incentive with that of the community such that each member maximizing individual surplus under D-NEM results in maximum community social welfare. Empirical studies compare the proposed mechanism with existing benchmarks, demonstrating its welfare benefits, operational characteristics, and responsiveness to NEM rates.