Operating-Envelopes-Aware Decentralized Welfare Maximization for Energy Communities

TL;DR

This paper introduces an operating-envelope-aware decentralized energy community model that optimizes welfare, ensures safe network operation, and aligns incentives among prosumers under dynamic limits and a novel pricing mechanism.

Contribution

It proposes a new community pricing mechanism that aligns individual incentives with overall welfare while respecting dynamic operating envelopes in energy communities.

Findings

The pricing mechanism satisfies the cost-causation principle.

It ensures stability of the energy community in a coalition game setting.

Numerical examples demonstrate the mechanism's effectiveness.

Abstract

We propose an operating-envelope-aware, prosumer-centric, and efficient energy community that aggregates individual and shared community distributed energy resources and transacts with a regulated distribution system operator (DSO) under a generalized net energy metering tariff design. To ensure safe network operation, the DSO imposes dynamic export and import limits, known as dynamic operating envelopes, on end-users' revenue meters. Given the operating envelopes, we propose an incentive-aligned community pricing mechanism under which the decentralized optimization of community members' benefit implies the optimization of overall community welfare. The proposed pricing mechanism satisfies the cost-causation principle and ensures the stability of the energy community in a coalition game setting. Numerical examples provide insights into the characteristics of the proposed pricing mechanism and quantitative measures of its performance.