TY - JOUR
T1 - On Distributional Effects in Local Electricity Market Designs
T2 - Evidence from a German Case Study
AU - Lüth, Alexandra
AU - Weibezahn, Jens
AU - Zepter, Jan Martin
PY - 2020/4
Y1 - 2020/4
N2 - The European Commission’s call for energy communities has motivated academia to focus research on design and trading concepts of local electricity markets. The literature provides a wide range of conceptual ideas and analyses on the technical and economic framework of single market features such as peer-to-peer trading. The feasible, system-wide integration of energy communities into existing market structures requires, however, a set of legal adjustments to national regulation. In this paper, we test the implications of recently proposed market designs under the current rules in the context of the German market. The analysis is facilitated by a simplistic equilibrium model representing heterogeneous market participants in an energy community with their respective objectives. We find that, on the one hand, these proposed designs are financially unattractive to prosumers and consumers under the current regulatory framework. On the other hand, they even cause distributional effects within the community when local trade and self-consumption are exempt from taxes. To this end, we introduce a novel market design—Tech4all—that counterbalances these effects. With only few legal amendments, it allows for ownership and participation of renewable technologies for all community members independent of their property structure and affluence. Our presented analysis shows that this design has the potential to mitigate both distributional effects and the avoidance of system service charges, while simultaneously increasing end-user participation
AB - The European Commission’s call for energy communities has motivated academia to focus research on design and trading concepts of local electricity markets. The literature provides a wide range of conceptual ideas and analyses on the technical and economic framework of single market features such as peer-to-peer trading. The feasible, system-wide integration of energy communities into existing market structures requires, however, a set of legal adjustments to national regulation. In this paper, we test the implications of recently proposed market designs under the current rules in the context of the German market. The analysis is facilitated by a simplistic equilibrium model representing heterogeneous market participants in an energy community with their respective objectives. We find that, on the one hand, these proposed designs are financially unattractive to prosumers and consumers under the current regulatory framework. On the other hand, they even cause distributional effects within the community when local trade and self-consumption are exempt from taxes. To this end, we introduce a novel market design—Tech4all—that counterbalances these effects. With only few legal amendments, it allows for ownership and participation of renewable technologies for all community members independent of their property structure and affluence. Our presented analysis shows that this design has the potential to mitigate both distributional effects and the avoidance of system service charges, while simultaneously increasing end-user participation
KW - Mixed Complementarity Problem (MCP)
KW - Energy communities
KW - Distributional effects
KW - Electricity market design
KW - Peer-to-peer trading
KW - Local energy sharing
KW - Mixed Complementarity Problem (MCP)
KW - Energy communities
KW - Distributional effects
KW - Electricity market design
KW - Peer-to-peer trading
KW - Local energy sharing
U2 - 10.3390/en13081993
DO - 10.3390/en13081993
M3 - Journal article
SN - 1996-1073
VL - 13
JO - Energies
JF - Energies
IS - 8
M1 - 1993
ER -