On Distributional Effects in Local Electricity Market Designs: Evidence from a German Case Study

Alexandra Lüth, Jens Weibezahn, Jan Martin Zepter

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

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
Original languageEnglish
Article number1993
JournalEnergies
Volume13
Issue number8
Number of pages26
ISSN1996-1073
DOIs
Publication statusPublished - Apr 2020

Keywords

  • Mixed Complementarity Problem (MCP)
  • Energy communities
  • Distributional effects
  • Electricity market design
  • Peer-to-peer trading
  • Local energy sharing

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