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

Author

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  • Alexandra Lüth

    (Copenhagen School of Energy Infrastructure (CSEI), Copenhagen Business School (CBS), Porcelænshaven 16 A, 2000 Frederiksberg, Denmark)

  • Jens Weibezahn

    (Workgroup for Infrastructure Policy (WIP), Technische Universität Berlin, Sekr. H 33, Straße des 17. Juni 135, 10623 Berlin, Germany)

  • Jan Martin Zepter

    (Center for Electric Power and Energy (CEE), Technical University of Denmark (DTU), Frederiksborgvej 399, 4000 Roskilde, Denmark)

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.

Suggested Citation

  • Alexandra Lüth & Jens Weibezahn & Jan Martin Zepter, 2020. "On Distributional Effects in Local Electricity Market Designs—Evidence from a German Case Study," Energies, MDPI, vol. 13(8), pages 1-26, April.
  • Handle: RePEc:gam:jeners:v:13:y:2020:i:8:p:1993-:d:346914
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    References listed on IDEAS

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    Cited by:

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    3. Di Silvestre, Maria Luisa & Ippolito, Mariano Giuseppe & Sanseverino, Eleonora Riva & Sciumè, Giuseppe & Vasile, Antony, 2021. "Energy self-consumers and renewable energy communities in Italy: New actors of the electric power systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 151(C).
    4. Vineet Jagadeesan Nair & Venkatesh Venkataramanan & Rabab Haider & Anuradha Annaswamy, 2021. "A Hierarchical Local Electricity Market for a DER-rich Grid Edge," Papers 2110.02358, arXiv.org, revised Mar 2022.
    5. Lissy Langer, 2020. "An Optimal Peer-to-Peer Market Considering Modulating Heat Pumps and Photovoltaic Systems under the German Levy Regime," Energies, MDPI, vol. 13(20), pages 1-25, October.
    6. Jens Maiwald & Tino Schuette, 2021. "Decentralised Electricity Markets and Proactive Customer Behaviour," Energies, MDPI, vol. 14(3), pages 1-27, February.
    7. Mehdi Montakhabi & Fairouz Zobiri & Shenja van der Graaf & Geert Deconinck & Domenico Orlando & Pieter Ballon & Mustafa A. Mustafa, 2021. "An Ecosystem View of Peer-to-Peer Electricity Trading: Scenario Building by Business Model Matrix to Identify New Roles," Energies, MDPI, vol. 14(15), pages 1-22, July.
    8. Schmitt, Carlo & Schumann, Klemens & Kollenda, Katharina & Blank, Andreas & Rebenaque, Olivier & Dronne, Théo & Martin, Arnault & Vassilopoulos, Philippe & Roques, Fabien & Moser, Albert, 2022. "How will local energy markets influence the pan-European day-ahead market and transmission systems? A case study for local markets in France and Germany," Applied Energy, Elsevier, vol. 325(C).
    9. Min Fu & Zhiyu Xu & Ning Wang & Xiaoyu Lyu & Weisheng Xu, 2020. "“Peer-to-Peer Plus” Electricity Transaction within Community of Active Energy Agents Regarding Distribution Network Constraints," Energies, MDPI, vol. 13(9), pages 1-23, May.
    10. Jakub Jasiński & Mariusz Kozakiewicz & Maciej Sołtysik, 2021. "Determinants of Energy Cooperatives’ Development in Rural Areas—Evidence from Poland," Energies, MDPI, vol. 14(2), pages 1-19, January.
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