Assessing the impact of energy communities on retailers’ balancing positions in the power market

Abstract

As regulatory constraints limit energy communities’ (ECs) participation in wholesale markets, these might rely on retailers’ supply when local generation falls short. As balancing responsible parties, retailers are financially responsible for matching the volumes traded in the market with customers’ actual needs. However, inadequate information about ECs’ operations may complicate this task. This paper explores the interactions and financial implications for retailers under contractual agreements with ECs. We design a novel modelling framework, consisting of: (1) a stochastic model of a strategic retailer participating in the day ahead market considering imbalance costs, (2) a community model optimising its operations based on the agreed tariff subscription with the retailer, and (3) a simulation of the imbalance settlement process. The frameworks’ applicability is demonstrated via a case study in London (UK). Results indicate that retailers’ primary source of profit loss arises from the increased self-sufficiency of customers belonging to EC. On the other hand, deviations from the market commitments exerts limited effects on retailers financial outcomes. This is explained by the earnings obtained by providing passive balancing services to system operators. Also, the paper underscores retailers’ need to reassess their business models, looking beyond merely establishing operational data exchange with ECs.