Economic Viability of Energy Communities versus Distributed Prosumers

Abstract

As distribution grids are made to accommodate significant amounts of renewable energy resources, the power system evolves from a classical producer-consumer scheme to a new one that includes individual prosumers or energy communities. This article contributes to the exploration of the solution to the dilemma of whether to be a distributed prosumer or an energy community prosumer by comparing the profitability of these two business models. To achieve this goal, a high-resolution methodology is created for measuring economic performance via proposed indices under different development scenarios of renewable proliferation and various network configurations. The developed methodology considers today’s electricity billing and renewable support scheme net metering. The results indicate that, first, the energy community is a more profitable framework than the individual distributed prosumer: avoided costs for energy community are, on average, 20% higher than for the individual, resulting in a payback period of the energy community that is about two times shorter than for owners of rooftop installations. Such promising results should encourage ordinary consumers to be members of energy communities. Second, the energy losses in the power distribution system are slightly higher for the case of energy communities rather than individual prosumers, yet the difference is insignificant, about 0.2%. Third, regulatory barriers shall be removed to enable participation of Latvian prosumers and distribution system operators to the energy communities, as it will benefit all the stakeholders and facilitate economically efficient energy transition. The results of this study could be adopted by decision-makers, such as government agencies, companies, and solar and wind turbine owners.