Integrating flexibility and energy local markets with wholesale balancing responsibilities in the context of renewable energy communities

Abstract

Prosumers can organize themselves in collective self-consumption (CSC) structures and renewable energy communities (RECs) to share energy they produce locally. In addition, through their contracted balancing responsible party (BRP), i.e., retailer and aggregator, they could become flexibility providers for system services to solve, for example, local grid constraints. Since CSC and REC structures are progressively being regulated in many countries, local energy markets (LEMs) and local flexibility markets (LFMs) to be developed with these structures should find the way to comply with existing CSC rules to settle energy transactions and flexibility activation, both, locally and with the wholesale markets (WSMs) settlement, and the existing barriers and regulatory improvements should be identified to allow future implementations. Indeed, the integration of local and WSMs is still a matter of development, demanding innovative solutions, one of the main issues being, for example, the impact of the flexibility activation by one BRP into another BRP’s expected delivery commitment in the WSM. This work proposes innovative designs for LEM and LFM based on common CSC rules of existing regulations, and a conceptual approach to integrate them together and with the WSM balancing responsibilities of the BRPs involved, identifying existing regulatory barriers. While many LEMs in the literature operate as WSMs, with future markets and delivery commitments for prosumers, we propose the use of a post-delivery LEM that can be cleared even after the delivery of energy, which strongly simplifies prosumers participation avoiding the need of these a priori unrealistic commitments. The business model, the main roles involved, and the contractual framework to connect the BRPs while allowing prosumers to freely contract the BRP of their choice for both energy supply and flexibility provision are described and can serve as a guide for future regulatory improvement of the common regulatory frameworks.