Local Energy Community: The future of flexibility? -An assessment of coordinated value, tariff structure and benefit allocation

Abstract

The increasing integration of distributed energy resources and rising electricity prices has created new opportunities for local energy communities (LECs) to improve selfconsumption, reduce peak demand, and lower electricity costs. This thesis investigates how electricity costs can be reduced within LECs, how different electricity tariffs and spot price variations influence the economic outcomes, and how the resulting savings can be fairly distributed among community members. A simulationbased analysis was conducted using residential and commercial load profiles from Gothenburg, Sweden. Different community configurations, tariff structures, and allocation methods were evaluated and compared to individual operation, with a focus on shared photovoltaic (PV) generation and battery energy storage systems (BESS). The operational analysis was initially performed for two-household configurations to evaluate how different flexibility resources influence LEC performance. The results show that the largest economic benefits were achieved in communities consisting of members with complementary flexibility resources and load profiles, increasing the opportunities for local energy sharing and coordinated operation. The highest surplus reduction reached 3486.6 SEK (7%), while the largest peak reduction achieved was 3.92 kW (20%). The coordinated operation within the LEC significantly increased self-consumption, with levels reaching up to 100% in some cases, corresponding to improvements of up to 67% percentage points compared to individual operation. The evaluation of tariff structures showed that peak-based tariffs create the strongest economic incentives for cooperation within the LEC, whereas spot price variations had a smaller influence on the overall benefits. To evaluate the distribution of economic savings, larger 10-member communities were analyzed for the allocation analysis. The results show that the selected allocation method significantly affects how benefits are shared among participants. Among the evaluated methods, the balanced allocation approach appeared to provide the best trade-off between fairness and incentives for flexibility contributions. Overall, the study highlights the potential of LECs to support a more flexible and cost-efficient electricity system while emphasizing the importance of tariff design and fair benefit-sharing mechanisms for successful community participation.