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Community energy projects in the context of generation and transmission expansion planning

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  • Fuentes González, Fabián
  • Sauma, Enzo
  • van der Weijde, Adriaan Hendrik

Abstract

We extend multi-level generation and transmission expansion planning optimisation methods to analyse the impact of the community energy sector emergence on power system expansion. Methodologically, we do this by incorporating biform games and linear production games into the classic power transmission and generation expansion planning problem. The model is formulated as a Mathematical Program with Equilibrium Constraints (MPEC). Using a stylised example based on Chilean power market data, we show that community energy projects can be an optimal choice for residential customers. Furthermore, we find that community energy projects can widely impact the power system as a whole. Importantly, unlike some large generation projects, they can have positive effects on electricity customers who do not participate in them. Nevertheless, the implementation of net billing schemes, potential competitors for community energy projects, may be preferred when net billing injection prices are comparatively high, there are potentially high levels of confidence about the final payoffs, and there exist comparatively lower investment costs. Yet, we show that, depending on the specific case analysed with our model, it is likely that under the above circumstances nodal prices increase, social welfare decreases, and capacity limitations need to be addressed. The methodology developed in this work can be a valuable tool to examine and better understand the complexities of community energy projects and their interactions with market incumbents.

Suggested Citation

  • Fuentes González, Fabián & Sauma, Enzo & van der Weijde, Adriaan Hendrik, 2022. "Community energy projects in the context of generation and transmission expansion planning," Energy Economics, Elsevier, vol. 108(C).
    • Handle: RePEc:eee:eneeco:v:108:y:2022:i:c:s0140988322000433
    DOI: 10.1016/j.eneco.2022.105859
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    More about this item

    Keywords

    Community energy; Biform games; Linear production games; Mathematical program with equilibrium constraints (MPEC); Generation and transmission expansion planning;
    All these keywords.

    JEL classification:

    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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