Smart Flexibility in Energy Communities: Scenario-Based Analysis of Distribution Grid Implications and Economic Impacts

Abstract

The transition of the power system towards increased renewable energy generation necessitates enhanced flexibility at all system levels, especially within distribution grids. This study investigates the integration of Energy Communities (ECs) as a potential strategy to manage consumer-level flexibility. The paper analyses various flexibility activation mechanisms, including local energy markets and flexibility markets within the European regulatory context. A comprehensive mathematical model is developed to analyze four distinct scenarios: reference, cooperative, competitive, and participatory. This model employs game theoretic techniques to assess the interactions between different stakeholders. The scenarios are evaluated based on their impact on peak load reduction, cost efficiency, and grid usage. The study concludes that combining active DSO strategies with local coordination in ECs enhances the cost-efficiency of flexibility activation, though careful consideration of pricing structures is necessary to realize the potential while preventing unintended consequences. Our scenario-based framework illustrates the potential of smart flexibility activation mechanisms to optimize grid operations, reduce peak loads, and enhance cost-efficiency. Key challenges and prerequisites to overcome them are also highlighted. By integrating advanced flexibility mechanisms and leveraging local market coordination, this study underscores the role of energy communities in accelerating the transition to decentralized smart energy systems.

Keywords: Demand Response, Distribution Grids, Energy Communities (ECs), Energy Policy, Smart Flexibility Activation, Local Energy Markets, Scenario Analysis