2404. Optimal Investment and Fair Sharing Rules for Incentives in Virtual Renewable Energy Communities
Invited abstract in session WA-9: Optimization methods and models for finance, stream OR in Finance and Insurance .
Wednesday, 8:30-10:00Room: Clarendon SR 2.01
Authors (first author is the speaker)
| 1. | Paolo Falbo
|
| Department of Economics and Management, University of Brescia |
Abstract
This paper examines two interconnected challenges in Renewable Energy Communities (REC) optimization: investment in renewable technologies and equitable sharing of incentives, offered (by a central authority) under the Virtual Framework of self-consumption. Focusing on a REC composed of a household and a biogas producer—common in rural and urban contexts—we analyze how investment decisions and incentive-sharing mechanisms impact community profitability. The household invests in photovoltaic panels to reduce energy purchases and monetize surplus generation, while the biogas producer either converts biogas into electricity or sells it on the gas market.
We model this interaction as a leader-follower problem: an administrator (leader) defines the incentive-sharing rule, while an household and a biogas (followers) determine their optimal investments. Modeling the objective of the leader as a Nash bargaining problem and a Nash equilibrium for the followers' static game, we provide insights into optimal REC design and policy implications for fostering sustainable community energy systems.
The model is applied to the case of a REC, under realistic data about the random variables and investment costs. We obtain deep insight of key relevance to address both the organization of a REC, the optimal investment decisions for the members and the incentive policy design for the central authority.
Keywords
- Energy Policy and Planning
- Game Theory
- Capacity Planning
Status: accepted
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