Integrated community energy systems (ICESs) are a modern development of local energy systems by integrating distributed energy resources and local communities. Cost allocation is one of the key issues affecting the success of ICESs. Costs should be allocated to those who cause them, and benefits to those who make the investments. A well-designed cost allocation approach will therefore contribute to a successful implementation and sustainable development of ICESs. This paper presents a general framework for designing cost allocation schemes in ICESs. Various cost allocation methods are proposed to compute the energy bills for local community members in an ICES. In addition, the cost reflectiveness of different cost allocation methods has been computed based on a case study of an ICES to gain insights into how well the costs are allocated. Next to this, the same is also done for the cost predictability to investigate how the energy costs would change in the long term. The results showed that methods with a single energy charging component perform the best in terms of the two criteria. Our assessment can facilitate local community members in selecting a method that satisfies their requirements. Overall, this research contributes to a successful implementation of cost allocation in an ICES.

Integrated community energy systems (ICESs) emerged in the reform of local energy systems during the energy transition. Cost allocation within an ICES is one of the key issues determining the success of ICESs. The costs should be allocated fairly among the members of a local energy community. However, not much research has been directed towards cost allocation in local energy systems. In this paper, firstly, we compare ICESs with large power systems in terms of their physical and cost structure. Secondly, learning from experience with electricity tariff design, we derive cost allocation approaches for ICESs. To this end, we summarize tariff design objectives, cost allocation procedures and the underlying regulatory principles for major tariffication approaches and discuss how these concepts may be applied to cost allocation in ICESs. Discussions on the lessons learned so far and application issues in ICESs are included in this paper. This review paper paves the way for application of fair cost allocation in ICESs by providing a systemic framework.

Integrated community energy systems (ICESs) are a good representative of local energy systems by integrating local distributed energy resources and local communities. It is proposed that costs should be allocated in a socially acceptable manner since there is no regulation in ICESs. In this paper, social acceptance is conceptualized from the dimension of community acceptance considering procedural and distributive justice. A fair process increases the understanding and the acceptance of the cost allocation outcomes, and a fair outcome leads to the acceptance of the cost allocation procedure. This approach adopted the multi-criteria decision-making technique to evaluate social acceptance to select a cost allocation method that was socially acceptable to local community members. The results show that our approach is unique and useful when multiple decision-making groups have to decide together upon the cost allocation method. It is able to provide quantitative results and optimal decisions from a multi-group decision-making perspective. The methodology developed in this research can be applied to any local community energy system to select a cost allocation method. Furthermore, the obtained results can be used by decision-makers to support them in the decision-making process. Based on our approach, policy implications are also analyzed to support the success of cost allocation in ICESs.

In this paper, a segmented energy tariff design is proposed to incentivize consumers to flatten load demand. This energy tariff focuses on consumption levels instead of consumption periods. Energy storage is an effective strategy to help to maintain the imported energy from grid below the threshold without affecting the comfort of energy consuming. From economic perspective, both battery size and segmented energy prices should be considered to minimize the total energy cost. For the considered home battery system, when the threshold value and battery size is larger than 0.45 kWh and 3 kWh respectively, the imported energy from grid is zero. When the price ratio is larger than 9, it is beneficial for consumers to response to load flattening with battery to reduce energy cost. It is recommended that policy makers or electricity regulators take the tariff incentive into account to make it attractive for consumers to respond to load flattening.

The decreasing costs of distributed energy resources and increasing need for flexibility have attracted the attention of many in community energy storage (CES) business. CES, however, is a complex sociotechnical system with a variety of technologies, actors, and interactions. In the changing energy landscape, two pathways for CES, namely, local and virtual, are prominent. The range of technical, economic, environmental, and institutional values differ in these pathways. This chapter analyzes business models of multivalue and multiactor CES and provides recommendations for enabling regulatory and governance conditions.

The deployment of offshore wind and power transmission in the European North Sea is accelerating. Stakeholders advocate regional governance for the European grid expansion, which may evolve into a pan-European governance and is key to developing integrated, hybrid offshore projects. However, such projects are still scarce. We thus analyze the governance of the North Sea offshore grid expansion using the dimensions of level, implementation obligation, and implementation discretion. Our exploratory approach identifies five challenges. The challenges relate to 1) the interaction of the European and regional levels; 2) the interaction of the national and regional levels; 3) the participation of non-European Union countries; 4) the dependence of regional planning on national development plans, which consider national interests; and 5) the interaction of cost allocation and European financing for Projects of Common Interest. The recent Clean Energy Package proposal extensively reforms the regulation of the European power system. The Package is part of the Energy Union strategy and focuses on the energy and climate policies’ governance and the power system operation. Thus, regional governance of offshore expansion is largely unaltered, and our identified challenges remain unaddressed.

Managing electric flexibility is of importance for reliable electricity supply, especially in a situation with increasing penetration of renewable electricity production. One of the capabilities of electricity smart grids is the possibility to incorporate distributed energy resources for provision of electric flexibility to the system. This paper presents an approach to determine the investment and short-term average costs of distributed energy resources to supply flexibility services in a local system, and compares those costs to the average costs in the Dutch markets for balancing and day-ahead flexibility. The approach in this paper is useful for techno-economic analysis of flexibility from distributed energy resources and the economic valuation of flexibility for trading in traditional markets. The analysis shows that local flexibility in many cases is much more expensive than centrally provided flexibility.

The development of offshore transmission and wind power generation in the North Sea of Europe is advancing fast, but there are significant barriers to an integrated offshore grid in the region. This offshore grid is a multi-level, multi-actor system requiring a governance decision-making approach, but there is currently no proven governance framework for it, or for the expansion planning of the European power system in general. In addition, existing offshore expansion planning models do not endogenously include governance considerations, such as country vetoes to integrated lines. We develop a myopic Mixed-Integer Linear Programming model of offshore generation and transmission expansion planning to study the effect of integrated governance constraints. These constraints limit investments in integrated lines: non-conventional lines linking offshore wind farms to other countries or to other farms. Each constraint affects the system (including the main transmission corridors), transmission technologies and welfare distribution differently. We apply our model to a long-term case study of the 2030–2050 offshore expansion pathways using data from the e-Highway2050 project. Results confirm that the offshore grid is beneficial to society. Integrated governance constraints induce a modest loss of social welfare, but do not change significantly the existing welfare distribution asymmetry between countries and actor groups. They do strongly affect the interaction of line technologies and types (conventional or integrated), so the impact of the integrated governance constraints is more visible on the grid topology than on welfare levels and distribution. We highlight the need to consider technology and type interactions in expansion planning, especially between multiterminal HVDC and integrated transmission lines. Also, an offshore governance framework should address the use of multiterminal HVDC in a non-integrated grid, but this is a second-best option compared to an integrated grid.

In order to decarbonize the energy sector, there is a widespread consensus that the role of end-users in the energy system should change from passive consumption to active prosumption and engagement. This is of particular importance as an increasing number of technologies and business models are focusing on the end-users. These developments provide new opportunities for further technical and social innovation to smarter, flexible and integrated systems such as community energy systems (CESs). Through system integration and community engagement CESs assist in transition to a low-carbon energy system. Despite the high importance, there is limited knowledge on willingness of local citizens to participate in the local energy systems such as CESs as well as associated factors determining such willingness. Through a survey among 599 citizens in the Netherlands, this research analyses the impact of demographic, socio-economic, socio-institutional as well as environmental factors on willingness to participate in CESs. Factor and multi-variate regression analysis reveals that the environmental concern, renewables acceptance, energy independence, community trust, community resistance, education, energy related education and awareness about local energy initiatives are the most important factors in determining the citizens’ willingness to participate in CESs. Citizens should be empowered to take active role in steering the local energy initiatives.

Risk management frameworks offer excellent tools to identify and manage risks in supply chains. Existing tools can be used to evaluate impacts of countermeasures, however, analysts struggle with modelling how disruptions escalate in complex supply chain systems within a certain amount of time and across several stakeholders. On the contrary, the resilience discipline offers the possibility to understand how a supply chain reacts to disruptions as a function of time. Hence, this paper integrates the concepts of resilience with risk management techniques and develops a risk based resilience assessment framework in a multi-actor context. Further, the framework is operationalized by developing a computer based tool that is tested in case of fruit import in Netherlands.

HVDC innovations and the integration of power markets and renewables drive the development of a European Northern Seas offshore grid. This power transmission system performs two functions: interconnecting Northern European onshore power systems, and connecting offshore wind farms. Despite its benefits, the development of an integrated offshore grid combining the two functions is slow. The main reasons are the lack of cooperation and governance frameworks to overcome regional differences and distribute costs and benefits. These barriers were studied so far only qualitatively or through perfect foresight optimization models. We complement this by studying transmission expansion pathways of the grid, which are non-optimal and path dependent, using a novel and open-source simulation model for offshore transmission investments. Different expansion typologies are considered, which we find perform the grid functions with different levels of integration and transmission capacities. Besides these typology factors, modelling and simulation factors also affect the expansion selection. Typology, modelling and simulation factors interact to result in radically different offshore grid pathways, which exhibit strong path dependence. Thus, to avoid locking-out beneficial expansions for the Northern Seas offshore grid, planning should be regional and consider HVDC innovations. Then individual projects can be implemented based on their own merits.

The governance of renewable electricity in Europe beyond 2020 is still uncertain. The only certain aspects are that national level targets will be abolished beyond 2020, and that most renewable electricity support schemes will take the form of competitive bidding. The objective of this paper is to assess the impact of policy choices, the so-called Design Elements, related to renewable electricity support schemes on social welfare. Presently, simulation and optimisation models are commonly applied for assessing the value of policy choice. Typically however, such models do not account for bounded rationality, and true uncertainty in investment decisions, and assume perfect information. However such assumptions can hardly be expected to hold in the real-world, especially in sectors where investment decisions which happen under knowledge of past trends and imperfect foresight, are a major determinant of welfare outcomes. The approach employed in this work is fundamentally different in that firstly, there is a shift from a ‘policy’ view to a ‘design element’ based approach of renewable electricity support assessment, and secondly investment decisions are simulated using agent-based modelling. We find that the combination of design elements that provides the highest increase in social welfare is the quantity warranty, with electricity market price accounted for ex-ante, and with technology specificity. Given the current debate on the governance of renewable energy generation in the European Union beyond 2020, the present paper offers guidance to policy makers and analysts who would like a better understanding of the relationship between policy design and social welfare.

In the unbundled national electricity markets in Europe, the balancing market is the institutional arrangement that deals with the balancing of electricity demand and supply. This paper presents a framework for policy makers that identifies the relevant design variables and performance criteria that play a role in the design and analysis of European balancing markets. We outline the full extent of the design challenge through a discussion of trade-offs among performance criteria, uncertain effects of design variables, and the many inter-linkages between the balancing market and the electricity market at large. Policy makers can address the balancing market design challenge by adopting a structured approach in which design variables, performance criteria, market conditions, system developments, and resultant market incentives are explicitly considered.

Offshore wind will contribute to the decarbonization of European power systems, but is currently costlier than many other generation technologies. We assess the adequacy of market strategies available to private actors developing offshore wind farms in Europe, by employing the development and diffusion pattern model. The model includes two earlier phases in addition to the large-scale deployment phase of other diffusion models: the innovation and the market adaptation phases. During its development and diffusion offshore wind moved from experimentation to a dominant design (monopile foundations and a permanent magnet generator). Simultaneously, wind farms shifted from an experimental to a commercial purpose and grew from 10 to 316 MW on average. The turbine and wind farm development markets kept a high concentration throughout all phases. Also, the wind farm life cycle and supply chain became more integrated and drew less from the onshore wind and oil & gas sectors. This development and diffusion was shaped by the barriers of cost, project risk and complexity, capital requirements, and multi-disciplinarity. Wind farms developers combined three niche strategies to address these barriers: the subsidized, the geographic, and the demo, experiment and develop. The barriers make these niche strategies more adequate than strategies of mass-market (dominating a market) or wait-and-see (developing resources but waiting for uncertainty reduction before market entrance). Nonetheless, the barriers and market strategies changed during the development and diffusion pattern. Thus, cost and risk reductions decreased the importance of the subsidized niche, while the geographic niche becomes less important as offshore wind develops outside of Europe. The study also identified an increase in cooperation for wind farm development, as development became more international and with more frequent alliances. Wind farm developers and development and diffusion models research must consider how contemporary forms of cooperation improve or hinder the market strategies.

Integrated community energy systems (ICESs) are emerging as a modern development to re-organize local energy systems allowing simultaneous integration of distributed energy resources (DERs) and engagement of local communities. Although local energy initiatives, such as ICESs are rapidly emerging due to community objectives, such as cost and emission reductions as well as resiliency, assessment and evaluation are still lacking on the value that these systems can provide both to the local communities as well as to the whole energy system. In this paper, we present a model-based framework to assess the value of ICESs for the local communities. The distributed energy resources-consumer adoption model (DER-CAM) based ICES model is used to assess the value of an ICES in the Netherlands. For the considered community size and local conditions, grid-connected ICESs are already beneficial to the alternative of solely being supplied from the grid both in terms of total energy costs and CO2 emissions, whereas grid-defected systems, although performing very well in terms of CO2 emission reduction, are still rather expensive.

The growing penetration of distributed energy resources is opening up opportunities for local energy management (LEM) – the coordination of decentralized energy supply, storage, transport, conversion and consumption within a given geographical area. Because European electricity market liberalization concentrates competition at the wholesale level, local energy management at the distribution level is likely to impose new roles and responsibilities on existing and/or new actors. This paper provides insights into the appropriateness of organizational models for flexibility management to guarantee retail competition and feasibility for upscaling. By means of a new analytical framework three projects in the Netherlands and one in Germany have been analysed. Both the local aggregator and dynamic pricing projects present potentials for retail competition and feasibility of upscaling in Europe.

Integrated Community Energy Systems (ICESs) are emerging as a modern development to re-organize the local energy systems allowing integration of distributed energy resources (DERs) and engagement of local communities. Although local energy initiatives such as ICESs are rapidly emerging, assessment and evaluation are still lacking on the value these systems can provide both to the local communities as well as to the whole energy system. In this paper, we present a framework to assess the value of ICESs for local communities. We apply this framework to assess the value of ICES in Spain. For a block of 10 households, investments and operations of DERs together with local exchange is simulated in DER-CAM model. For the considered community size and local conditions, ICESs are beneficial to the alternative of solely being supplied from the grid. An ICES that gets remunerated the excess energy to the grid has higher benefits than the system where energy exports are not remunerated as currently in Spain.