Cost allocation in integrated community energy systems - A review

Abstract

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.