Scandinavian Working Papers in Economics

Working Papers,
Copenhagen Business School, Department of Economics

No 19-2021: Prosumer Empowerment Through Community Power Purchase Agreements:A Market Design for Swarm Grids

Raluca Dumitrescu (), Alexandra Lüth (), Jens Weibezahn () and Sebastian Groh
Additional contact information
Raluca Dumitrescu: MicroEnergy Systems Research Group, Technische Universität Berlin, Postal: Straße des 17. Juni 135, Berlin 10623, Germany
Alexandra Lüth: Department of Economics, Copenhagen Business School, Postal: Copenhagen Business School, Department of Economics, Porcelaenshaven 16 A. 1. floor, DK-2000 Frederiksberg, Denmark
Jens Weibezahn: Department of Economics, Copenhagen Business School, Postal: Copenhagen Business School, Department of Economics, Porcelaenshaven 16 A. 1. floor, DK-2000 Frederiksberg, Denmark
Sebastian Groh: BRAC Business School (BBS), BRAC University, Postal: 66 Mohakhali, Dhaka 1212, Bangladesh

Abstract: In this paper, we are proposing a policy innovation for both a more sustainable and a more inclusive electrification strategy, particularly for improved energy access in the Global South: combining the extension of national grids whilst taking advantage of existing decentralized renewable energy infrastructure allowing their collective feed-in to the national grid. We are introducing community power purchase agreements as a regulatory instrument for compensating and incentivizing the actors active at the intersection of the two infrastructures (prosumer, grid operator, state utility).We use both a mixed complementarity and a linear model for analyzing the concept in a case study of Pirgacha village, Bangladesh, in which a cluster of solar home system prosumers are interconnected into a renewable energy swarm grid. We determine the energy infrastructure cost components and their split among the actors. The results demonstrate a series of co-benefits: (a) the prosumer is monetarily rewarded for the utilization of her assets and for electricity trading with no additional infrastructure investment; (b) if the state utility takes over the investment costs with the interconnection infrastructure and outsources the integrated grid operations and maintenance to the private sector, the otherwise high grid expansion costs can be saved and repurposed in other infrastructure investments; (c) the operations of the decentralized renewable energy company are no longer threatened by the grid expansion and it can become an Integrated Grid Operator.

Keywords: Decentralized renewable energy; Swarm grids; Grid integration; Power purchase agreements; Integrated grid operator

JEL-codes: C61; C63; D47; L94; Q41; Q42; Q48

Language: English

14 pages, February 3, 2022

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