Optimal Management of Public Energy Communities: Investment Strategies and Welfare Maximization

A municipality (social planner) is seeking to establish a renewable energy community paying the initial investment costs, while also identifying the optimal management framework. In this context, two distinct modes of governance are analyzed: the private and the public one. In the first case, a private (or profit) aggregator oversees the energy community with a monopolistic behavior, while in the other the aggregator is a public owned, or controlled, company following the social approach advocated by the promoter, i.e the municipality. In both scenarios, the effective functioning of the community requires the collection of private data on members’ energy consumption. This process allows for optimal management of the community, but also results in a loss of privacy for members. The model incorporates this as a dis-utility, assuming that the members address the portion of their energy needs not covered by the community’s production by purchasing energy from the manager at a price determined on the basis of the information collected. In addition, the aggregator is allowed to sell the collected data to third parties for financial gain. By integrating the members’ energy valuation and incorporating uncertainty regarding the investment cost, we examine policy recommendations aimed at establishing a community size closer to the social optimum.