Increasing the penetration of renewable energy through community energy projects. An economic approach based on biform games

Abstract

In 2014, the Chilean government promulgated the Law 20,571. This law gives to regulated clients, mainly residential electricity customers, the right to produce energy/electricity for self-consumption and sell any surplus to the grid. After five years of implementation, including an update in 2018, the installed capacity of these projects is still very low. In contrast, in Scotland it is possible to find a much higher citizen participation in energy production through more collective initiatives, specifically community energy projects. This situation begs important questions about the effectiveness of net billing schemes in promoting citizen participation in energy production. In this doctoral thesis, a variety of tools inspired by game theory, social science, and mathematical programming are used and adapted to answer these questions. This leads to the following findings. Firstly, the current Chilean net billing scheme may not be the best support mechanism for citizen-led energy production developments. Secondly, some residential electricity customers would be willing to participate in local energy initiatives by devoting money and/or time, even when their main concern is the lack of financial resources necessary to fund such projects, and project ownership can influence this willingness. Thirdly, community energy projects can be the best strategy to follow for residential electricity customers in Scotland and Chile, although cost subsidisation can further improve community energy incentives. Even when the incumbents do not know their share of the benefits at the time of choosing a particular energy production scheme or mechanism, community energy projects present more opportunities to be implemented in comparison with net billing schemes in both countries. Finally, under specific circumstances, community energy deployment can have positive effects on variables like social welfare, consumer surplus, nodal prices, and carbon dioxide emissions. Based on these findings, we then draw conclusions and recommendations, which can help further development in the community energy sector, particularly in Chile.