Series of Articles: Energy Sharing – Possible impacts on the Energy System
Energy sharing refers to the coordinated use and generation of electricity, independent of established market roles, including the inclusion of the public grid. Energy sharing can intrinsically combine several positive repercussions. Among other things, it can enable greater participation of private individuals in the energy transition, thereby increasing acceptance of renewable energies and private investment. Energy sharing is also expected to create incentives for the grid-friendly use of flexible consumption equipment at local level.
In November 2024, a legislative proposal was made to amend the Energy Industry Act (EnWG) to enable energy sharing using the public grid. This raises various questions regarding implementation, pricing and possible system repercussions. In this article series, we provide an insight into current developments and explain possible forms of design and the implications for the energy system.
Contents of the series:
- Possible impacts of Energy Sharing on the Energy System
- Regulatory developments and prospects for diverse business models in Germany
- Local dynamic tariffs
On behalf of Elektrizitätswerke Schönau, the FfE has published the study “Flexibilisierung des Stromsystems” [3] that provides an overview of the potential goals and implementation forms of Energy Sharing. Additionally, the study analyzes the relationship between the implementation form and the expected system feedback effects of Energy Sharing. This article summarizes the key findings of the study.
Objectives of Energy Sharing
Energy Sharing can serve various objectives, which can be summarized into three categories :
- Increased Participation of Individuals in the Energy Transition:
- Energy Sharing enables active involvement of individuals (including small and medium-sized businesses and municipalities) in the energy transition.
- Prosumers can directly sell their electricity to other individuals of their choice.
- Vulnerable groups can participate as consumers in the energy transition and benefit from, for example, lower electricity costs.
- Enhanced Acceptance and Increased Adoption:
- Greater participation in the energy transition is expected to lead to higher acceptance of renewable energy: When the construction of a wind turbine in a community genuinely results in reduced electricity costs or increased price stability for residents, it is anticipated that acceptance of the wind turbine will significantly improve.
- Energy Sharing can also incentivize private investments:
- Prosumers are motivated to build oversized installations if they can locally and attractively market their surplus electricity.
- Allowing communal self-consumption (direct consumption of electricity generated by collectively operated facilities by community members) makes investments in community-based or cooperative systems more attractive.
- Vulnerable consumers, such as those living in multi-family houses or facing financial constraints, can invest small amounts in the energy transition and benefit from it.
- Reduction of grid expansion
Energy Sharing is expected to positively impact grid expansion by encouraging local electricity sharing. This should incentivize electricity consumption during periods of high local generation, thereby reducing grid load. Additionally, Energy Sharing aims to promote investments in the energy transition near consumers, further decreasing the need for grid expansion.
Beyond these intrinsic grid impacts, Energy Sharing is also expected to stimulate and accelerate investments in flexible systems, as well as their aggregation and use for grid or system services.
Impact of the implementation form on the effects of energy sharing
Energy Sharing currently encompasses various, sometimes very different, concepts. The key features and parameters that need to be considered in the implementation of Energy Sharing, as well as their impact on its effects, are discussed in the study and can be summarized as follows:
- Price formation of the shared electricity: A static price for the shared electricity is sufficient to incentivize grid and market serving behaviors. Dynamic prices enhance create additional incentives to invest in a diverse production portfolio.
- Pooling: Pooling production and demand in the community before sharing the electricity optimizes the self-consumption levels inside the community
- Metering: Energy Sharing requires a metering infrastructure that enables the matching of production and consumption with high temporal resolution (e.g. 15-minute measurements)
- Responsibilities: If private persons, such as prosumers, bear too much responsibilities, it is likely that Energy Sharing will not be attractive to them and will not gain traction
- Locality: Positive effects of energy sharing on the grid can only be expected for grids above the ones where electricity is traded (as the grid still has to be used to connect producer and consumer, but imports and exports can be mitigated). Therefor, energy sharing should be limited to a small geographical or grid-topological area to harvest its benefits on the grid
- Participation: A successful implementation of energy sharing requires a balance between production and consumption. To this end, the production portfolio in the community should be diversified (solar and wind). In particular, a participation of cooperatives would be beneficial.
- Combination with other price components: Energy Sharing can be combined with time of use grid fees, which can enhance its benefits for the grid, as well as with dynamic tariffs for the imported electricity, resulting in increased positive effects for the electricity market.
- Funding: Without funding, the participation in Energy Sharing will likely not be profitable for both consumers and prosumers. A funding could be implemented, if the positive effects of energy sharing are comparable to those of alternative funded mechanisms.
Conclusion and Outlook
The positive effects of energy sharing on participation in the energy transition and the resulting increase in expansion have already been partially demonstrated in countries where energy sharing has been implemented [4, 5]. To achieve the goals, it is crucial that energy sharing is economically viable for private individuals, as widespread implementation of energy sharing cannot be expected otherwise. From a political perspective, the costs and benefits associated with the implementation of energy sharing must be compared with those of other mechanisms with the same goals.
The grid-friendliness of energy sharing, on the other hand, is highly dependent on its implementation. Currently, there is no empirical evidence of the grid-friendliness of energy sharing, which is likely due to the chosen implementations in the affected countries [3, 4, 5]. Results from simulations suggest that energy sharing can make an important grid-friendly contribution if implemented correctly. Here, too, a cost-benefit analysis must be carried out in the future, comparing energy sharing with alternative grid-friendly mechanisms.
In summary, this study mainly shows that a clear definition of the goals to be pursued with energy sharing is a necessary step, as not all implementations of energy sharing contribute equally to all goals.
The FfE plans to continue to be actively involved in the development of energy sharing concepts and to scientifically evaluate their costs and benefits. The focus will always be on transferring scientific findings into public debate and industry.
Literature
[1] Wiesenthal, J., Aretz, A., Ouanes, N., & Petrick, K. (2022, Mai). Energy Sharing: Eine Potenzialanalyse. Gemeinschaftlich Strom im Verteilnetz erzeugen und nutzen: Eine Studie zum Umsetzungsvorschlag im Rahmen von Artikel 22 der Erneuerbare-Energien-Richtlinie der EU. Institut für ökologische Wirtschaftsforschung (IÖW). https://www.ioew.de/fileadmin/user_upload/BILDER_und_Downloaddateien/Publikationen/2022/Energy_Sharing_Eine_Potenzialanalyse_1.pdf
[2] Ritter, D., Bauknecht, D., Fietze, D., Klug, K., & Kahles, M. (2023). Energy Sharing: Bestandsaufnahme und Struktu-rierung der deutschen Debatte unter Berücksichtigung des EU-Rechts. Umweltbundesamt. https://www.umweltbundesamt.de/publikationen/energy-sharing
[3] FfE (2024): Flexibilisierung des Stromsystems: Beitrag von Energy Sharing für Netz-, System- und Marktdienlichkeit. Studie im Auftrag der: Elektrizitätswerke Schönau
[4] Urbansky, J., & Schürmann, L. (2024). Untersuchung der Verteilnetzbelastung bei Proaktivem Energy-Sharing nach Österreichischem Vorbild. Fraunhofer UMSICHT. https://www.tugraz.at/fileadmin/user_upload/tugrazExternal/f560810f-089d-42d8-ae6d-8e82a8454ca9/files/lf/Session_C3/333_LF_Urbansky.pdf
[5] Pressmair, G., Mayr, M., & Benke, G. (2024). Welchen Beitrag liefern Energiegemeinschaften zur Energiewende? Eine Kritische Diskussion. e7 energy innovation & engineering https://www.researchgate.net/publication/378299470_Welchen_Beitrag_liefern_Energiegemeinschaften_zur_Energiewende_Eine_Kritische_Diskussion