Dynamic choice of renewable energy communities: Bottom-up vs top-down organisation

This paper compares two forms of Renewable Energy Communities by assessing their impact on long-run social welfare from the perspective of a local public administration. By maximising the intertemporal utility of a representative prosumer, we assess how different REC organisations affect utility under different energy market, incentive and technology conditions. The results show that while consumption and pollution levels remain constant across REC types, differences in prosumers’ utility arise due to different financial costs and benefits. In particular, high energy market prices, higher incentive levels and increased energy capacity favour bottom-up RECs, while higher coordination costs and higher prosumer incentive weights favour top-down RECs. Our findings highlight the economic trade-offs that influence REC adoption decisions.