Smart flexibility in energy communities: Scenario-based analysis of distribution grid implications and economic impacts

The transition of the power system towards increased renewable energy generation necessitates enhanced flexibility at all system levels, especially within distribution grids. This study investigates the integration of Energy Communities (ECs) as a potential strategy to manage consumer-level flexibility within the context of Norwegian distribution grids. An equilibrium model is developed to analyse both implicit and explicit flexibility activation mechanisms to investigate potential strategies for distribution grid operators (DSOs) and assess the interactions between different stakeholders. The scenarios are evaluated based on their impact on peak load reduction, cost efficiency, and grid usage. Results from a Norwegian case study show that EC flexibility activation can reduce total system costs by 1.8% while lowering peak grid capacity needs by 13.1%. These reductions contribute to mitigating distribution grid congestion and deferring costly infrastructure reinforcements. Although derived from a specific geographical context, the findings offer valuable insights applicable to other regions with similiar grid conditions and regulatory frameworks. The study concludes that combining active DSO strategies with local coordination in ECs enhances the cost-efficiency of flexibility activation, though careful consideration of pricing structures is necessary to realise the potential while preventing unintended consequences. Our scenario-based framework illustrates the potential of smart flexibility activation mechanisms to optimise grid operations, reduce peak loads, and enhance cost-efficiency. Key challenges and prerequisites to overcome them are also highlighted. By integrating advanced flexibility mechanisms and leveraging local market coordination, this study underscores the role of energy communities in accelerating the transition to decentralised smart energy systems. • Develops a mathematical model with explicit and implicit flexibility activation. • Analysis of four distinct scenarios, evaluating grid and economic impact. • Results from winter peak load and summer peak generation case studies. • Actionable insights on integration of energy communities in distribution grids.