Transaction costs as a factor of adherence to institutionalized energy communities – case study of energy clusters in Poland

This study investigates why investors in Poland's rapidly growing sector of small renewable energy sources (RES, <1 MWe) largely avoid institutionalized energy communities, particularly energy clusters, despite strong regulatory support. Building on transaction cost economics, investment theory, and the property-rights approach, a real-options model is developed to evaluate the economically admissible level of transaction costs under different opportunity-cost assumptions. The model integrates asset structures, liquidity buffers, and operational surpluses, and is applied to Polish data on RES auctions, virtual prosumption, and the balance sheets of benchmark energy firms. Results show that when opportunity costs are charged on the total asset base, acceptable transaction costs are uniformly negative across all cases, leaving no room for rigid institutional commitments. Only when opportunity costs are assessed relative to equity do temporary, narrow windows of tolerance emerge, especially in early auction years or in firms with atypical equity structures. These findings explain the weak adherence to energy clusters: investors prioritize flexibility and liquidity, while rigid contractual schemes raise transaction costs beyond tolerable thresholds. The study concludes that institutional designs for energy communities should reduce sunk costs, enhance flexibility, and align incentives with investors' liquidity profiles rather than relying solely on price-based mechanisms. • Polish investors avoid energy clusters despite regulatory incentives. • Real-options model links transaction costs with RES investment decisions. • Acceptable transaction costs are often negative under asset-based assumptions. • Liquidity and equity buffers shape investor tolerance for institutional contracts. • Policy should reduce sunk costs and enhance flexibility in community design.