Investment Assessment of Distributed Energy Resources Under Coalitional Energy Management

Yearly net energy metering (NEM), e.g, California NEM 2.0, is one effective way to subsidize distributed energy resources (DERs). However, it comes with a high grid balancing cost that is eventually passed down to all end-users. Hourly NEM helps remove the need for tax payer subsidization, but it disincentivizes investments in DERs such as rooftop solar due to the electricity export price being much lower than the import price. To shift NEM from yearly to hourly while maintaining the business case for DER investments, this paper adopts a cooperative game theoretic framework for co-optimizing DERs of a group of agents to minimize their joint energy cost. The cost savings are then reallocated to the agents via the Shapley value. This paper subsequently outlines a method for comparing the discounted cash flows for these DER technologies with and without co-optimization under hourly NEM. Financial KPIs such as the net present value (NPV) and the complex payback (CPB) are analyzed and compared in the case studies to quantify the financial improvement from cooperation.