Maelis Renault

Abstract

Achieving carbon neutrality in Europe requires a significant expansion of renewable electricity generation and new mechanisms to valorize decentralized production. Traditional support schemes such as feed-in tariffs and net metering have been criticized for their economic inefficiencies, particularly their inability to reflect temporal, spatial, and system value differences. In France, collective self-consumption (CSC), introduced in 2015, enables locally produced electricity to be shared among nearby participants organized within a legal entity, potentially creating a form of local energy market. Despite the rapid growth of CSC projects—half of which are initiated by local authorities—the determinants of participation in open CSC operations remain largely unexplored. Existing literature mainly focuses on the profitability and internal governance of energy communities, emphasizing the role of self-consumption rates, load profile complementarity, and sharing rules. However, little attention has been paid to the initial decision of public producers to engage in such arrangements. This article develops a theoretical model in which a local authority chooses between selling its surplus electricity to EDF OA or creating an open CSC operation with a backup sale to EDF OA. The model highlights the role of surplus volume, internal electricity prices, and participant recruitment costs in shaping this decision. It derives the conditions under which local electricity exchange becomes economically preferable, contributing to the literature on distributed energy incentives and the emergence of local energy markets.