Conference Agenda

The global transition to sustainable energy systems has accelerated the rise of renewable energy communities, where individuals or entities share energy infrastructures. These communities foster local energy production, democratic governance, and social equity while promoting energy security, resilience and climate-change mitigation. This paper applies club theory (Buchanan, 1965) as an analytical framework, offering insights into voluntary participation, congestion management, exclusion mechanisms, and the determination of optimal membership size in energy communities. By framing energy infrastructures as club goods, the study demonstrates how efficiency, equity, and long-term viability can be achieved through well-designed governance structures. We assume that club members are homogeneous who possess identical preferences and resources, and that club managers compete to attract members. In such a competitive game, each club manager makes optimal choices that maximize the utility of the representative club member.

We examine two settings. To derive key economic insights regarding the important role that membership size plays in the optimal configuration with multiple club facilities, we first assume that the renewable resource is not subject to exogenous climate shocks. Later, this simple setting is extended to account for the fact that renewable resources (e.g., solar energy) are intermittent. We focus on solar energy production. We introduce uncertainty and demonstrate how the club manager chooses one of two competing technologies (single source or hybrid) ex-ante and the economic arrangement that takes place ex-post. Under uncertainty, we assume that there are two possible states of nature, sunny and cloudy. The results of the analysis produce crucial insights about the complex nature of energy clubs as these entities provide multiple sharing facilities in stochastic settings.