Summary Among household electricity end users, there is growing interest in local renewable electricity generation and energy independence. Community‐based and neighborhood energy projects, where consumers and prosumers of electricity trade their energy locally in a peer‐to‐peer system, have started to emerge in different parts of the world. This study investigates and compares the costs incurred by individual households and households organized in electricity trading communities in seeking to attain greater independence from the centralized electricity system. This independence is investigated with respect to: (i) the potential to reduce the electricity transfer capacity to and from the centralized system and (ii) the potential to increase self‐sufficiency. An optimization model is designed to analyze the investment and operation of residential photovoltaic battery systems. The model is then applied to different cases in a region of southern Sweden for year 2030. Utilizing measured electricity demand data for Swedish households, we show that with a reduced electricity transfer capacity to the centralized system, already a community of five residential prosumers can supply the household demand at lower cost than can prosumers acting individually. Grouping of residential prosumers in an electricity trading community confers greater benefits under conditions with a reduced electricity transfer capacity than when the goal is to become electricity self‐sufficient. It is important to consider the local utilization of photovoltaic‐generated electricity and its effect on the net trading pattern (to and from the centralized system) when discussing the impact on the electricity system of a high percentage of prosumers.

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An increase in distributed small-scale generation and storage in residential prosumer households requires an understanding of how the household-controlled operation of these distributed technologies differ from a system-optimal utilization. This paper aims at investigating how residential photovoltaic (PV)-battery systems are operated, given different assumed incentives, and whether or not a prosumer induced operational pattern differs from what is desirable from a total electricity system point of view. The work combines a household optimization model that minimizes the annual household electricity bill for two price zones in southern Sweden with a dispatch model for the northern European electricity supply system. The results show significant differences in the charging and discharging patterns of residential batteries. A household annual electricity cost minimization gives many hours in which only a fraction of the battery capacity is used for charging and discharging, mainly driven by incentives to maximize self-consumption of PV-generated electricity. In contrast, in a total electricity system operational cost minimization larger fractions of the available battery capacity are utilized within single hours. In the total system optimization case, the batteries are charged and discharged less frequently and the energy turnover in the batteries is only half that of the household optimization case. For all the cases studied, the hourly electricity price provides only a limited incentive for households to operate their batteries in a system-optimal manner.

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