PED topic 2: Ensuring positive socio-economic impact: PEDs in local economies and energy markets

PED development has a transformative impact on local energy markets, driving innovation, sustainability, and economic efficiency. The shift from centralised energy production to localised renewables requires rethinking grid connectivity, energy distribution, and market structures. Localised production should enhance energy security, affordability, and resilience against geopolitical risks. This topic aims to explore the (positive) impact of PEDs for local energy markets, affordability of energy prices and overall increased resilience. This includes the assessment of market effects of decentralised energy generation, market effects of PEDs as energy trading platforms (energy communities), effects on Demand-Response Mechanisms through integration of smart technologies and IoT, effects on market stability through enhanced storage options, etc.

A multi-level perspective needs to be addressed: PEDs, while improving grid resilience, cannot single-handedly shift energy markets, which are influenced by national and transnational policies. Regulatory and incentives structures are necessary to enable PEDs and local energy markets to function effectively. The integration of local energy markets into the overall market design, the impact of PED development on energy grids and the future role of Distribution System Operators (DSOs)are key questions to be further explored, as well as multi-commodity approaches for power grids and heating/cooling systems. Proposals need to address and demonstrate the impact of adapted local energy markets on local communities in terms of social interactions, behavioural aspects and local jobs. Equally, the impact on the local economy in terms of local socio-economic indicators need to be addressed and detailed.

Proposals under this topic must explore the transformative impact of PEDs on local and regional energy markets and seek innovative approaches to provide evidence for environmental, economic and social benefits the energy market transformation. Proposals should aim to demonstrate how PEDs can drive innovation, improve local economies, and stabilise energy markets while fostering sustainable energy transitions at the local level. In particular, proposals should address the following aspects:

Decentralised energy generation and market effects: Proposals need to demonstrate the added value of decentralising the energy system via PEDs by investigating the market impact of optimised energy efficiency (buildings, infrastructure) and how decentralised renewable energy production and flexibility services within PEDs influence local energy markets, energy pricing, and affordability, while enhancing energy security and resilience against geopolitical risks. Furthermore, by applying a multi-level perspective, proposals need to explore and provide innovative approaches for the balance between national and local levels in terms of (market) regulatory frameworks, incentives, and similar.

Socio-economic impact on local communities: Proposals need to explore the socio-economic effects of PED development on local communities, including behavioural shifts, social interactions, and the creation of local jobs and economic opportunities. Furthermore, proposals need to assess the role of PEDs as energy trading platforms, particularly through energy communities, and their impact on local energy distribution and economic efficiency.

Grid resilience and market stability: Proposals need to examine the effects of PEDs on the resilience of energy grids, and how the integration of local energy systems into national and transnational grid structures can promote energy stability. This includes exploring the role of DSOs and the future role of power grids, heating, and cooling systems (link to PED topic 3). Furthermore, proposals need to evaluate the potential of enhanced energy storage solutions within PEDs to contribute to market stability and facilitate the transition to decentralised energy models.

Demand-response and smart technologies: Proposals need to explore the integration of smart technologies, IoT, and demand-response mechanisms within PEDs, focusing on how these systems can optimise energy consumption, improve grid stability, and contribute to market flexibility.

Regulatory and incentive structures: Proposals need to investigate the need for adapted regulatory frameworks and incentive structures to support the integration of PEDs into broader energy market designs and ensure fair and effective market operation.

Project proposals submitted under this topic should address one or several of the following issues:

• How do PEDs impact local energy markets, including energy pricing, affordability, security, and economic efficiency? How do PEDs need to be designed to ensure positive impact on energy markets?
• How can PEDs be effectively integrated into national and transnational energy markets, considering regulatory and incentive structures?
• What role do smart technologies play in optimising energy efficiency and consumption, improving grid stability, and enhancing market flexibility?
• How can PEDs strengthen energy grid resilience and stability through decentralised energy generation, energy storage solutions, and integration with existing infrastructure?
• What are the socio-economic impacts of PEDs on local communities, including job creation, social interactions, and economic opportunities?

Rather than focusing on isolated technical solutions, projects are expected to approach this topic through systems thinking and place-based strategies related to this topic. Project outcomes should be both impact-oriented and process-driven, aiming to be as concrete and user-centred as possible. Projects should clearly define their expected qualitative and/or quantitative outputs (including facts and figures) in relation to the chosen question. Expected outputs include, but are not limited to:

• Evidence on how optimised energy efficiency, decentralised renewable energy production and flexibility services within PEDs impact local energy markets, energy pricing, affordability, and energy security, as well as recommendations for optimising these effects.
• Innovative approaches for balancing local and regional energy markets with national and transnational energy frameworks, including regulatory and incentive structures to ensure effective market operation.
• Analysis of the socio-economic effects of PEDs on local communities, including the creation of local jobs, economic opportunities, and behavioural shifts in social interactions within the community.
• Assessment of PEDs as energy trading platforms and energy communities, with clear evidence of their impact on local energy distribution, economic efficiency, climate neutrality and community engagement.
• Insights into the integration of smart technologies, IoT, and demand-response mechanisms within PEDs, demonstrating how these technologies optimise energy consumption, improve grid stability, and market flexibility, reduce emissions and air pollution and contribute to climate change mitigation.
• Understanding of the role PEDs play in enhancing grid resilience, including how local energy systems can be integrated into national and transnational grids, and the future role of DSOs in this transition.
• Evaluation of enhanced energy storage solutions within PEDs and their potential to stabilise energy markets, facilitating the transition towards decentralised energy models.

Recommendations for adapting regulatory frameworks and incentive structures to support the integration of PEDs into broader energy market designs, ensuring fair and effective market operations that foster local economic and energy resilience.