A Decision-Making Framework for New Member Integration in Renewable Energy Communities under Prospect Theory

Abstract

This paper introduces an original approach to an underexplored issue: the integration of a new member into an existing renewable energy community. The problem involves actions with both long-term consequences, such as investment and local pricing, and short-term operational ones, such as daily energy and financial flow management. Long-term decision-making is modeled using finite extensive-form game theory, while short-term day-ahead scheduling decisions are formulated as a generalized Nash equilibrium problem. This framework explicitly accounts for heterogeneous stakeholder preferences and bounded rationality, modeled through prospect theory. The proposed approach is flexible and general, making it applicable to various objectives and decision-making contexts in the evolving landscape of renewable energy communities. It is applied to two communities with five members, eleven candidate users, multiple preference configurations and a comparison with heuristic metrics from the literature is also addressed. The model also exhibits that equilibrium outcomes and stakeholder behavior are influenced by the order of decisions, their preference criteria, and prospect theory parameters particularly the reference point selection.