A Hybrid Approach for Fair Energy Distribution and Optimal Resource Allocation in Decentralized Energy Systems

Abstract

Decentralized energy communities (DECs) allow households, prosumers, and small generators to trade electricity locally, improving grid flexibility and supporting renewable integration. However, local market designs often face a trade-off between efficiency and fairness. Efficiency-oriented settlement rules can produce payment outcomes that are perceived as unfair, while strongly redistribution-based approaches may weaken incentives and reduce operational performance. This paper proposes a hybrid Vickrey-Clarke-Groves (VCG)-Shapley payment framework designed to balance an efficiency-oriented VCG settlement baseline, contribution-based fairness, and settlement stability. The VCG mechanism forms the efficiency-oriented settlement base, and a Shapley-inspired redistribution layer incentivizes meaningful community contributions beyond net energy supply. We develop a 14-factor contribution score to operationalize this approach, covering reliability, flexibility, self-consumption, demand response, renewable integration, transparency, and other supportive behaviors. Scores are evaluated every 30 minutes using time-varying weights to reflect the changing system conditions. A 24-hour simulation with generators, prosumers, and consumers compares the VCG-only settlement, the score-based redistribution, a convex combination payment and the proposed hybrid mechanism. The results show that the hybrid method produces the lowest SD and MAD-based payment dispersion among the evaluated post-VCG alternatives, preserves the VCG settlement anchor, and satisfies interval-level budget balance.