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Following recent Danish legislation promoting energy communities, we explorehow to enable these communities to provide grid services to distribution systemoperators. In particular, we focus on "capacity limitation services", where wepropose a bilateral agreement in which an energy community is given reducedgrid import tariffs by setting a cap to its consumption level in certain hours.This requires a coordination mechanism between the community manager and theprosumers within the community. We enable this coordination by developing abilevel optimization model to be solved by the community manager, aiming to setdynamic, i.e., time- and prosumer-differentiated, prices. This coordinationmechanism enabled by dynamic pricing ensures desirable market propertiesincluding budget balance for the community manager and individual rationalityfor prosumers, while encouraging (but not guaranteeing) a fair allocation ofcollected benefits among prosumers.

How Can Energy Communities Provide Grid Services? A Dynamic Pricing Mechanism with Budget Balance, Individual Rationality, and Fair Allocation