Hierarchical Energy Management for Renewable Energy Communities Using MPC and Rule-Based Control with Peer-to-Peer Energy Trading

Islanded and weakly interconnected power systems face increasing operational challenges as the penetration of renewable energy grows, particularly in environments with limited flexibility and reserve support. This study investigates a residential energy community in Cyprus using real time prosumer data and proposes a hierarchical decentralized Energy Management System (EMS). The EMS was initially implemented as a rule-based Minimum Viable Prototype (MVP), enabling practical validation of system operation and data integrity under realistic conditions. Building on this foundation, the final EMS adopts a three-layer control architecture in which rule-based household storage operation and peer-to-peer energy trading are complemented by a community-level Model Predictive Control (MPC) strategy for shared battery management. The MPC leverages short-term net-energy forecasts to proactively schedule charging and discharging of the community battery with the objective of reducing grid energy imports and improving local renewable energy utilization, while respecting battery operational limits and regulatory constraints. Simulation results based on measured data demonstrate consistent improvements over the rule-based baseline, achieving up to 23.4% reduction in electricity cost, approximately 6–7% reduction in grid energy imports, and a 1–2% increase in community self-sufficiency. Although the reduction in imported energy is moderate, its cumulative impact over long-term operation leads to significant economic benefits under time-varying tariffs. These results demonstrate that even when MPC is applied exclusively at the community battery layer, coordinated system-level energy management can deliver stable and economically meaningful improvements under realistic operating conditions.