Who pays for community energy? Peer-to-peer trading, distribution grid headroom and the supplier’s dilemma

Renewable Energy Communities (RECs) with peer-to-peer (P2P) trading can lower bills and unlock flexibility, but they also reshape supplier revenue and distribution-network headroom. We couple an agent-based REC market model to a Transformer Headroom Index (THI) to evaluate welfare and grid outcomes across seasons. A 20-household feeder in South-East England with PVs, EVs, and heat pumps is simulated with and without P2P under four retail tariffs: Flat, Economy-7, Agile, and a wholesale-linked Dynamic tariff. Metrics include community net bills, supplier profit, and import/export headroom for 50 and 100 kVA transformers. Results reveal a persistent distributional trade-off: tariffs that minimise community bills compress supplier margins. P2P accentuates this by reducing grid purchases in PV-rich periods. P2P improves import headroom via EV load shifting; however, in PV-rich summer it can synchronise prosumer behaviour around price spikes, concentrating exports into short windows that erode export headroom. Nonetheless, across seasons, P2P is consistently part of the Pareto-optimal solution set, though the preferred supporting tariff varies by season. Policy implications derived from these trade-offs include: the need to re-base residual cost recovery onto fixed or capacity charges, the adoption of facilitation fees and THI-based flexibility contracts for value-sharing, the addition of Dynamic Operating Envelopes (DOEs) as guardrails for real-time tariffs, and the regulatory enablement of EVs as flexibility assets.