package.el can be used to setup a local repository, the necessary bits are in package-x.el

(require 'package-x)

(defvar local-archive
  (expand-file-name "local/" user-emacs-directory)
  "Location of the package archive.")
(setq package-archive-upload-base local-archive)
(add-to-list 'package-archives `("local" . ,local-archive) t)

Once this is evaluated, package-upload-file can be used to add a package.

Add <package_name>-pkg.el file containing a package description.

(define-package
  "mypackage"
  "version"
  "Desription of mypackage."
  '((dependency1 "3.1.0")
    (dependency2 "2.1.4")))

Note that define-package is marked obsolete since version 29.1. What this means exactly isn't clear as it is still required to define a package.

A package can be a single file if version information is set correctly in the file header or a .tar archive. In case of an archive package files must be under <package_name-version> directory, otherwise the function will fail. The function documentation doesn't explain that well, package.el commentary section does a better job.

A tar file should be named "NAME-VERSION.tar". The tar file must unpack into a directory named after the package and version: "NAME-VERSION". It must contain a file named "PACKAGE-pkg.el" which consists of a call to define-package. It may also contain a "dir" file and the info files it references.

From a source directory this can be achieved with the following command - tar -f <pkg>.tar -c --transform 's,^\.,<pkgdir>,' .