Energy Communities: Orchestrating the EU-wide Energy Transition at the citizen and the local level
Graphical summary of the main outcomes of the online event, by © Robert Six rb6
The Need for New Generation Power Grid
The traditional power grid- with its centralized generation, transmission and distribution is being turned upside down for a new generation grid with prosumers and distributed storage. The future power grid will look much different than the one we have today – the next generation paradigm is organic, local, and highly distributed.
Key Barrier in the acceleration towards Distributed Energy Resources
But lack of maturity of the energy markets is acting as a key barriers for rapid acceleration towards distributed energy resources. In traditional electricity market design, distributed energy reality is seen as a challenge rather than an opportunity. Therefore, to unlock the full potential of distributed energy resources i.e. solar PV, wind energy, energy storage, demand response, energy efficiency etc. a bottom up energy market design is needed.
Finally, prosumers and their collective forms can engage directly in the EU energy sector
This is where The European Commission's Clean Energy Package comes in. The European Commission's Clean Energy for All Europeans Package have broken new ground for consumers by recognising, for the first time under EU law, the rights of citizens, prosumers and communities to engage directly in the energy sector.
The EU legislative framework has formally acknowledged and defined specific types of community energy as 'renewable energy communities' and 'citizen energy communities'.
Both of these Energy communities 'renewable energy communities' and 'citizen energy communities' are defined in two separate laws of the Clean Energy Package. The revised Renewable Energy Directive (EU) 2018/2001 sets the framework for ‘renewable energy communities’ covering renewable energy. The revised Internal Electricity Market Directive (EU) 2019/944 introduces new roles and responsibilities for ‘citizen energy communities’ in the energy system covering all types of electricity.
What characterizes energy communities?
Energy communities are incorporated as a non-commercial type of market actors that combine non-commercial economic aims with environmental and social community objectives (Roberts et al., 2019).
More detailed characterization of these energy communities 'renewable energy communities' and 'citizen energy communities' in terms of ownership structure, governance and purpose, Geographical scope, activities, participants, autonomy, effective control can be found in the two separate laws of the Clean Energy Package: revised Renewable Energy Directive (EU) 2018/2001 and revised Internal Electricity Market Directive (EU) 2019/944.
In addition, both citizen energy communities and renewable energy communities can exercise similar activities, including generation, distribution, supply, aggregation, consumption, sharing, and storage of energy and provision of energy-related services. Depending on the activity performed, they must comply with the obligations and restrictions applicable to the other market participants (generators, suppliers, distributors, aggregators and other market actors) in a non-discriminatory and proportional manner.
What are the challenges and opportunities of energy communities in fostering the energy transition?
Challenges of Energy communities:
EU member states need to come up with concrete measures to implement the new rights given to citizen and renewable energy communities in the revised Internal Electricity Market Directive and, respectively, the revised Renewables Directive.
Implementation of Energy communities pose serious challenges for current market and regulatory arrangements.
The long-term sustainability of community energy projects will be contingent on the development of viable business models moving towards innovative financing and remuneration schemes, smart technologies, national regulatory support and their wider social acceptance and degree of citizen participation.
Need to develop innovative social policy and revisit regulatory structures to ensure that the costs of infrastructure and the risks of local inequalities can be socialised and, on the other hand, also avoid the formation of ghettos.
Opportunities of Energy communities:
On the other hand, if the new rights given to citizen and renewable energy communities in the revised Internal Electricity Market Directive and the revised Renewables Directive are fully implemented. Energy communities can bring a host of benefits to the energy systems:
Engaging citizens through collective energy actions can reinforce positive social norms and support the energy transition.
Energy communities can have a positive impact on grid stabilization and flexibility management.
Energy communities can alleviate the need for traditional network upgrades.
Implementation of Energy communities can lower energy prices for customers and access to private capital from renewables investments through citizen participation.
Examples of different approaches to energy communities already available in Europe:
Collective generation and trading in the Netherlands
Collective self-consumption in France
Housing associations as energy communities: FlexShape in Denmark
Energy positive districts as nucleus for energy communities
About islands and other autonomous communities in Greece
Local utility operating on behalf of and supporting the citizens
Financial Aggregation and Investment
Local organizations for fostering energy efficiency: ALLIES in Hungary
Jointly providing flexibility and grid services while charging EVs
Digital Energy supply and demand response systems
According to the case studies analysed in Energy communities Report: JRC Science for Policy, show that while the majority of community-based projects remain engaged in generation, their roles are gradually expanding. Their rise into new areas such as energy supply, energy efficiency and electro-mobility is likely to continue to disrupt activities traditionally held by energy/or car companies, addressing initiatives across the energy system. Estimates suggest that by 2030, energy communities could own some 17% of installed wind capacity and 21% of solar (European Commission, 2016). By 2050, almost half of EU households are expected to be producing renewable energy (Kampman, Blommerde, and Afma, 2016).
In my opinion, engaging citizens through collective energy actions with energy communities directive can reinforce positive social norms and support the energy transition at the citizen and at the local level – although it depends how it’s implemented in different EU member countries. Its transposition into national law will be essential for the successful development of EU-wide energy communities.
Although energy communities can bring much-needed innovation potential, their contribution to the energy transition is not yet fully understood EU-wide. More research is needed to clarify and quantify their potential at local, regional and/or the national levels, and analyse their economic, environmental and social effects. This should also investigate the barriers preventing people and communities from participating in energy projects.
Energy communities: an overview of energy and social innovation, JRC Science for Policy Report, 2020.