The European Green Deal’s ambitious decarbonisation goals are a chimera without the contribution of small and medium energy users. This disruptive change from consumers to prosumers will only happen if we find the way to engage them with technology, digital tools and new energy markets. Energy communities are one of the most promising initiatives to foster this vital change.
01 June 2021 • 4 min read
The ambitious goals of the EU Green Deal have put even more emphasis on the need to empower, mobilise and engage citizens for reaching our climate energy objective. Focusing on people and citizen-driven initiatives is seen as a key priority of the European energy policy, as it will support the transition to a cleaner and more efficient energy system.
Energy communities, locally owned and operated entities geared towards the transition to clean energy, have the potential to contribute to the various initiatives and objectives of the EU Green Deal. They offer a holistic approach to the decarbonisation of local energy systems by including a wide range of potential activities such as renewable energy integration, energy efficiency measures, balancing and flexibility services to the grid, novel ICT management platforms, local stakeholder engagement (through information, education and participation), clean mobility and more.
Focusing on people and citizen-driven initiatives is a key priority… it will support the transition to a cleaner and more efficient energy system.
In a nutshell, they are pushing and helping citizens and local stakeholders to shift from passive consumer to active prosumer (one who produces as well as consumes energy; individuals may do this, for example, through the use of solar panels on their roof at home).
This view is encapsulated by the European Commission’s Directorate-General for Energy: “Energy communities should lead the transitions from consumers to prosumers while giving the tools and regulatory framework to allow citizens and local authorities and stakeholders to rethink and decarbonise their local energy systems.”
Renewable (or Citizens) Energy Communities, as defined within the EU regulatory framework, are legal entities of voluntary shareholders and members – individuals, SMEs and local authorities. Essentially, it is for and by the local community. In the definition from RED (Renewable Energy Directive), the autonomous Renewable Energy Community is “effectively controlled by shareholders or members that are located in the proximity of the renewable energy projects that are owned and developed by that legal entity”.
More specifically, taking the definition from IMED (Internal Market for Electricity Directive), these communities “can be engaged in electricity generation, distribution and supply, consumption, aggregation, storage or energy efficiency services, generation of renewable electricity, charging services for electric vehicles or provide other energy services to its shareholders or members.”
The return to the local economy is up to 7 times higher when renewable energy projects are community-owned.
Invariably, these communities are not about profit and financial gain, but rather the collective benefits – environmental, economic and social – for the local area it serves.
Studies in Germany, and more recently in France, have shown that the return to the local economy is up to seven times higher when renewable energy projects are community-owned. Community ownership empowers and engages consumers, as well as fosters acceptability of the clean energy transition to a carbon-free economy and society.
Moreover, energy communities are especially well-suited to foster energy transition in rural and energy-poor areas. They lower the barriers that prevent socially vulnerable groups from participating in distributed generations and communities. They also fight energy poverty by reducing consumption and supply tariffs and, in some cases like Greece, a percentage of the profits made by an energy community must be allocated to energy poverty by law. Therefore, energy communities are central to ensuring that no one is left behind in the energy transition.
Energy communities, by definition, are built upon a wide range of stakeholders, ranging from public bodies and municipalities to citizens and SMEs. This leads to an important challenge in design to find the optimal scenarios that meet and balance the different stakeholders’ interests and objectives. These initial consultancy works are key to developing a successful energy community.
Energy communities are especially well-suited to foster energy transition in rural and energy-poor areas, as they lower the barriers that prevent socially vulnerable groups from participating in distributed generation and communities. They are central to ensuring that no one is left behind in the energy transition.
To measure and track the main impacts and benefits of energy communities, relevant KPIs must be defined to ensure all stakeholders needs are taken into account, such as:
Grid functionality. Integration with distribution system operators (DSOs) and transmission system operators (TSOs) is key to assure the stability, reliability, security, safety and privacy of energy communities’ assets and services;
Affordability. (Including ROI and low energy bills) Tracking financials is crucial to ensure energy communities meet their environmental objectives in an economically feasible way;
Behaviour change. The success of energy communities needs the engagement and behaviour change of the people involved, so developing a methodology to measure it is crucial;
Community benefits. Local authorities should work hard to ensure the energy community also fosters the social aspects of inclusiveness, energy independence and community building;
Externalities. (e.g., GHG emission reductions, increasing renewable energy, lowering noise level, etc.) These are the most obvious but important outcomes of energy communities and a solid and reliable methodology to measure them is therefore fundamental;
Competitive advantage. (Including local employment, innovation, green image, validation of new products and services, replicability, etc.) The competitive advantages provided to the local ecosystems should be exploited and measured to get the most out of energy communities.
Using the power of local action is essential to redress the imbalance of resources that our climate emergency is making all too apparent. Through energy communities, small and medium-sized energy users can move from consumer to prosumer and help us attain the European Green Deal’s decarbonisation targets. Together, we can be the difference.
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