Energy communities are local collectives that organize the production, distribution, and consumption of energy. These communities aim to increase local energy self-sufficiency, reduce energy costs, and promote the use of renewable energy sources. They are usually founded by citizens, local authorities, or other entities and often involve collaborative management and shared ownership of energy resources.

Legal context

The European Commission’s Clean Energy Package establishes new legal frameworks that recognize the rights of citizens and communities to participate directly in the energy sector. It defines energy communities under two directives: the Renewable Energy Directive (EU) 2018/2001 for ‘renewable energy communities,’ which focuses on renewable energy, and the Internal Electricity Market Directive (EU) 2019/944 for ‘citizen energy communities,’ which includes all types of electricity. These directives outline energy communities as collective citizen actions within the energy system. Energy communities are characterized as non-commercial market entities that pursue environmental and social objectives. The directives ensure that energy communities can compete fairly in the market without distorting competition or neglecting the rights and obligations that apply to other market participants.

Structure and organization

Energy communities can take on different legal and organizational forms, including cooperatives, non-profits, limited liability companies, or informal associations. The choice of structure often depends on the local regulatory environment, the specific goals of the community, and the preferences of its members. Key features of energy communities include democratic decision-making processes, shared ownership of energy assets, and a focus on local benefits. Members of an energy community typically have a say in major decisions, such as the type of renewable energy technology to adopt, how to finance projects, and how to distribute benefits (Koirala et al., 2016; Walker & Devine-Wright, 2008).

Goals and Objectives

The primary goals of energy communities are to promote renewable energy production, enhance energy efficiency, and increase local energy resilience. By generating energy locally from renewable sources such as solar, wind, or biomass, these communities aim to reduce their dependence on fossil fuels and lower their carbon footprint. Energy efficiency measures, such as retrofitting buildings or promoting energy-saving behaviors, help to reduce overall energy consumption. Additionally, by decentralizing energy production and creating local energy networks, energy communities can enhance energy security and resilience against external shocks, such as power outages or price volatility in energy markets (European Commission, 2020; Hicks & Ison, 2018).

Benefits

Energy communities offer a multifaceted array of benefits. Economically, they empower communities by locally generating and managing energy, thereby lowering energy costs and generating additional income through surplus energy sales. Moreover, they stimulate job growth in the renewable energy sector, from installation to management roles. Environmentally, energy communities champion sustainability by promoting renewable energy sources and reducing greenhouse gas emissions through energy efficiency measures (REN21, 2019; Bauwens et al., 2016). Socially, they serve as catalysts for community cohesion, fostering collaboration, knowledge-sharing, and support among members. Lastly, they bolster energy security and resilience by decentralizing energy production, minimizing reliance on centralized systems, and implementing local energy storage solutions and microgrids to mitigate supply disruptions (Hicks & Ison, 2018; Koirala et al., 2016). These interconnected benefits underscore the vital role energy communities play in fostering sustainable, resilient, and empowered communities.

Challenges

Energy communities, while offering numerous benefits, face a variety of obstacles that hinder their advancement and sustainability. Significant regulatory barriers exist, particularly in regions where current energy regulations may not support the decentralized energy generation and communal ownership principles of these communities. This situation requires careful negotiation of regulatory frameworks and the acquisition of permits (European Commission, 2020; Hicks & Ison, 2018). Financial limitations present another formidable barrier, as financing renewable energy endeavors and energy efficiency initiatives demands substantial initial investment, often requiring a blend of funding sources such as member contributions, grants, loans, and subsidies, which can be particularly daunting for smaller communities with limited financial means (Bauwens et al., 2016; Walker et al., 2010). Possessing technical expertise is crucial for deploying and overseeing renewable energy systems. This underscores the need for investments in training and capacity-building initiatives to empower community members with the necessary skills and knowledge. Furthermore, fostering robust community engagement emerges as a critical challenge, demanding concerted efforts to ensure all members are adequately informed, engaged, and motivated to partake in communal endeavors, underpinned by transparent decision-making processes, effective communication, and the cultivation of a sense of ownership and shared responsibility (Walker & Devine-Wright, 2008; Seyfang et al., 2013).

Future Implications

The concept of energy communities aligns with broader trends in the energy sector, including the decentralization of energy production, the transition to renewable energy sources, and the increasing importance of community participation in energy systems. As technology advances and regulatory frameworks evolve, energy communities are likely to play an increasingly significant role in the energy transition (European Commission, 2020; Koirala et al., 2016). The Citizen participation and community co-ownership in energy projects play a vital role by increasing public involvement in energy issues and acceptance of renewable energy. These energy communities prioritize local benefits over profits, generating financial gains, local investments, and social advantages. They enhance democratic decision-making and control over renewable energy, although there is a risk of creating social disparities between wealthier members and those less affluent. Energy communities provide opportunities for lower-income individuals to engage in electricity markets and can help alleviate energy poverty through initiatives that lower energy bills and improve social conditions. A comprehensive EU-wide study would help assess their potential in reducing energy poverty and their impact on sustainable energy behaviors. Energy communities support renewable energy adoption, offer flexibility services, and improve network operations. By 2030, they could own significant shares of renewable energy capacity in Europe. They introduce new business models in the power sector and provide local flexibility services, but their integration must ensure cost-efficiency for all customers. Further research and innovation in energy communities can enhance citizen engagement and technological adoption. More studies are needed to quantify their benefits and support their development.

Final remarks

Energy communities represent a powerful model for local, sustainable, and inclusive energy systems. By empowering citizens to take control of their energy production and consumption, these communities can drive the transition to renewable energy, enhance local energy security, and deliver a wide range of economic, environmental, and social benefits. Despite the challenges, the growing interest in and support for energy communities suggest that they will continue to play a crucial role in shaping the future of energy systems worldwide.