Topic 1: Local PEDs in a multi-level perspective

Challenge Description

Decentralising the energy system is expected to increase the resilience of urban energy systems. Local action needs to be intertwined with action on regional and national levels, making the PED development substantially a multi-level challenge. While it is recognized that decentralization supports flexibility for the energy grid, strategic and regulatory frameworks are still missing that could support this transition on relevant levels of urban governance and implementation. This topic explores the scope of action at the neighbourhood level in relation to city, regional and national levels, against the background of European and global energy technology trends. There is a need to explore and define the role of the local (neighbourhood) level in a systemic energy transition. This role relates to the operation of local energy markets that are systemically integrated in the overall energy market, but equally includes the implementation of just transition processes. A viable design of a multi-level governance approach in which each level of government contributes to achieving the overall climate goals not only includes governance issues, but needs to thoroughly explore regulatory issues, public-public and public-private relations for sustainable climate investment, and the consideration of different socio-cultural and socio-political settings. In short: what combination of activities on the different scale levels creates the overall conditions for the energy transition to flourish?



The above-mentioned challenges call for novel approaches towards governance and regulation at different levels. Systemic change requires conscious consideration of the different needs on different (scale) levels. There seems to be a need for a more mission-oriented governance in which the higher national/regional governmental levels act as supporter and facilitator and treat the local municipal level as equal partners in the transition towards climate neutrality. While national/regional governments are best placed to provide ambitious and clear targets, a sound regulatory framework and tools to support implementation, local governments at the other hand can use their extensive knowledge on the local context to develop place-based approaches for implementation. An intensive, programmatic and multi-level approach complemented with adequate financing and capacity building needs to be developed. Inspiring examples of such governance mechanisms can already be found across Europe and need to be further explored, tested and replicated.


There are several economic challenges regarding the operating of decentralized energy districts. First, there is the more complex stakeholder ecosystem and engagement in which new mechanisms need to be developed for the engagement of utilities, the real-estate sector, businesses and industry and even individual private homeowners to align with climate investment strategies and opportunities for matched public and private funding. Secondly, it is recognized that classical financing logics are unable to support the full transition needed to evolve towards a climate neutral society. New types of public-private and public-public partnerships need to be explored in order to tackle some of the current capacity barriers within local public administrations while at the same time providing adequate funding to realize ambitious projects in line with the local strategic vision. Thirdly, the co-benefits deriving from a local, decentralized and sustainable energy system need to become more visible with a focus on social and environmental benefits, besides economic benefits.


This also touches on the issue of just transition processes, the energy transition risks enhancing socio-economic inequalities. Often the most vulnerable people in society are hit hardest by the energy and climate crisis. Because of the intrinsic higher financial and mental barriers coupled with sustainable measures and technologies exclusionary conditions are likely to be increased. This calls for a sensible integration of diverse end-user/prosumer perspectives, as well as the integration of community-building approaches tailored for local energy management. In this sense, roles and capacities of the key actors need to be analyzed and conceptualized, and strategic solutions in a multi-level perspective need to be elaborated.


Project proposals submitted under this topic should address one or several of the following issues:


  • How can interactions, cooperation and facilitation between municipal, regional and national levels be conceptualized and operationalized in an integrated approach? What governance models are needed? What regulatory aspects are hindering/promoting factors?


  • How can local energy management ensure broad representation? How can we strengthen the capacities and engagement of civil society and prosumers regarding local systemic energy transition? How can their perspectives, motivations and constraints as key actors be integrated?


  • What funding and financing, what business models need to be in place on which scale level? How can climate investment contracts support PED initiatives in particular?


  • How can climate ambitions, economic perspectives and social values be approached in an integrated way?


  • How can the stakeholder ecosystem be identified and strengthened? What are effective cooperation modes?


Expected Outputs and Outcomes

Rather than provide isolated technical solutions, projects are expected to address this topic in a systemic way. Project outcomes should be impact-oriented and process-oriented, and therefore as concrete and user-centred as possible. Expected outcomes include, but are not limited to:


  • Analysis of framework conditions on local, national and European levels in the context of this topic in terms of challenges, barriers and success factors


  • Analysis of the relevant stakeholder ecosystem, a methodology on how to engage key stakeholders and how to align their efforts with each other and the overall climate ambitions


  • Modelling and developing viable scenarios of PED development in a multi-level perspective based on analysis of existing approaches and existing urban contexts


  • Modelling and developing viable scenarios for public-private and public-public partnerships to finance the needed transition


  • Modelling of innovative approaches on how to decrease socio-economic inequalities in PEDs


  • Demonstration of viability of these models, including qualitative and quantitative arguments


  • Evaluation of added value and impact of suggested approaches and models


  • Recommendations and guidelines for mainstreaming, considering geographical and cultural context, as well as social and regulatory aspects