Energy Communities at a Crossroads: EU Policy Barriers and Recommendations
Recent EU regulations have focused on promoting renewable energy sources and energy sharing, seemingly facilitating EU consumers to take an active role in the energy transition. However, a recent review of the legal framework in Denmark, Netherlands, Portugal and Norway shows several regulatory barriers. In an interview, Jelena Nikolic, explained some of the gaps identified in legislation in the report “Energy Communities: inventory of barriers & opportunities and best practice”, and how the EU and Member States could address them.
The EU could include large enterprises and industries in energy communities, removing an unnecessary legislative barrier
The EU has defined energy communities as legal entities in which members of the energy community can produce, use, store, and sell energy from renewable energy sources, as well as share it among themselves (Art. 22 of Directive (EU) 2018/2001 and Art. 16 of Directive (EU) 2019/944). In the case of energy communities, members can include citizens, local authorities and municipalities, as well as small and medium-sized enterprises.
In June 2024, to further support citizen participation in the production and use of renewable energy, the EU introduced a Directive improving the Union’s electricity market design, which defines energy sharing among active consumers (Art. 15a of Directive 2024/1711). In this updated directive, energy sharing may also include consumers from industry. However, the installed capacity of renewable energy sources must not exceed 6 MW, and energy sharing is only possible within limited geographical areas.
The new energy sharing regulations have to be implemented by Member States by July 2026. However, although energy sharing may appear encouraging, particularly because its implementation does not require the establishment of a legal entity such as an energy community, it raises the question of how this approach may affect the development of energy communities, as well as the full range of social and financial benefits that energy communities are able to provide.
“Excluding industries from sharing energy within Energy Communities is unnecessary. Industry could help create a better balance between energy production and consumption, and improve self-consumption.,” argues Jelena Nikolic, Engineer and Research Assistant at Aalborg University.
The ideal scenario in energy communities is achieving self-consumption by matching renewable energy production with consumption in a short time. Without the possibility to share electricity across all members of a district or municipality, establishing positive energy districts and neighbourhoods becomes highly challenging, Nikolic added. Unlike in most European countries, energy sharing is allowed within industrial zones in Norway.
The EU can encourage EU Member States to have a strategy for engaging citizens in energy communities, and provide financial and legal support
Although EU Member States are introducing energy sharing legislation in line with Directives, some elements for effective national implementation are missing. For example, in Portugal, previously mentioned EU Directives have been implemented to make energy sharing within energy communities possible. So far, energy sharing has taken place in so-called “pilot projects” of energy communities. The report also highlighted a complex legal framework that citizens need to navigate across the EU in order to establish energy communities. To illustrate this, Nikolic uses the example of energy communities in Denmark. There, energy communities must have an energy supplier to be established, while energy suppliers are not legally required to provide services to them. Therefore, suppliers have little incentive to manage the added layer of complexity that comes with working with energy communities, and tend to avoid doing so.
In the Netherlands, a new Energy Act also allows sharing electricity. However, a national congested grid and other legal requirements mean that energy sharing among members of energy communities almost non-existent. In this context, citizens need to understand not only the regulations concerning both energy communities and the energy sector.
To share energy on a larger scale, the EU should recommend Member States to define a strategy for citizens’ inclusion in their country’s energy transition. In addition, with no other financial or legal support available, citizens need most likely to take loans from banks and must familiarize themselves with the system to achieve energy self-sufficiency.
Therefore, based on the results from COPPER’s report, Nikolic strongly believes that EU Member States should have an administrative service providing financial and legal support to citizens starting an energy community.
