European climate and energy policy puts citizens at the centre of the clean energy transition. Laws such as the EU renewable energy directive (REDII) contain specific provisions to enable citizens to take an active role in renewable energy projects. In REDII, renewable energy communities (RECs) are understood as ‘grassroots’ innovations initiated by citizens, small and medium enterprises (SMEs) or local governments. RECs should be autonomous and controlled by shareholders or members close to the renewable energy projects they promote. Their primary purpose is to provide environmental, economic or social benefits for their members and the localities where they operate, rather than financial profit.
RECs have potential but this varies by region
RECs can make a significant contribution to increasing the share of renewables in the energy mix. In addition, they can help balance electricity supply and demand at the local level, which is likely to be increasingly important in a system with a rising share of variable renewables (wind and solar) and increasing electrification. Studies have also found that citizens who produce their own energy are more concerned with reducing their electricity consumption.
The COME RES project, supported by the EU’s flagship R&D programme Horizon 2020, has assessed the current potential and conditions for the uptake of RECs across select regions in Belgium, Germany, Italy, Latvia, the Netherlands, Norway, Poland, Portugal and Spain. The researchers estimated the potential for citizens to participate in the development of solar PV (both ground and rooftop-based) and onshore wind from 2020 to 2030, taking into account the specific climactic, energy, technological and socio-economic conditions in the different regions.
First, they looked at the additional investments required to realise political ambitions or technical potentials for each technology up to 2030. Next, citizens’ potential role in financing these developments was estimated, based on the average capacity of households to invest in renewables, and estimates of their willingness to join an REC.
The figures below show there is an important potential for RECs in the low-carbon energy transition. Across all regions and technologies, citizen collectives could on average potentially finance 23% of the anticipated renewables development up to 2030. However, there is variation across regions, which can be explained both by varying degrees of anticipated renewables development, and by local citizens’ capacity and willingness to invest in RECs. Ensuring that RECs control a high share of renewable energy capacity, especially in regions with high political ambitions or technical potentials, is challenging. A further professionalisation of the citizen energy movement, complementing direct citizen investments with investments by local SMEs and local authorities, and access to finance at favourable conditions (e.g. public financing, low interest rates for investment loans in RECs, etc) could be a key enabler.
Firm legal support
The potential for RECs in the energy transition will depend on how REDII is transposed and implemented. EU member states had until 30 June 2021 for that transposition. The COME RES study (in line with other studies) showed that most countries had made progress in adapting their legislation to empower citizens and RECs, but all nine countries analysed needed to do more in order to facilitate the uptake of RECs. For example, several still had to assess barriers and potentials for RECs, and all nine needed to further develop enabling frameworks to promote and facilitate REC development, as well as address the specificities of RECs in support schemes to allow them to compete for public support on an equal footing with other renewables developers, such as utilities.
So far, regulatory frameworks and support schemes are not designed with community energy in mind. Moreover, in most countries, economic incentives such as feed-in tariffs or green certificate schemes are being phased out, limiting RECs’ financing opportunities. Schemes such as auctions seem to favour ‘big’ players. There is also great regional and national variation in the procedures for licensing, spatial planning and getting public support, which are themselves almost always complicated, especially for wind and hydropower. This requires navigating cumbersome bureaucracy and makes it harder for RECs to draw on support and experience from each other.
In addition, the COME RES study found a lack of clearly defined, quantitative targets for REC development in national plans. Although not required by REDII, establishing targets for RECs could help promote them, and monitor progress going forward. Targets could be expressed as shares of planned production capacity increases owned by RECs, in addition to the number of RECs and their members.
Do people want RECs?
The COME RES project’s analysis of people’s perception of RECs and renewables shows a generally positive attitude to renewables in the nine countries studied. Yet there are also movements against onshore wind, and public support is in decline in some regions. That opposition is unlikely to disappear completely, but promoting RECs can help increase the probability of renewables development winning local acceptance.
Historical context influences interest in RECs. For instance, in Thuringia in eastern Germany the population’s reluctance to invest in community-owned companies and cooperatives can be partly explained by the region’s socialist heritage. This could impede the high theoretical potential for RECs identified in Thuringia.
In regions and communities that have traditions of community energy, one challenge is how to establish and organise RECs in ways that align with existing practices. This is particularly important in places where community energy has high legitimacy and social acceptance, such as in Belgium and parts of Germany.
RECs may be less attractive in other countries, such as Norway, where the electricity sector is already almost 100% renewable, with a strong centralised supply chain owned mostly by the public sector. Several other countries also have centralised electricity supply systems and thus do not support decentralisation.
Finally, the focus in REDII on RECs as grassroots initiatives controlled by local shareholders or members, and exclusion of profit as the main objective, may deter stakeholders with a commercial interest and local utilities that could bring important resources and experience.
The COME RES study identifies important potential for RECs in the energy transition, where grassroots community energy can contribute to increasing the share of renewables in the energy mix, win citizen acceptance for renewables infrastructure and provide benefits to local communities. However, the study shows that it is quite challenging to establish RECs in many European countries.
Realising the full potential of RECs in the energy transition requires national governments to do more to promote them. First, they must further adapt national legislation to encourage RECs, in line with the requirements in REDII. Second, they should consider establishing clear targets and objectives for RECs at national and regional level. And third, they must remove unwieldy, complicated regulations that do not support RECs because they were made for a traditional centralised energy system.