Energy communities – where citizens own and participate in renewable energy or energy efficiency projects – are a significant element in Europe’s low carbon energy transition. By 2050, almost half of all European households could be involved in producing renewable energy, about 37% of which could come through ‘collective’ participation in an energy community.
Europe’s energy market is not only undergoing a fundamental transition from a system-based on fossil and nuclear power towards one based entirely on renewable, efficient and sustainable energy. It is also transforming from a centralized market dominated by large utilities to a decentralized market with millions of active energy citizens.
Putting citizens at the heart of the energy transition will be essential for its success. The energy transition requires considerable investments that are paid for by citizens: as consumers or tax payers. To ensure fairness, citizens should enjoy equal opportunities to use the grid and have control over how their energy is produced, distributed and supplied. Energy communities can aggregate their members to provide flexibility and other services that will help system operators to integrate more renewables, safely and efficiently. Most importantly, energy communities offer citizens something that is often overlooked in the energy sector: ownership, control, and a voice in how the business operates. Energy communities distinguish themselves by the way they do business in two important ways – governance and purpose.
First, energy communities provide for open participation and democratic governance of the undertaking. Energy communities are open to all persons able to use their services and willing to accept the responsibilities of being part of the community, without gender, social, racial, political or religious discrimination. They are democratically controlled by their members, who actively participate in setting their policies and making decisions.
Second, instead of aiming to make profits, they exist to benefit, for example through the provision of services, their members and the local community. They harness the renewable energy projects not just to provide a modest return on investment to their members, but to fund social programmes, invest in energy efficiency in public buildings, create local employment, address various community development needs, and combat energy poverty. In this way, energy communities ensure that economic value generated by the energy transition is retained locally.