The overarching ambition of the European Commission’s Clean Energy Package (CEP) is to accelerate the energy transition. The framework promotes the adoption of innovative solutions in domains like renewable energy and energy efficiency. It proposes guidelines to facilitate new business models or to revamp energy legislation and the design of the electricity market. The CEP also encourages the participation of citizens and communities as partners in energy projects or energy communities.
Different types of energy communities
So what exactly are ‘energy communities’? “An energy community is a legal entity which aims to produce, consume, store and share energy among a group of people and/or companies,” says Jonas Van de Venster, business consultant at Trilations. “Energy communities are non-commercial entities. Even though they engage in economic activities [1], their primary purpose is to provide social, economic, and environmental community benefits, rather than making profit.”
“The EU legislative framework acknowledges two types: citizen energy communities (CECs) and renewable energy communities (RECs),” Van de Venster continues. “Both of them may be controlled by citizens, local authorities or small companies – but only RECs can be controlled by medium-sized or large SMEs [2]. Whereas a CEC can produce and use a combination of renewable and non-renewable energy sources, a REC is committed to renewable sources only. Moreover, RECs have a locality condition: the communities should be organized in the immediate vicinity of the renewable energy projects they own or develop.”
Power to the community!
Energy communities offer multiple benefits to their members.
“As a type of community-driven initiative, CEC and RECs play a key role for social innovation as they reflect a fundamental shift in consumer behaviour,” Van de Venster argues. “The traditionally passive consumer becomes the co-owner of renewable energy facilities and promotes a socially fair model of energy prosumership. Through ‘Solar Sharing’ [3] for example, solar panel owners share their green generation with community members who lack the necessary financial means or roof space. Energy communities make for a broader and more democratic access to renewable technologies.”
Peer-to-peer energy trading within energy communities also creates economic benefits for the members. “When they trade electricity amongst each other for €0,15 per kWh, each party gains €0,10 per kWh, benchmarked to the sales price of €0,25 per kWh and the purchase price of €0,05 per kWh set by energy suppliers [4],” Van de Venster calculates. “Large energy communities can also offer flexibility services to help balance the grid. These services generate substantial revenues, which can be re-invested in renewable energy infrastructure for the community, like a heating system or windmill, an electric car park or community batteries for electricity storage.”
Large-scale investments in environmentally friendly technologies are expensive, but they speed up the energy transition towards a de-carbonized system by 2050. Energy communities, and especially REC’s, promote sustainable energy production and consumption practices, while simultaneously empowering the consumer (the importance of which was already discussed here). Van de Venster summarizes: “Energy communities offer social, economic, and environmental benefits that reenforce one another. Their breakthrough will shift the energy transition into a higher gear.”
Energy communities in Belgium
Belgium can showcase some interesting pilot projects. ROLECS (Roll Out of Local Energy Communities), a research project by Flux50, intends to gain a deeper understanding of the possibilities of LECs in Belgium by testing theory on 10 demonstration sites, e.g. De Nieuwe Dokken in Gent, Mechelen Noord Business Park and Thor Science Park in Genk. Another example is Transfo Zwevegem, a former power plant turned into a multifunctional hub. The site wants to become a climate-neutral energy community with local generation and storage.
“To fully develop these pilots,” Jonas Van de Venster points out, “we need a clear framework for energy communities in federal or regional legislation. At this point it is unclear how Belgian energy communities should tackle challenges like infrastructure management, data management and privacy issues.”
European member states were advised to translate the European directive for energy communities into local legislation by the end of 2020. Despite efforts by Flemish Minister for Energy Zuhal Demir in October 2020 [5], Belgium does not yet have such a regulatory framework. Van de Venster: “Stakeholders like Elia, the DGO’s, the balance suppliers, regulators and the government are still debating. The final implementation of a legislative framework for energy communities is not expected before early 2022. We are lagging behind: in the Netherlands, over 600 energy communities are active!” According to an estimate by the 2019 JRC Report [6] on energy communities, Belgium has 34 community energy initiatives, which is a mere 2 to 5% of forerunners like Germany (1750) and Denmark (700). The numbers cannot be misunderstood, Jonas Van de Venster emphasizes: “A clear legislation for energy communities should be a priority to our policymakers.”
Sources
[1] Energy communities may take on utility-like activities such as the sale of electricity and energy efficiency services. However, their cooperative business model aims to reinvest profits in the community and puts ownership with the community and/or citizens, instead of investors.
[2] JRC Science for policy, Energy communities: an overview of energy and social innovation, report by Aura Caramizaru and Andreas Uihlein, 2020
[3] Energyville – What can you really do with LECs (Georg Jung)
[4] Calculation based on VREG-data
[5] Ministerraad van 30/10/2020
[6] See footnote 2, JRC Science for policy, figure 1 on page 5
