Models of local energy ownership and the role of local energy communities in energy transition in Europe.
Date: 2018-09-25
Institutions: Commission for the Environment, Climate Change and Energy
Subjects: EU law, EU regional policy, energy grid, energy policy, energy supply, regional and local authorities, security of supply, sustainable development

Commission for
the Environment,
 Climate Change and Energy

E
V
N
E

Models of Local Energy Ownership
and the Role of Local Energy Communities
in Energy Transition in Europe

© European Union, 2018 
Partial reproduction is permitted, provided that the source is explicitly mentioned. 

More information on the European Union and the Committee of the Regions is available online at 
http://www.europa.eu and http://www.cor.europa.eu respectively. 

Catalogue number: QG-01-18-933-EN-N; ISBN: 978-92-895-0989-3; doi:10.2863/603673 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
This report was written by Mariya Gancheva, Sarah O’Brien, Nicola Crook  
and Catarina Monteiro (Milieu Ltd, Belgium). 

It does not represent the official views of the European Committee  
of the Regions. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table of contents 

Main findings .................................................................................................... 1 

Recommendations ............................................................................................. 4 

1.  Introduction ................................................................................... 7 

2.  Local energy ownership models across the EU ......................... 11 

2.1

  Overview of local energy ownership models in the EU ...................... 11 

2.2

  Member State examples ....................................................................... 15 

2.2.1

  Denmark ........................................................................................ 16 

2.2.2

  Germany ........................................................................................ 18 

2.2.3

Ireland ........................................................................................... 20 

2.2.4

  Greece ........................................................................................... 22 

2.3

2.4

2.5

Typical success factors and enabling framework conditions ............... 23 

Typical obstacles .................................................................................. 24 

Lessons for local energy ownership models ........................................ 26 

3.  Local and regional energy cooperatives .................................... 29 
  Overview of local and regional energy cooperatives ........................... 29 

3.1

3.2

Socio-economic impact of energy cooperatives ................................... 31 

3.3

  Relevant aspects of the regulatory environment and the electricity 

market design ........................................................................................ 33 

3.4

  Best practices ........................................................................................ 37 

3.4.1

3.4.2

Production of renewable energy ................................................... 38 

Provision of district heating ......................................................... 40 

3.4.3

  Operation of distribution networks ............................................... 40 

3.4.4

Provision of energy efficiency or other energy services ............... 41 

3.5

Lessons for energy cooperatives .......................................................... 42 

4.  Analysis of relevant EU legislation ............................................ 45 

4.1

  Current legislation ................................................................................ 45 

4.2

Post-2020 outlook ................................................................................. 48 

4.2.1

4.2.2

Acknowledging local energy communities and prosumers ........... 49 

Electricity market design .............................................................. 52 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5.  Conclusions and recommendations ........................................... 55 
EU policy-makers ................................................................................. 56 

5.1

5.1.1

  Maintain a stable policy environment for promotion of renewable 
energy ............................................................................................ 56 

5.1.2

Establish energy market rules that can support an energy 
transition in all aspects of the system ........................................... 57 

5.2

  National policy-makers ........................................................................ 58 

5.2.1

5.2.2

5.2.3

5.2.4

Acknowledge the role and specific needs of local energy 
communities in relevant national policies and legislation ........... 58 

Establish policies and rules that promote local energy 
communities and local collaboration ........................................... 59 

Adopt simplified and proportionate regulatory and administrative 
procedures for local energy communities ..................................... 59 

Ensure local energy communities have access to technical 
information, guidance and finance ............................................... 60 

5.3

Local and regional authorities .............................................................. 60 

5.3.1

5.3.2

Adopt local policies for the development of local energy 
communities .................................................................................. 60 

Explore the opportunities to partner with or establish local energy 
communities .................................................................................. 61 

Annex 1: List of references .............................................................. 63 

 
 
 
 
 
 
 
 
 
 
 
 
 
List of tables 

Table  1:  Strengths  and  weaknesses  of  the  different  local  energy  ownership 
models ................................................................................................. 25 

Table 2:   Overview of the provisions concerning RE installations, prosumers 

and local energy communities in the Member States ......................... 32 

List of abbreviations 

CHP 
CoR 
DSO 
EED 
EESC 
IEM 
LRAs 
PPP 
PV 
RE 
RED 
RES 
SEAI 
SEC 
SECAP 

Combined Heat and Power 
Committee of the Regions 
Distribution System Operator 
Energy Efficiency Directive 
European Economic and Social Committee 
Internal Energy Market 
Local and Regional Authorities 
Public-Private Partnership 
Photo-Voltaic 
Renewable Energy 
Renewable Energy Directive 
Renewable Energy Sources 
Sustainable Energy Authority of Ireland 
Sustainable Energy Communities  
Sustainable Energy and Climate Action Plan 

 
 
 
 
 
 
 
 
Executive Summary 

The purpose of the study ‘Models of Local Energy Ownership and the Role of 
Local  Energy  Communities  in  Energy  Transition  in  Europe’  is  to  inform  the 
European Committee of the Regions (CoR) in the preparation of its opinion on 
local  energy  communities.  This  study  aims  to  support  the  opinion  through  an 
analysis of: 

  Different local ownership models and the enabling  framework  conditions 

or obstacles/ barriers they face; 

  Energy cooperatives, their socio-economic impacts and relevant aspects of 

the regulatory environment; 

  The  EU  legislation  and  how  it  addresses  the  operation  of  local  energy 

communities. 

Section 1 provides an introduction to the topic and outlines some key concepts. 
Section  2  focuses  on  the  different  models  for  local  energy  ownership  and 
provides  country  examples  with  the  aim  of  illustrating  typical  success  factors 
and  obstacles  for  local  energy  ownership.  Section  3  explores  in  more  detail 
energy  cooperatives  as  an  example  of  local  energy  communities,  examining 
their socio-economic impacts, aspects of the regulatory environment that affect 
them  and providing some best practice examples. Section 4 offers an analysis of 
the strengths and weaknesses of the EU legislation that can impact the operation 
of local energy communities, the analysis covers both the current legislation and 
some key proposals from the post-2020 policy framework. The final part of the 
study,  section  5,  provides  conclusions  and  recommendations  based  on  the 
findings  of  the  previous  sections.  To  the  extent  possible,  recommendations  for 
policy-makers  at  different  governance  levels  are  distinguished.  The  study  is 
based  on  a  review  of  publicly  available  literature  and  information  sources  and 
stakeholder  feedback  collected  through  interviews  and  the  CoR  stakeholder 
consultation  workshop  on  "Models  of  local  energy  ownership"  held  on 
10 July 2018. 

Main findings 

The  implementation  of  the  EU  climate  and  energy  policy  objectives  entails  a 
transition to a new energy system where Renewable Energy Sources (RES) are 
used and new technologies are developed and adopted. To some extent, this will 
require  decentralisation  of  the  energy  system  and  an  evolution  in  the  roles  of 
energy  producers  and  consumers,  so  that  new  opportunities  to  generate 
renewable energy and deploy new technologies are realised. This transition has 

1 

 
 
 
 
 
 
 
already  resulted  in  more  active  participation  of  individual  consumers  or 
collectively acting citizens in the energy system to produce Renewable Energy 
(RE) or take on other activities such as management of local grids. Community-
led  initiatives  based  on  local  collaborative  solutions  that  can  be  set  up  by 
individuals,  groups  of  individuals,  households,  small  businesses  or  local 
authorities that operate individually or in an organised way are often referred to 
as  ‘local  energy  communities’.  These  communities  are  expected  to  play  an 
important  role  in  the  energy  transition  as  they  can  enable  the  development  of 
sustainable  energy  technologies  and  bring  a  variety  of  benefits  to  local 
communities. 

In  practice,  the  organisational  structures  of  community  energy  initiatives  vary, 
and include different legal forms such as partnerships (including public-private 
partnerships (PPPs) with local authorities), co-operatives, community trusts and 
foundations, limited liability companies, non-profit customer-owned enterprises, 
housing associations and municipal ownership. Regardless of the specific legal 
forms  local  energy  communities  take,  their  emergence  can  be  attributed  to 
several key processes that are gaining traction across the EU: 

  Remunicipalisation  –  the  process  of  increasing  municipal  control  over 

local energy management; 

  Devolution  -  the  process  of  increasing  the  strategic  and  political  role  of 

local authorities in energy policy;    

  Participative  governance  –  the  promotion  of  direct  democracy  and 

citizens’ influence on energy and climate policies.    

These processes have resulted in a growing local participation in energy systems 
in  the  EU.  The  remunicipalisation  and  devolution  trends  have  resulted  in  the 
municipal  ownership  of  energy  systems  through,  for  example,  public  utility 
companies or PPPs. At the same time, participative governance has resulted in a 
growing number of citizen-led energy initiatives, most often taking the forms of 
partnerships or cooperatives.  

Although  on  a  positive  trajectory,  the  level  of  development  of  local  energy 
communities  is  not  the  same  in  all  Member  States  and  it  considerably  more 
advanced  than  in  others.  The  success  factors  and  obstacles  behind  the 
development  of  local  energy  communities  has  been  studied  in  this  report 
through  an  analysis  of  four  Member  State  examples:  Denmark,  Germany, 
Greece  and  Ireland.  The  Member  States  have  been  selected  to  cover  a  broad 
range of local energy models; from those that are well established and regarded 
as leaders of community energy (Germany and Denmark), to those that currently 
have no national strategy for community energy (Ireland) or are only starting to 
support local energy communities in a targeted way (Greece).  

2 

 
 
 
 
 
The  analysis  of  success  factors  and  potential  barriers  to  local  community 
development  from  the  country  examples  and  literature  suggests  that  the 
successful uptake of the local energy ownership models depends upon: 

  A  clear  political  commitment  to  energy  transition  and  stable  policies  for 

the development of RES at all governance levels; 

  A  clear  legal  framework  that  governs  the  establishment,  functioning  and 

access to the energy market for local energy communities; 

  Access to financing instruments or partnership schemes for de-risking the 

investments;  

  Synergies and partnerships with local and regional authorities (LRAs). 

Energy  cooperatives  are  one  of  the  most  common  forms  of  local  energy 
communities. They can provide different services across the energy sector such 
as:  self-production  and  consumption;  RE  production  for  sale  on  the  grid; 
ownership  or  operation  of  storage  facilities,  micro-grids  and  other  distribution 
infrastructure;  provision  of  energy  efficiency  and  other  services;  aggregate 
demand  response  and  distributed  generation  of  RE  to  provide  flexibility 
services.  While energy cooperatives share most of the features of other forms of 
local energy communities, they are a unique ownership model from an economic 
and legal perspective. Unlike traditional businesses, cooperatives are owned by 
their  members/users  on  a  ‘one  member  –  one  vote’  principle  and  aim  to 
maximise  local  benefits  rather  than  the  return  on  capital.  Like  other  forms  of 
local energy communities, energy cooperatives contribute to a more democratic 
energy  system  and  local  social  and  economic  development  by,  for  example, 
addressing  energy  poverty  and  creating  employment  in  the  community. 
Nevertheless,  their  success  also  depends  on  the  regulatory  framework  that 
governs their operations and particularly their access to the energy system.  

The  EU-level  policy  instruments  that  have  the  biggest  impact  on  local  energy 
communities,  including  energy  cooperatives,  are  the  EU  Renewable  Energy 
Directive  (RED,  Directive  2009/28/EC)  and  the  common  rules  for  the  internal 
energy market (IEM) in electricity (Directive 2009/72/EC). While the RED aims 
to promote renewable energy, including through the use of support schemes, the 
State aid guidelines (Communication 2014/C 200/01) may render some national 
support  mechanisms  incompatible  with  the  internal  market.  In  addition  to  EU 
policies,  national  legislation  transposing  or  complementing  EU  legislation  can 
further affect local energy communities. A brief review of the main provisions 
for RE installations in the different Member States suggests that most countries 
lack  a  legal  definition  of  a  ‘local  energy  community’,  ‘energy  cooperative’  or 
related  concepts.  Even  though  all  Member  States  provide  some  types  of  RE 
support  mechanisms,  including  feed-in  tariffs,  feed-in  premiums  or  quota 
obligations, only some countries allow priority access to the grid for renewable 

3 

 
 
 
 
energy or a simplified procedure for the permitting of small RE installations. 

While  the  current  EU  legislation  lacks  a  specific  focus  on  local  energy 
communities,  the  proposals  for  a  new  RED  and  a  new  IEM  Directive  for 
electricity, put forward in the process of implementing the EU 2030 climate and 
energy  policy  framework  and  the  Energy  Union  goals,  make  considerable 
progress.  Both  proposals  provide  definitions  for  what  is  a  ‘renewable  energy 
community’ and a ‘local energy community’ respectively and outline provisions 
that  aim  to  ensure  access  of  such  communities  to  the  energy  market. 
Nevertheless,  the  current  proposals  need  to  be  clarified  to  ensure  consistent 
transposition across the Member States and to better recognise the needs of local 
energy communities, including their need for additional support and incentives, 
where relevant. 

Recommendations 

Considering  the  obstacles  local  energy  communities  might  face  and  the 
necessary  conditions  for  their  success,  policy-makers  at  different  governance 
levels need to ensure there is a stable legal and regulatory framework for RE and 
undertake  more  concrete  actions  to  promote  the  development  of  local  energy 
communities.  The  specific  actions  for  different  policy-makers  are  outlined 
below. 

EU  policy-makers  have  an  important  role  in  setting  a  level-playing  field  and 
minimum  requirements  for  the  promotion  of  local  energy  communities  in  the 
EU. Hence, they should: 

  Maintain  a  stable  policy  environment  for  promotion  of  renewable 
energy: Maintaining a stable policy framework for the promotion of RE, 
especially  concerning  financial  support  independent  of  energy  market 
prices,  is  crucial  for  ensuring  non-traditional  market  actors  such  as  local 
energy communities can participate in the energy system. While the design 
of the specific support mechanisms remains a national competency, the EU 
legislation should not limit the possibilities for Member States to continue 
supporting  RE  with  both  market-based  and  market-independent  financial 
support measures. 

  Establish energy market rules that can support an energy transition in 
all  aspects  of  the  system:  The  proposals  for  a  new  IEM  Directive  for 
electricity and a new RED are significant improvements to the current EU 
legislative  framework.  However,  their  provisions  should  be  clarified 
further  to  ensure  they  cover  the  variety  of  services  local  energy 

4 

 
 
 
 
 
 
 
 
communities  provide,  such  as  energy  efficiency  and  energy  savings, 
storage,  management  of  local  distribution  networks,  aggregation  and 
flexibility  services.  Furthermore,  the  rules  should  allow  simplified 
administrative  procedures  for  small  RE  producers  and  local  energy 
communities and possibilities for such actors to aggregate their production 
and  supply  energy  as  a  larger  unit,  including  through  the  use  of  novel 
approaches such as virtual power plants. 

  Ensure  consistency  and  coherence  between  different  policies:  It  is 
paramount  that  the  provisions  in  different  EU  legislative  documents  are 
coherent in their treatment and promotion of local energy communities and 
do  not  provide  contradictory  rules.  Moreover,  the  relevant  EU  energy 
legislation  should  acknowledge  the  specific  features  and  needs  of  local 
energy  communities  and  allow  for  special  treatment  and  support  where 
relevant.  This  should  be  adequately  reflected  by  the  EU  state  aid 
guidelines. 

National  policy-makers  are  responsible  not  only  for 
transposing  and 
implementing  EU  legislation  but  also  for  defining  specific  national  objectives 
and incentives for local energy communities. Hence, they should: 

  Acknowledge the role and specific needs of local energy communities 
in  relevant  national  policies  and  legislation:  Member  States  should 
follow  the  steps  taken  at  EU  level  for  defining  the  roles  of  local  energy 
communities  and  adopt  similar  definitions  and  provisions  about  their 
activities. National policy-makers might also define concrete objectives for 
community  energy  and 
to  national  energy  goals. 
Nevertheless,  national  policy-makers  should  be  careful  not  to  propose 
definitions  or  objectives  that  are  too  restrictive  and  may  exclude  some 
types  of 
local  energy 
communities. 

individual  producers  and  consumers  and 

its  contribution 

  Establish  policies  and  rules  that  promote  local  energy  communities 
and 
local  collaboration:  To  complement  potential  objectives  for 
community  energy,  national  policy-makers  can  also  establish  specific 
policies/rules for promotion of local energy communities. These rules can 
take  different  forms  and  target  various  aspects  of  the  local  energy 
ownership  models  such  as  their  focus  on  local  benefits,  sustainability  or 
environmental benefits. 

  Adopt  simplified  and  proportionate  regulatory  and  administrative 
procedures  for  local  energy  communities:  National  policy-makers 
should  offer  simplified  and  proportionate  administrative  procedures  for 

5 

 
 
 
 
 
 
small  RE  projects  (e.g.  led  by  individual  citizens)  and  local  energy 
communities  to  ensure  cumbersome  procedures  do  not  deter  their 
activities.  The  provisions  encouraging  Member  States  to  establish  ‘one-
stop-shops’ and time limits for the permitting procedures for RES projects 
proposed  in  the  new  RED  are  an  important  basis  upon  which  Member 
State can build solutions tailored to their national context.  

  Ensure local energy communities have access to technical information, 
guidance  and  finance:  National  policy-makers  can  set  up  dedicated 
finance support schemes for local energy communities, to especially help 
them during the planning and project set-up phases. Such mechanisms can 
be,  for  example,  grant-to-loans,  guarantees  or  cheap  credit  opportunities. 
Additionally,  national  policy-makers  should  facilitate  the  access  of  local 
energy  communities  to  technical  information  and  guidance  about  setting 
up, financing and operating community projects. 

Local  and  regional  authorities  can  complement  the  EU  and  national  policies 
for  promoting  local  energy  communities  and  be  important  partners  to  local 
energy communities. Therefore, LRAs should: 

  Adopt local policies for the development of local energy communities: 
LRAs can complement EU and national policies by adopting further local 
objectives for the contribution of local energy communities to local energy 
targets e.g. by committing to sustainable energy  targets in the framework 
of  the  Covenant  of Mayors1  initiative. Hence, LRAs  should identify  how 
local  energy  communities  can  best  contribute  to  meeting  local  energy 
goals  (and  other  objectives,  such  as  social  policy  goals)  and  establish 
mechanisms that support their development, including advisory services or 
provision of financial support. 

  Explore  the  opportunities  to  partner  with  or  establish  local  energy 
communities: To strengthen the contribution of local energy communities 
to local policy goals LRAs can also partner with existing communities or 
establish  new  ones  in  cooperation  with  local  citizens.  LRAs  and  local 
energy communities are suitable partners, as LRAs can provide space for 
RE  projects,  administrative  support  and  access  to  capital  at  preferential 
rates, while local energy communities can provide technical expertise and 
oversee the operation of the projects. 

1 https://www.covenantofmayors.eu/  

6 

 
 
 
 
 
 
 
                                                 
1. Introduction 

The 2015 Energy Union Package2 spells out the overall EU  energy strategy  as 
ensuring secure, affordable and sustainable energy supply based on five pillars:  

  Energy security, solidarity and trust through diversification of the energy 

supply; 

  Full integration of the internal energy market; 
  Energy efficiency; 
  Decarbonisation  of  the  economy  through  climate  and  renewable  energy 

policies; 

  Research, innovation and competitiveness in the energy sector. 

The  actions  under  all  these  pillars  entail  a  transition  to  a  new  energy  system 
where  Renewable  Energy  Sources  (RES)  are  used  and  new  technologies  are 
developed and adopted. To some extent, this will require decentralisation of the 
energy system and an evolution in the roles of energy producers and consumers, 
so  that  new  opportunities  to  generate  renewable  energy  and  deploy  new 
technologies are realised.  

So far, the energy system in Europe, and thus the energy policies that govern it, 
is based on centralised production (using mainly fossil fuels) and the notion that 
citizens  are  passive  consumers  of  the  energy  generated3.  The  growing  use  of 
RES has resulted in the need to decentralise the energy system and re-evaluate 
the role of consumers in it. The legislative proposals under the 2016 EU energy 
package, which aim to update the EU energy policies post-2020, recognise and 
formulate more concretely the roles of consumers, citizens and local authorities 
in  the  energy  transition4.  The  2016  Communication  on  ‘Clean  Energy  for  All 
Europeans’5 recognised the fundamental role of consumers in realising the full 
potential  of  the  European  energy  market,  and  the  need  to  offer  them  the 
opportunity  to  actively  and  beneficially  participate  in  the  energy  transition 
process.  The  measures  outlined  in  the  different  policy  proposals  of  the  2016 
energy  package  (e.g.  the  proposals  for  a  new  Renewable  Energy  Directive 
(RED)  and  a  new  Directive  on  common  rules  for  the  internal  energy  market 
(IEM) for electricity) aim to make it easier for consumers to generate their own 
energy, store it, share it, consume it or sell it back to the market either directly or 
as energy cooperatives (for further details see section 4). 

2 European Commission, 2015, Energy Union Package, COM(2015) 80 final. 
3 Roberts, J, Bodman, F and Rybski,R 2014. Community Power: Model Legal Frameworks for Citizen-owned 

Renewable Energy. 

4 Rochon, E. 2018, People leading the renewable revolution. 
5 European Commission, 2016, Clean Energy For All Europeans, COM(2016) 860 final. 

7 

 
 
 
 
 
                                                 
These  evolving  and  increasingly  overlapping  roles  of  energy  producers  and 
consumers  have  resulted  in  the  use  of  the  terms  ‘prosumers’  or  ‘active 
customers’.  ‘Prosumers’  broadly  refers  to  energy  consumers  who  also  produce 
their own energy from a range of different onsite generators, mainly from RES6.  
The  Proposal  on  common  rules  for  the  internal  market  in  electricity7  defines 
‘active  customers’  as  individuals  or  groups  of  jointly  acting  customers  who 
consume,  store  or  sell  electricity  generated  on  their  premises  or  participate  in 
demand response or energy efficiency schemes as long as these activities do not 
represent their primary commercial or professional activities.  

While such a definition clarifies the activities that characterise a prosumer or an 
active  customer,  it  remains  vague  what  individuals  or  organisations  can  be 
covered by it. A definition of ‘prosumers’ outlined by the European Economic 
and Social Committee (EESC) in its own-initiative opinion on the topic provides 
examples  of  different  prosumers  that  can  complement  the  understanding  of 
‘active  customers’  provided  by  the  Commission’s  definition.  According  to  the 
EESC,  prosumers  (or  active  customers)  can  be  individuals,  groups  of 
individuals, households, small businesses, social enterprises or local authorities 
that  operate  individually  or  in  an  organised  way,  for  instance  through 
associations, foundations or cooperatives8.  

Such  community-led  initiatives  based  on  local  collaborative  solutions  that 
enable  the  development  of  sustainable  energy  technologies  are  increasingly 
perceived  as  key  potential  actors  in  the  transition  toward  low-carbon  energy 
systems9.  Hence,  the  Proposal  on  common  rules  for  the  internal  market  in 
electricity10  recognises  the  significant  role  of  such  initiatives  and  provides  a 
definition also for a 'local energy community':  

‘an association, a cooperative, a partnership, a non-profit organisation or 
other legal entity which is effectively controlled by local shareholders or 
members,  generally  value  rather 
in 
distributed  generation  and  in  performing  activities  of  a  distribution 
system  operator,  supplier  or  aggregator  at  local  level,  including  across 
borders’.  

than  profit-driven, 

involved 

6  European  Commission,  2017,  Study  on  Residential  Prosumers  in  the  European  Energy  Union,  p.31  (main 

document). 

7  European  Commission,  2017,  Proposal  for  a  Directive  of  the  European  Parliament  and  of  the  Council    on 

common rules for the internal market in electricity,  COM(2016) 864 final/2, p.52. 

8  European  Economic  and  Social  Committee,  2016,  Prosumer  Energy  and  Prosumer  Power  Cooperatives: 

opportunities and challenges in the EU countries, Opinion TEN/583. 

9 Bauwens, T. Gotchev, B. and Holstenkamp, L. What drives the development of community energy in Europe? 

The case of wind power cooperatives. 

10  European  Commission,  2016,  Proposal  for  a  Directive  of  the  European  Parliament  and  of  the  Council    on 

common rules for the internal market in electricity,  COM(2016) 864 final/2, p.52. 

8 

 
 
 
 
                                                 
Local energy communities are also linked to the concept of energy democracy. 
Although there is no strict definition of ‘energy democracy’, it concerns the shift 
of  power over  all  aspects  of  the energy  sector  (from production  to  distribution 
and  supply,  from  finance  to  technology  and  knowledge)  to  consumers  and 
workers,  with  increased  importance  attached  to  social  and  environmental 
goals11.  This  growing  ‘community  power’  allows  citizens  to  participate  more 
meaningfully in the production and use of sustainable energy and contribute to 
the  EU’s  energy  transition.  Community  power  can  support  the  shift  to  low 
carbon  energy  systems  as  it  drives  the adoption  of  sustainable energy  policies, 
ensures  RES  projects  benefit  from  public  support  and  acceptance,  and 
contributes  to  energy  self-sufficiency. In  addition,  community  power and  local 
energy  projects  can  allow  communities  to  harness  local  resources,  build  social 
capital, create employment, generate revenue and financial benefits and combat 
fuel poverty12. 

Local energy communities can take different forms and constitute different types 
of  local  energy  ownership.  They  can  be  partnerships,  cooperatives,  non-profit 
organisations or entities owned by the local authorities.  While each type offers 
different  benefits  and  can  be  better  suited  to  certain  local  rules  and  conditions 
(e.g. specific national or local legislation as outlined in section 2), all forms of 
community  energy  have  the  potential  to  contribute  to  the  above-mentioned 
benefits and should be promoted. Therefore, national or local rules can stimulate 
the  development  of  local  energy  communities  through  clear  rules  about  their 
activities and promotion of at least partial local ‘ownership’13. 

Prominent  examples  of  local  energy  ownership  are  remunicipalisation  and 
cooperative  structures.  While  the  former  refers  generally  to  the  retaking  of 
ownership  of  energy  services  by  local  authorities,  the  latter  concerns  multiple 
individuals  that  collectively  invest  in  energy.  Even  though  there  is  a  surge  in 
local  energy  communities,  their  number  varies  enormously  across  Europe. 
While  remunicipalisation  has  been  observed  (e.g.  in  Germany)  and  the 
renewable energy (RE) cooperative model is well-established in some countries, 
they remain marginal in others.  

In  this  report,  a  comparative  analysis  of  the  contextual  factors  that  affect  the 
development  of  local  energy  community  initiatives  and  ownership  models  is 
conducted, with a focus on several countries: Denmark, Germany, Ireland, and 

11  Angel,  J.  2016,  Towards  Energy  Democracy:  Discussions  and  outcomes  from  an  international  workshop 

Amsterdam, 11-12 February, p.3. 

12 Roberts, J, Bodman, F and Rybski,R 2014. Community Power: Model Legal Frameworks for Citizen-owned 

Renewable Energy. 

13 Roberts, J, Bodman, F and Rybski,R 2014. Community Power: Model Legal Frameworks for Citizen-owned 

Renewable Energy. 

9 

 
 
 
 
                                                 
Greece.  The  analysis  highlights  how  different  factors  combine  to  facilitate  or, 
conversely, hinder, the development of local energy communities (section 2) and 
functioning  of  RE  cooperatives  (section  3).  The  common  patterns  that  emerge 
from this trans-national comparison are emphasised without neglecting national 
specificities. This is complemented by an analysis of the EU legislation relevant 
for  the  development  of  local  energy  initiatives  (section  4)  with  the  goal  of 
outlining recommendations for future action (section 5). The report is based on a 
review of publicly available information (e.g. academic literature, news reports, 
reports by EU organisation and other stakeholders; for a list see Annex 1) and 
stakeholder  feedback  collected  through  interviews  and  the  CoR  stakeholder 
consultation on "Models of local energy ownership" held on 10 July 2018. 

10 

 
 
2. Local  energy  ownership  models  across 

the EU 

According  to  the  literature,  it  is  evident  that  ‘local  energy’  does  not  have  a 
stringent  definition,  but  rather  is  generally  treated  as  a  flexible  concept  that  is 
interpreted  differently  across  contexts  and  sectors.    The  term  encompasses  a 
wide  range  of  activities  and  structures,  including  the  likes  of  heat  or  power 
generation,  as  well  as  demand  reduction  activities,  which  are  led  by  local 
authorities  or  citizen  volunteers  and  involve  communities  of  locality  and/or 
communities  of  interest.    Local  energy  can  generally  be  readily  distinguished 
from other forms of energy projects by high levels of community participation in 
a  project,  including  in  decision-making,  and  a  high  degree  of  local  benefit-
sharing. 

The following section is a qualitative overview and exemplification of the types 
of  local  energy  ownership  models  across  the  EU,  exploring  typical  enabling 
framework conditions and problems/obstacles encountered by the various types. 

2.1

 Overview of local energy ownership models in the EU 

Overall,  community  RES  projects  or  local  energy  communities  can  be 
considered schemes in which citizens are highly involved in decision-making or 
where there is an emphasis on local benefits such as energy access, job creation, 
community regeneration and education. Such projects can be owned completely 
by a community and/or its citizens (e.g. a RE cooperative) or represent a hybrid 
model of partnerships between citizens, public or private organisations14. 

In  practice,  the  organisational  structures  of  community  energy  initiatives  vary, 
and include different legal forms such as partnerships (including public-private 
partnerships (PPPs) with local authorities), cooperatives, community trusts and 
foundations, limited liability companies, non-profit customer-owned enterprises, 
housing  associations  and  municipal  ownership15.  In  order  for  these  models  to 
come  into  fruition,  there  is  a  need  to  shift  corporate,  social  and  governmental 
frameworks. The categories below offer examples of processes that promote the 
introduction  of  the  local  energy  ownership  models  mentioned  above.  In  many 
instances, these approaches are used concurrently: 

14 Hanna, R. 2017,  Community Renewables Innovation Lab, Energy Transition Platform Policy Briefing. 
15 Roberts, J, Bodman, F and Rybski,R 2014. Community Power: Model Legal Frameworks for Citizen-owned 

Renewable Energy.  

11 

 
 
 
 
 
 
 
                                                 
  Remunicipalisation  refers  to  the  operational  role  of  local  authorities  and 
their economic decisions that lead to an increase of municipal control over 
energy  management  (e.g.  setting  up  new  or  taking  back  control  over 
existing  local  energy  companies  and  energy  infrastructure)16.  This 
municipal ownership allows more political involvement in the local energy 
market17  and  more  control  over  the  local  energy  systems,  and  has  been 
pioneered in Germany with great success. 

  Devolution  refers  to  an  increasing  strategic  and  political  role  for  local 
authorities  in  energy  policy  through  the  transfer  of  powers  from  the 
national  government,  concerning  the  preparation  and  implementation  of 
energy planning and regulations18. This usually entails city councils taking 
responsibility for the energy supply of their territory, and is cited as easing 
interactions and information flow between citizens and government19. 

  Participative  governance  refers  to  all  the  tools  implemented  to  promote 
direct  democracy  and  allow  citizens  to  influence  energy  and  climate 
policies  (e.g.  discussion  forums,  participative  budgets,  co-building  of 
planning  schemes).  This  process  can  encourage  an  energy  agenda  that 
corresponds  to  local  needs  and  opportunities,  whilst  also  improving 
transparency and accountability in public service delivery20. 

These  processes  drive  local  participation  in  energy  systems  and  can  be  found 
throughout the EU. The remunicipalisation and devolution trends have resulted 
in  the  municipal  ownership  of  energy  systems  through,  for  example,  public 
utility companies or PPPs. For instance, in several European countries (France, 
Germany  and  Scandinavian  countries)  a  number  of  municipal  companies  are 
operating local energy projects. Local authorities and citizens are motivated by a 
number of factors to end the private management of energy services, including a 
general refusal of corporate power and the belief in a more localised generation 
of power21. 

16 Energy Cities, 2017, Local Energy Ownership in Europe: An exploratory study of social public initiatives in 

France, Germany and the United Kingdom. 

17 Wagner, O. and Berlo, K. The wave of remunicipalisation of energy networks and supply in Germany  – the 

establishment of 72 new municipal power utilities. 

18 Energy Cities, 2017, Local Energy Ownership in Europe: An exploratory study of social public initiatives in 

France, Germany and the United Kingdom. 

19 Walton, M. 2012, Social and Economic Benefits of Community Energy Schemes. 
20 Energy Cities, 2017, Local Energy Ownership in Europe: An exploratory study of social public initiatives in 

France, Germany and the United Kingdom. 

21 Energy Cities, 2017, Local Energy Ownership in Europe: An exploratory study of social public initiatives in 

France, Germany and the United Kingdom. 

12 

 
 
 
 
 
 
                                                 
Devolution  has  occurred  in  Scandinavian  and  federal  countries  (e.g.  Belgium 
and  Germany),  resulting  in  city  councils  baring  responsibility  for  the  energy 
supply  of  their  territory.  In  many  instances,  they  have  opted  to  create  local 
energy companies to oversee the local supply networks. In other countries, local 
authorities  do  not  have  this  ability  as  this  competence  was  traditionally  a 
monopoly  of  the  national  government,  before  becoming  a  private  one  in  some 
countries22.  

At the same time, participative governance has resulted in a growing number of 
citizen-led  energy  initiatives,  most  often  taking  the  forms  of  partnerships  or 
cooperatives.  Cooperatives  are  the  most  common  form  of  organisational 
initiatives23.  They  constitute 
structure  adopted  by  community  energy 
‘democratic structures that follow a set of internationally agreed principles and 
make  decisions  on  a  one-member-one-vote  basis;  day-to-day  operation  is 
governed  by  an  elected  board.’24.  In  general,  they  allow  a  moderate  return  to 
investors, and require fewer administrative and legal requirements than that of a 
private company25. In several Member States, an increasing share of RE is now 
produced  by  cooperatives.  For  instance,  in  Germany,  there  are  more  than  600 
RE  cooperatives  and  local  groups,  including  some  community  owned  projects 
that  produce  electricity.  RE  cooperatives  also  provide  a  new  opportunity  for 
local  energy  production  and  ownership,  transforming  the  energy  market  and 
defining  national  schemes.  Energy  cooperatives  and  other  forms  of  local 
community energy can  also  support energy efficiency projects (e.g. retrofitting 
or  new  developments)26.  Section  3  explores  energy  cooperatives  as  a  form  of 
local energy ownership in more details. 

Another common legal entity for community energy ownership are partnerships. 
They can be set up between individuals or legal persons and usually take one of 
two  forms  depending  on  the  liability  for  debts:  ‘joint  and  several’  liability 
partnerships  where  each  member  is  liable  or  a  ‘limited’  partnership  where  a 
separate  corporate  structure  is  established  so  that  individual  investors  have 
limited  liability  for  the  partnership’s  debts27.  Partnerships  tend  to  be  governed 
by  a  management  board,  with  the  ownership  rights  dependent  on  the  financial 

22 Energy Cities, 2016, The new local flavour. 
23 REN21, 2016, Renewables 2016  Global Status Report, Chapter 7: Feature: Community Renewable Energy, 

p.137. 

24 REN21, 2016, Renewables 2016  Global Status Report, Chapter 7: Feature: Community Renewable Energy, 

p.137. 

25 Roberts, J, Bodman, F and Rybski,R 2014. Community Power: Model Legal Frameworks for Citizen-owned 

Renewable. 

26  Smith,  C.  et  al.  2016,  Social  Innovation  and  Community  Energy  best  practices,  methods  and  tools  across 

Europe. 

27 Roberts, J, Bodman, F and Rybski,R 2014. Community Power: Model Legal Frameworks for Citizen-owned 

Renewable. 

13 

 
 
 
                                                 
investment  of  each  partner28.  The  use  of  a  partnership  model  has  several 
benefits,  including  the  possibility  of  certain  tax  advantages,  the  equal 
distribution  of  responsibilities  and  profits,  and  the  ability  to  ensure  decision-
making is  more democratic and  transparent than that of a  traditional company. 
Bylaws  of  the  partnership  may  establish  limitations  on  ownership,  determine 
how  decisions  are  made,  and  stipulate  who  may  participate29.  For  instance,  in 
Germany, limited partnerships with a private company as a general partner are a 
commonly  used  structure  for  community  energy,  while  in  Denmark,  energy 
partnerships often function under the title of ‘association’ 30. 

Other legal forms for community energy projects can be non-profit enterprises, 
foundations  and  trusts.  Non-profit,  customer-owned  enterprises follow  the 
framework of cooperatives with the addition of specific rules. For example, the 
organisation’s  rules  might  stipulate  that  ‘ownership  might  require  grid 
connection, or votes may be capped to limit the power of individuals who own 
multiple  properties’  making  this  set-up  particularly  suitable  for  community 
projects  that  rely  on  independent  grid  networks  31.  For  instance,  this  model  of 
community  energy  ownership  has  been  particularly  prevalent  in  Denmark  in 
relation to its district heating sector32. To ensure that returns on investment and 
benefits  from  community  energy  projects  support  the  local  community, 
ownership models in the form of trusts and foundations are most suitable. These 
organisations are intended to act for the broader community benefit (as opposed 
to  the  profit  of  particular  members)  and  allow  the  profits  from  the  renewable 
energy project to be reinvested back into the local community for specific local 
ventures  –  this  ensures  that  even  those  citizens  who  do  not  have  the  capital  to 
invest directly benefit from community energy33.  

Housing  associations  can  also  act  as  a  model  of  local  energy.  They  operate  as 
private, non-profit organisations that are able to ‘finance community renewable 
energy  projects  by  adjusting  tenant  rents’34  and  can  be  instrumental  in 

28 REN21, 2016, Renewables 2016  Global Status Report, Chapter 7: Feature: Community Renewable Energy, 

p.137. 

29 Roberts, J, Bodman, F and Rybski,R 2014. Community Power: Model Legal Frameworks for Citizen-owned 

Renewable. 

30 REN21, 2016, Renewables 2016  Global Status Report, Chapter 7: Feature: Community Renewable Energy, 

p.137. 

31 REN21, 2016, Renewables 2016  Global Status Report, Chapter 7: Feature: Community Renewable Energy, 

p.137. 

32 Roberts, J, Bodman, F and Rybski,R 2014. Community Power: Model Legal Frameworks for Citizen-owned 

Renewable Energy. 

33 Roberts, J, Bodman, F and Rybski,R 2014. Community Power: Model Legal Frameworks for Citizen-owned 

Renewable Energy. 

34 REN21, 2016, Renewables 2016  Global Status Report, Chapter 7: Feature: Community Renewable Energy, 

p.137. 

14 

 
 
 
                                                 
addressing  social  issues  such  as  fuel  poverty35.  However,  residents  sometimes 
have only limited  control over decisions of the housing association, which can 
act  as  a  barrier  to  such  a  model  becoming  successful  within  the  community36. 
Such a system can be found for example in social housing estates in Denmark, 
where  tenants  are  members  of  a  housing  association  and  can  take  decisions 
concerning the management of the estate37. 

Community  energy  ownership  can  take  other  legal  forms  led  by  companies, 
social  enterprises  or  citizens  depending  on  the  national  circumstances  and 
laws38.  For  instance,  public  and  private  limited  liability  companies  are  gaining 
popularity  (especially  in  Europe  and  North  America)  as  a  form  of  ownership 
attractive  to  investors  who  wish  to  limit  their  liability,  whist  simultaneously 
protecting private assets from losses39.  

their  form, 

local  energy  ownership  can  empower 

Regardless  of 
local 
communities to deploy RES and energy efficiency solutions, develop new smart 
energy transition models and supply chains40. At the same time some forms of 
local  energy  ownership  models  such  as  RE  cooperatives  can  provide  local 
citizens  with  cheaper  energy41,  while  bringing  communities  closer  to  energy 
democracy42.  However,  like  any  form  of  energy  investment,  community  and 
local  energy  projects  have  significant  financing  requirements  and  need 
consistent  policy  support.  If  these  are  not  in  place  in  the  relevant  national 
structure, the success of community energy projects can be jeopardised.  

2.2

 Member State examples 

The  following  section  identifies  specific  Member  State  examples  of  existing 
local  ownership  models  in  the  energy  sector.  The  Member  States  have  been 
selected in order to cover a broad range of local energy models; from those that 

35 Roberts, J, Bodman, F and Rybski,R 2014. Community Power: Model Legal Frameworks for Citizen-owned 

Renewable. 

36 REN21, 2016, Renewables 2016  Global Status Report, Chapter 7: Feature: Community Renewable Energy, 

p.137. 

37 Roberts, J, Bodman, F and Rybski,R 2014. Community Power: Model Legal Frameworks for Citizen-owned 

Renewable. 

38 Roberts, J, Bodman, F and Rybski,R 2014. Community Power: Model Legal Frameworks for Citizen-owned 

Renewable. 

39 REN21, 2016, Renewables 2016  Global Status Report, Chapter 7: Feature: Community Renewable Energy, 

p.137. 

40  Smith,  C.  et  al.  2016,  Social  Innovation  and  Community  Energy  best  practices,  methods  and  tools  across 

Europe. 

41  European  Economic  and  Social  Committee,  2016,  Prosumer  Energy  and  Prosumer  Power  Cooperatives: 

opportunities and challenges in the EU countries, Opinion TEN/583. 

42 Creupelandt D. and Vansintjan, D. REScoop – Mobilizing European Citizens to Invest in Sustainable Energy, 

Deliverable 2.3 REScoop – Municipality Approach. 

15 

 
 
 
 
 
 
                                                 
are well established and regarded as leaders of community energy, to those that 
currently  have  no  national  strategy  for  community  energy.  Germany  and 
Denmark offer the opportunity to analyse different drivers and legal models that 
have been deployed which have allowed them both to be at the forefront of local 
energy generation within the EU, albeit with different favoured forms of energy 
and legal avenues available. Ireland allows us to examine the prevalence of local 
energy in a Member State that has very little in the way of regulatory support for 
community  energy  projects.  The  comparison  between  these  three  countries 
enables a generalisation of success factors and potential barriers to community 
energy generation within the EU. Finally, Greece is analysed as an example of a 
Member  State  attempting  to  progress  towards  a  more  supportive  national 
structure for local energy  generation; the current draft law  provides a snapshot 
of the key elements that a Member State currently attempting to revolutionise its 
energy sector  in favour of community energy  believes are required to ensure a 
successful energy transition. A brief overview of the current state of community 
energy,  as  well  as  the  background  and  rational  behind  it,  is  given  for  each 
country. The  differing  enabling conditions, leading  to  both  success  factors  and 
barriers to community energy, are then subsequently analysed.  

2.2.1

 Denmark 

Denmark has a history of supporting the development of RES, and is considered 
one of the pioneering nations in regards to wind energy. Denmark has deployed 
different laws since the 1970s to promote the development of RES, with a clear 
focus on wind energy in particular. The measures taken in the 1970s and 1980s 
included  tax  exemptions  for  income  from  wind  turbines,  fixed  feed-in-tariffs, 
guaranteed  grid  connection,  purchase  obligations  and  priority  transmission  for 
wind  energy.  Despite  some  volatile  changes  to  the  rules  concerning  the 
operation  of  RES  in  the  late  1990s  and  early  2000s,  the  latest  legal  reform 
enacted with the Promotion of Renewable Energy Sources Act of 2009 ensures a 
larger  fixed  premium  for  wind  energy,  making  RE  cooperatives  more 
attractive43. 

In  addition  to  policies  promoting  RES  development,  Denmark  also  has  a 
tradition  of  cooperative  ownership,  especially  in  the  agricultural  sector,  and 
local energy activism (e.g. against nuclear power generation). Therefore, it is not 
surprising  that  Denmark  has  promoted  local  ownership  of  RES,  particularly 
wind energy, by citizens, companies and cooperatives through targeted measures 

43 Bauwens, T. Gotchev, B. and Holstenkamp, L. What drives the development of community energy in Europe? 

The case of wind power cooperatives. 

16 

 
 
 
 
                                                 
such  as  planning  schemes  and  specific  regulations44.  Even  though  Danish  law 
prohibits  cooperatives  from  owning  wind  turbines,  other  forms  of  ownership 
have  occurred  to  facilitate  local  citizen  participation.  Communities  tend  to 
obtain  common  ownership  through  a  legal  partnership,  which  essentially 
operates  in  largely  the  same  way  as  a  cooperative.    In  these  partnerships, 
individuals  combine  their  funds  to  purchase  turbines,  with  community  wind 
projects financed completely through the sale of shares. Consequently, members 
of the partnership are protected against liability for debts beyond the resources 
of the partnership, which each member only liable for the amount they invested. 
This  has  helped  overcome  the  risks  of  joint  and  several  liability  and  helped 
encourage more citizen investments in local energy generation45.  

Most  energy-related  issues  come  under  the  ambit  of  the  national  government, 
which has continuously supported the development of community-owned energy 
projects.  However,  as  previously  mentioned,  many  government  policies  that 
previously  helped  to  establish  the  wind  industry  (such  as  subsidies  for  set-up 
costs and previous feed-in-tariff laws) are no longer available. That being said, 
the remaining grid connection arrangement  has ensured the ongoing success of 
community power in Denmark. This arrangement states that turbine owners are 
only required to pay for the connection to the closest technically feasible point 
of  the  grid46.  Consequently,  energy  utilities  must  finance  any  necessary 
expansion of the grid, rather than the owners of the specific turbine.  

In  Denmark,  public  participation  is  central  to  the  wind  power  development 
scheme  as  local  citizens  have  the  option  of  purchasing  wind  power  shares. 
According  to  the  2009  Promotion  of  Renewable  Energy  Sources  Act  ‘any 
person who erects one or more wind turbines of at least 25m in height onshore, 
or offshore wind turbines established without a tendering procedure [...], shall, 
prior  to  commencement  of  erection,  offer  for  sale  at  least  20  per  cent  of  the 
ownership  shares  to  the  persons  […]’47  living  within  a  4.5  km  radius  of  the 
turbine.  Consequently,  community  energy  generation  in  Denmark  now  occurs 
predominantly in partnership with energy utilities (co-owned community energy 
projects)  rather  than  in  fully  private  owned  projects48.  This  legislation  has 
allowed communities to collectively invest in wind energy since the 1970s; as a 
result, by 2013, 70-80% of existing wind turbines were owned by communities, 
whilst  the  rate  of RES generation  owned  by  communities  is  now  one  of  the 

44 Bauwens, T. Gotchev, B. and Holstenkamp, L. What drives the development of community energy in Europe? 

The case of wind power cooperatives. 

45 Hicks, J. and Ison, N. Community energy in Europe. 
46 Hicks, J. and Ison, N. Community energy in Europe. 
47  Promotion  of  Renewable  Energy  Act,  Act,  no.  1392  of  27  December  2008,  Article  13: 
https://ens.dk/sites/ens.dk/files/Vindenergi/promotion_of_renewable_energy_act_-_extract.pdf      (accessed  11 
July 2017). 

48 Hicks, J. and Ison, N. Community energy in Europe. 

17 

 
 
 
                                                 
highest in the world49. 

In  conclusion,  Denmark  has  a  strong  focus  on  renewable  energy  communities 
and a nurturing environment that allows it to be at the forefront of community 
energy generation in Europe.  That being said, the majority of its policy relates 
solely to the establishment of wind power, with little mention of other forms of 
RE.  

2.2.2

 Germany  

In  Germany,  like  Denmark,  there  is  strong  and  stable  support  for  renewable 
energy,  though  it  is  more  recent,  with  an  official  ‘energiewende’,  or  ‘energy 
transition’ introduced in 2010. National policy aims to promote both wind and 
solar power. The transition includes ambitious targets and measures (e.g. feed-in 
tariffs)  aimed  to  promote  renewable  energy,  energy  efficiency  and  greenhouse 
gas  reductions.  This  is  complemented  by  strong  policy  and  widespread  public 
support for community ownership of  RE generation50. Even though there is no 
explicit  policy  support  for  community  energy,  apart  from  regional  political 
support in finding and providing spaces for RES installations (e.g. roofs for solar 
power  installations)51,  as  of  2012  approximately  half  of  the  RE  capacity  is 
installed under some form of community ownership52.  

This surge in energy communities can be explained by several factors. Firstly, a 
combination  of  legal  provisions  and  other  developments  have  resulted  in  the 
remunicipalisation of the energy sector in some Laender. A large number of the 
concession contracts for managing electricity and gas distribution networks (the 
number  of  contacts  is  estimated  at  over  20,000)  have  been  renewed  in  recent 
years,  creating  an  opportunity  for  the  remunicipalisation  of  these  services  and 
resulting  in  the  establishment  of  over  70  new  municipal  power  utilities53.  This 
has  helped  the  network  remain  highly  fragmented  throughout  the  country, 
preventing a monopolisation of the energy network which has been seen in other 
countries, such as the ‘Big Six’ power companies in the UK54.  

Furthermore,  local  authorities  in  Germany  benefit  from  a  certain  degree  of 

49 Roberts, J, Bodman, F and Rybski,R 2014. Community Power: Model Legal Frameworks for Citizen-owned 

Renewable Energy. 

50 Simcock, N. Willis, R. and Capener, P. 2016,  Cultures of Community Energy, International case studies. 
51 Lucha, C. and Prahl, A. 2015, Cost and financing aspects of community renewable energy projects, Volume II: 

Case Studies-Germany. 

52 Simcock, N. Willis, R. and Capener, P. 2016,  Cultures of Community Energy, International case studies: 
53 Wagner, O. and Berlo, K. The wave of remunicipalisation of energy networks and supply in Germany  – the 

establishment of 72 new municipal power utilities. 

54Energy Cities, 2017, Local Energy Ownership in Europe: An exploratory study of social public initiatives in 

France, Germany and the United Kingdom. 

18 

 
 
 
 
 
 
                                                 
autonomy  and  responsibility  for  local  actions.    Municipal  autonomy  and  the 
‘right  to  regulate  all  local  affairs  on  their  own  responsibility’  is  enshrined  in 
German law. As a result, municipalities have considerable executive powers (for 
example, they are responsible for implementing a large part of national and EU 
legislation)55. These powers are restricted by both the localisation principle and 
subsidiarity  clause,  which  limits  any  activity  of  the  local  authority  to  the 
geographical  area  under  its  administration,  and  only  allows  local  authorities  to 
run a public service if they can do so as efficiently as a third party56. However, 
the  creation  of  new  municipal  companies  in  Germany  has  been  cited  as  being 
crucial to the success of its community energy projects. 

Energy  communities  partnering  with  local  authorities  can  also  benefit  from 
available  financing  at  preferential  rates;  for  example,  local  authorities  have 
access to long-term, inexpensive financing from the German  public bank KfW 
or  low-cost  capital  from  institutional  investors  that  search  for  low-risk 
investments.  Finally,  the  Fukushima  accident  in  2011  generated  the  political 
momentum  necessary  to  push  for  the  implementation  of  the  Energiewende 
legislative  package  as  a  means  of  shifting  away  from  nuclear  power.  The 
Energiewende package promoted decentralised renewable energy by confirming 
that public support will back decentralised renewable energy, combined heat and 
power (CHP) and energy efficiency projects57. 

The  definition  of  ‘energy  community’  in  Germany  is  broad.  In  some  Laender 
this  includes  energy  efficiency  improvements  for  households58.  The  most 
common form of community energy in Germany is that of a limited partnership 
between  electricity  utilities/wind  developers  and  communities,  with  a  limited 
liability company as a general partner. Generally, the limited liability company 
is the wind developer or utility, whilst the limited partnership is made up of the 
local  people  wanting  to  invest  in  wind  power.  The  profit  from  the  project  is 
distributed according to the number of shares a stakeholder has purchased59.  

Germany  is  also  embracing  new  and  innovative  approaches  to  support  its 
Energiewende package. To address challenges in balancing the power supply of 
an evolving energy system, Germany is exploring the concept of  virtual power 
plants. In its 2015 White Paper, the Federal Ministry for Economic Affairs and 

55 Energy Cities, 2017, Local Energy Ownership in Europe: An exploratory study of social public initiatives in 

France, Germany and the United Kingdom. 

56 Energy Cities, 2017, Local Energy Ownership in Europe: An exploratory study of social public initiatives in 

France, Germany and the United Kingdom. 

57 Energy Cities, 2017, Local Energy Ownership in Europe: An exploratory study of social public initiatives in 

France, Germany and the United Kingdom. 

58 Lucha, C. and Prahl, A. 2015, Cost and financing aspects of community renewable energy projects, Volume II: 

Case Studies-Germany. 

59 Hicks, J. and Ison, N. Community energy in Europe. 

19 

 
 
 
 
                                                 
Energy  considers  virtual  power  plants  and  virtual  storage  units  as  innovative 
concepts that may play a crucial role in the so-called ‘electricity market 2.0’60. 
Virtual power plants interconnect small, decentralised and usually privately-run 
RES  power  producers  and  storage  facilities  with  utility  companies,  network 
operators  and  consumers.  This  allow  small  decentralised  power  producers  to 
connect and sell their energy as one virtual power plant on the market. Operated 
by a central control unit, the virtual power plants coordinate power generation, 
storage  and  consumption  in  a  certain  place  ensuring  that  a  certain  amount  of 
electricity is fed into the grid at a certain time61 62. For instance, the transmission 
network  operators  TenneT  and  sonnen  use  domestic  storage  systems  and 
blockchain technology to stabilize the power grid in Germany. The cooperation 
of these companies in a virtual power plant allows RE to be stored in batteries in 
one  place  while  the  virtual  power  plant  delivers  energy  from  its  available 
resources in other locations63. 

The success of community energy in Germany can be attributed to a number of 
factors  including:  a  well-established  environmental  and  alternative  energy 
movement and a general tradition of forming cooperatives and other associations 
to  achieve  change  at  a local  level;  a high  level  of leadership  and  support  from 
municipalities;  and  macro-level  institutional  factors  such  as  the  feed-in  tariff 
system  and  the  state-owned  development  bank,  KfW.  In  addition,  Germany  is 
exploring innovative concepts such as virtual power plants that can facilitate the 
access of decentralised community-based RES generators. 

2.2.3

 Ireland  

Ireland  is  one  of  the  most  energy-intensive  countries  per  capita  in  Europe 
creating  economic  and  geopolitical  risks  for  the  country64.  To  address  these 
risks,  the  country  has  developed  a  series  of  policies  and  measures  to  promote 
renewable  energy  and  energy  efficiency  with  a  focus,  albeit  small,  on  energy 
communities. 

Currently, community-owned renewable energy in Ireland is a small, but rapidly 
growing  industry.  Compared  to  the  likes  of  Germany  and  Denmark,  there  is 
currently a limited number of community energy projects in operation. This has 

60  Federal  Ministry  for  Economic  Affairs  and  Energy,  2015,  An  electricity  market  for  Germany’s  energy 

transition, White Paper. 

61 Leuphana University of Lueneburg, EnERgioN: The generation, storage and marketing of renewable energy in 
https://www.leuphana.de/en/partners/innovation-incubator-lueneburg/sustainable-

northern 

the 
region: 
energy/energion.html (accessed 25 June 2018). 

62 Peeters, M. and Schomerus, T. 2014, Regional renewable energy: a string of legal and financial challenges. 
63 

Intersolar  Europe,  Virtual  power  plants  are  developing 

serious  market  contenders: 

into 

https://www.intersolar.de/en/news-press/news/news/virtual-power-plants.html (accessed 25 June 2018). 

64 SEAI, 2016, Energy in Ireland 1990 – 2015. 

20 

 
 
 
 
 
                                                 
been attributed to significant barriers which hinder the success of these groups 
and projects, and as a result community energy in Ireland represents a very small 
amount  of  overall  energy  generation  and  potential.  For  instance,  the  country 
currently  lacks  a  national  strategy  for  community  energy.  National  energy 
policy65  does  not  adequately  consider  the  potential  of  community  energy,  and 
provides  no  clear  steer  to  support  community  energy  projects,  groups, 
partnerships66.  Additionally,  no  rules  facilitate 
the  creation  of  energy 
cooperatives to provide a legal entity to energy communities67.  

However, a change in momentum has been seen in recent years, with  Ireland’s 
National Energy White Paper (December 2015)68 and National Mitigation Plan 
(June  2017)69  emphasising  the  role  of  citizens  and  communities  in  meeting 
energy  targets  for  a  low  carbon  future.  Additionally,  the  Sustainable  Energy 
Authority  of  Ireland  (SEAI)  advocates  the  Sustainable  Energy  Communities 
(SEC)  Programme  as  one  of  the  main  pillars  of  for  the  climate  action 
objectives70. 

Moreover,  Energy  Co-Operatives  Ireland  is  working  on  the  EU  cooperative 
movement and supports RE cooperatives at every stage of their development by 
guiding  them  through  the  legal  processes,  advising  them  on  their  interaction 
with  state  agencies,  introducing  them  to  other  cooperatives  and  helping  them 
communicate their message locally and nationally71.   

As  of  2018,  24  communities  across  Ireland  are  now  part  of  the  SEAI’s 
Sustainable  Energy  Communities  network,  a  rapidly  expanding  national 
movement towards a cleaner energy future. The communities have committed to 
developing  long-term  energy  plans  with  the  assistance  of  SEAI.  The  network 
has  doubled  in  size  in  2017,  as  momentum  gathers  in  the  move  to  more 
sustainable energy systems72. 

Therefore,  although  there  has  been  a  recent  surge  in  community  energy  in 
Ireland compared to previous years, the general lack of uptake in comparison to 
other  EU  countries  is  apparent.  There  are  several  barriers  which  prevent 

65  For  instance,  the  National  Renewable  Energy  Action  Plan,  The  National  Energy  Efficiency  Action  Plan, 

Government White Paper, Delivering a Sustainable Future for Ireland. 

66 Friends of the Earth Ireland, 2014, Community Energy Policy Position Paper. 
67  European  Commission,  2017,  Study  on  “Residential  Prosumers  in  the  European  Energy  Union”,  Ireland 

national report. 

68 Department of Communications, Energy and Natural Resources, 2015, Ireland’s Transition to a Low Carbon 

Energy Future 2015-2030. 

69 Department of Communications, Energy and Natural Resources, 2017, National Mitigation Plan. 
70 Kirwan, N. 2018, Sustainable Energy Communities: Community action is key to tackling climate change. 
71  European  Commission,  2017,  Study  on  “Residential  Prosumers  in  the  European  Energy  Union”,  Ireland 

national report. 

72 SEAI, 2017, Over 120 communities nationwide now working with SEAI. 

21 

 
 
 
 
 
                                                 
communities  from  developing  their  own  projects,  including  access  to  funding 
and  advice  at  initial  project  development  stages  and  access  to  the  power  grid. 
Currently  connecting  to  the  National  Electricity  Grid  for  a  local  energy 
community is considerably long and costly73. 

2.2.4

 Greece  

The  structure  of  the  support  regime  for  renewable  electricity  in  Greece  is 
changing. In January 2018, a new law on energy communities was voted in the 
Greek  Parliament,  which  defines  the  role  of  citizens  in  the  energy  sector,  and 
gives wide scope for energy communities74. The law encourages citizens, local 
authorities  and  private  and  public  agencies  to  participate  in  the  production, 
distribution  and  supply  of  energy;  essentially,  it  gives  electricity  consumers  a 
possibility  to  become  electricity  producers.   The  main  driver  for  reform  is  to 
bring  Greece  into  compliance  with  the  European  Commission’s  Guidelines  on 
State  aid  for  environmental  protection  and  energy  for  the  period  2014–
2020 (Guidelines)75. 

According  to  press  coverage76,  the  changes  enable  energy  communities  to 
produce, sell or self-consume electricity and thermal energy produced by RES or 
CHP. The law enables local energy communities to set-up ownership structures 
and prohibits the charging of fees to renewable energy communities that do not 
align with real costs.  

Overall, the objective of the law is to enable citizens, municipalities and regions 
to directly participate in energy projects, particularly renewable energy projects. 
It also aims to ensure community energy projects do happen in the community 
by laying down requirements for the member of the community to be linked to 
the place of its headquarters77.   

There  are  reports  that  suggest  some  municipalities  are  already  taking  steps 
towards  establishing  local  energy  communities78.  It  has  been  reported  that 
Larissa, Thessaloniki and some municipalities in Athens are already preparing to 
use  virtual  net-metering  and  to  develop  plans  that  would  provide  free  solar 
energy  to  households  suffering  energy  poverty.  The  new  provisions  for  virtual 
power  sharing  investments may  be  particularly  important,  as  they  can  enable 
consumption  to  occur  in  a  different  location  to  where  the  energy  is  produced. 

73 Friends of the Earth Ireland, 2014, Community Energy Policy Position Paper. 
74 Greenpeace Greece & REScoop, 2018, Energy communities in Greece: new legislation. 
75 Assimakis, D. and Kitsilis, M, 2017, Shifting to auctions for renewable energy capacity in Greece. 
76 Balkan Green Energy News, 2017, ‘Greek energy communities draft bill awaits ratification’. 
77 Greek Draft Law ‘Energy Communities and other provisions’, Article 2. 
78 Greenpeace Greece & REScoop, 2018, Energy communities in Greece: new legislation. 

22 

 
 
 
 
 
 
                                                 
This  is  critical  in  parts  of  Greece  where  residents  live  in  multi-apartment 
buildings and lack the space for micro-generation installations79. 

Therefore, although still in its early stages,  with the broad definition of energy 
community  and  the  possibility  of  virtual  metering,  the  new  law  has  the 
possibility  of  completely  revolutionizing  the  ability  of  energy  communities  to 
form  and  operate  in  Greece.  However,  as  the  law  has  only  recently  been 
adopted, it is not yet possible to evaluate its impact. 

2.3

 Typical  success  factors  and  enabling  framework 
conditions 

The  frameworks  currently  operating  in  the  four  countries  studied  clearly 
exemplify the opportunities and successes of local energy ownership initiatives. 
In particular, analysis of the success of both Denmark and Germany allows us to 
highlight key aspects that promote community energy.  

First, a commitment to renewable energy acts as a concrete base for promoting 
community  energy;  the  support  for  renewable  energy  in  both  Denmark  and 
Germany  is  high  within  both  the  general  population  and  at  political  level. 
Moreover,  provisions  to  support  the  access  to  the  grid  of  local  energy 
communities  with  clear  financial  responsibilities  for  the  community  and  the 
network operate as in Denmark can significantly facilitate the operation of local 
energy  communities.  Such  a  regulatory  environment  fosters  the  role  of 
community energy, and encourages its growth in municipalities.  

requires 

transition 

to  energy 

the 
Additionally,  a  strong  commitment 
identification  of  new  opportunities  for  decentralised  production  and  local 
projects.  For  this  reason,  ambitious  local  and  national  energy  transition 
strategies can drive community energy projects. In addition, an energy transition 
to  a  system  with  more  decentralised  RES  installations  requires  innovative 
approaches  to  ensure  the  balancing  of  the  grid.  Innovative  approaches  such  as 
virtual  power  plants,  storage  units  and  net-metering  are  being  explored  by 
countries  such  as  Germany  and  Greece  and  have  the  potential  to  foster  the 
development  of  more  local  energy  projects  by  ensuring  their  successful 
integration into the energy market. 

Furthermore,  the  setting  of  targets  for  community  energy  ownership  and  co-
ownership  are  a  very  successful  way  of  focusing  government  policy  and 

79 Greenpeace Greece & REScoop, 2018, Energy communities in Greece: new legislation. 

23 

 
 
 
 
 
 
 
 
                                                 
providing  security  for  investors.  In  Denmark,  the  Promotion  of  Renewable 
Energy Act necessitates developers to offer ownership shares of wind projects to 
the  local  community,  for  instance,  20%  of  overall  ownership  shares  of  wind 
projects larger than 25 m tall to eligible persons entitled to make an offer, whilst 
providing preferential right to residents within 4.5 km to buy the first 50 shares, 
and  the  remaining  shares  offered  to  residents  that  reside  in  the  local 
municipality.  In  addition,  setting  some  minimum  requirements  about  the  local 
ownership  of  community  energy  as  proposed  in  the  new  law  on  energy 
communities  in  Greece has  the  potential to  significantly  facilitate and  promote 
the development of local energy initiatives while ensuring benefits accrue to the 
local community. 

Last but not least, partnering local energy communities and local authorities can 
offer  a  variety  of  benefits  and  enhance  local  RES  projects.  Usually  local 
authorities  are  responsible  for  land  use  planning  and  can  thus  authorize  RES 
projects on their territory or provide space in municipal buildings and lands for 
installation of RE generators (e.g. solar panels)80. Local authorities also play an 
important  role  in  engaging  local  stakeholders  and  rallying  support  for  RES 
projects81.  Local  authorities  may  also  help  de-risk  local  energy  community 
projects  by  either  providing  some  investments  themselves  or  helping  the  local 
community  secure  external  funding  for  their  project82.  Finally,  an  increasing 
number of EU cities and municipalities are joining voluntary initiatives such as 
the  Covenant  of  Mayors  that  promote  the  development  and  implementation  of 
sustainable energy  plans  at the  local  level.  The  commitment  to  such  initiatives 
and voluntary targets might create a demand for more local RES projects. 

2.4

 Typical obstacles 

The  reasons  and  opportunities  that  motivate  local  authorities  to  embark  on 
community energy projects are multiple: revitalising the local economy, creating 
a  close  connection  with  citizens,  managing  local  public  services  in  a  more 
integrated  way,  fostering  cooperation  and  partnerships  with  other  players, 
accessing  new  markets,  etc.  However,  these  endeavours  also  come  with  risks, 
and, although the frameworks currently operating in the countries studied clearly 
exemplify the opportunities and successes of local energy ownership initiatives, 
they also include a number of barriers that must be considered.  

80 Peeters, M. and Schomerus, T. 2014, Regional renewable energy: a string of legal and financial challenges. 
81  European  Economic  and  Social  Committee,  2016,  Prosumer  Energy  and  Prosumer  Power  Cooperatives: 

opportunities and challenges in the EU countries, Opinion TEN/583. 

82 Hanna, R. 2017, Community Renewables Innovation Lab, Energy Transition Platform Policy Briefing. 

24 

 
 
 
 
 
 
 
                                                 
The first barrier which is prevalent across the Member States analysed relates to 
the legal standing of community energy, i.e. the constraints imposed by national 
legal  frameworks  that  limit  the  conditions  under  which  an  energy  community 
can  be  formed  and  operate.  Specifically,  securing  access  to  the  national 
electricity  grid  for  community  energy  projects  is  vital.  Taking  Ireland  as  an 
example, at present the costs, delays and uncertainty associated with connection 
to  the  grid  represents  a  major  barrier  for  community  groups  in  developing 
community energy projects. Rules about the operation and connection of RES in 
general  can  also  affect  the  development  of  RE  communities  as  e.g.  balancing 
responsibilities  and  permitting  procedures  for  RE  generators  can  be  costly  and 
might sometimes present a challenge for small energy communities (for further 
details  see  section  4).  Additionally,  the  extensive  powers  granted  to  local 
authorities  in  Germany  by  the  national  law  is  cited  as  being  crucial  for  the 
success  of  community  energy  in  the  different  Laender.  For  local  energy 
communities to develop Member States should adopt clear definitions and rules 
that  govern  their  activities  while  keeping  some  flexibility  and  not  being  too 
restrictive  in  order  to  allow  the  various  models  of  local  energy  ownership  to 
flourish83. 

Secondly,  finance  for  community  energy  projects  is  often  one  of  the  biggest 
barriers  that  a  community  group  must  overcome.  In  practice,  it  is  particularly 
difficult  for  communities  to  secure  first  round  financing  to  bridge  the  gap 
between  feasibility  and  planning  stages.  Even  when  upfront  investment 
subsidies  are  available,  this  financial  support  is  often  time-limited84.  The 
availability  of  loans  on  preferential  rates  from  public  banks  such  as  KfW  in 
Germany  is  one  approach  to  support  the  start-up  of  local  community  driven 
energy  initiatives.  Other  options  include  the  use  of  innovative  financing 
approaches  such  as  crowd  funding  or  public-private  partnerships  with  local 
authorities and/or private organisations85.  

Finally,  political  support  must  be  present  to  enable  the  legal  and  economic 
conditions that allow community energy to flourish. Linking community energy 
projects with overarching policy objective can help secure support stakeholders 
and citizens.  

83 Roberts, J, Bodman, F and Rybski,R 2014. Community Power: Model Legal Frameworks for Citizen-owned 

Renewable Energy. 

84 Hanna, R. 2017, Community Renewables Innovation Lab, Energy Transition Platform Policy Briefing. 
85 Hanna, R. 2017, Community Renewables Innovation Lab, Energy Transition Platform Policy Briefing. 

25 

 
 
 
 
 
                                                 
2.5

 Lessons for local energy ownership models 

Local  energy  ownership  models  allow  the  existence  of  various  forms  of  local 
energy  communities  where  benefits  are  shared  locally  bringing  communities 
closer to the concept of energy democracy. Nevertheless, the existence of such 
models  is  often  hindered  by  lack  of  an  enabling  legal  framework,  or  indeed,  a 
prohibitive  framework,  and  insufficient  financial  resources.  Considering  the 
typical  success  factors  and  obstacles  identified  in  this  section,  we  can  outline 
several  key  conditions  for  the  promotion  of  local  energy  ownership  models  in 
the EU: 

  There  should  be  a  clear  political  commitment,  either  through  binding 
policies  or  voluntary  commitments  e.g.  in  the  framework  of  initiatives 
such as the Covenant of Mayors, to the development of RES and an energy 
transition  with  more  decentralized  RES  producers  connected  on  the 
market. 

  There  should  be  a  clear  legal  framework  that  governs  the  establishment, 
functioning and access to the energy market for local energy communities. 

  Local  energy  communities  should  have  access  to  financing  instruments 
that can support their investments or to partnership schemes that help them 
de-risk their investments. 

  Synergies  and  partnerships  between  local  energy  communities  and  local 

authorities should be promoted. 

Once the above-mentioned conditions are present, local energy communities can 
be  set  up  in  various  forms,  all  of  which  offer  different  advantages  and 
disadvantages as exemplified in the following table. 

Table 1: Strengths and weaknesses of the different local energy ownership models 
Local energy 
ownership model 

Weaknesses 

Strengths 

Cooperative 
(community-owned 
social enterprise) 

Community - local 
government hybrid 
model 

  Voluntary and 

democratic structure 
(typically one member = 
one vote) 

  Common economic, 

social and cultural goals 
can be met 

 

Local authorities can help 
de-risk the initial 
investment in projects, 
provide grants and 

  Raising sufficient capital for 

investment can be a 
challenge 
Lack of familiarity with RE and 
technical skills/ knowledge 
can be an issue 

Local authorities vary in terms 
of their understanding of 
community energy 
Inconsistent application of 

 

 

 

26 

 
 
 
 
 
 
 
Local energy 
ownership model 

Strengths 

Weaknesses 

 

collaborate to secure 
external funding 
Local authorities can 
provide practical 
planning support and 
share public land 

  Community acceptance 

of larger scale 
installations, which can 
offer larger returns on 
investment, increases  
  Community organisations 
benefit from skills and 
investment of commercial 
developers 

 

This structure allows 
multiple owners of a 
community RES project on 
a single site where the 
community organisation 
owns one part 

  Other parts might be 

owned by a commercial 
developer, utility, 
independent power 
producer or investment 
fund 

planning rules and consent 
across different local 
authorities can be 
challenging 

  Cultural and operational 
differences between 
community and commercial 
organisations can be difficult 
to overcome 

  Communication barriers due 

to mutual lack of 
understanding and 
transparency can be 
challenging 

 

 

The community still needs to 
raise funds to construct or 
purchase part of the project 
The community is still 
responsible for operating, 
monitoring and maintaining 
their equipment 

Community - 
commercial 
developer hybrid 
model 

Split ownership 

Source: Hanna, R. 2017, Community Renewables Innovation Lab, Energy Transition Platform Policy Briefing. 

27 

 
 
 
 
3. Local and regional energy cooperatives 

Energy  cooperatives,  and  RE  cooperatives  in  particular,  are  one  of  the  most 
common forms of local  energy ownership around the EU and they are gaining 
popularity. Therefore, it is important to understand the factors that can influence 
their formation and functioning in the different countries. This section provides 
an  overview  of  local  and  regional  energy  cooperatives  across  the  EU,  relevant 
aspects of the regulatory environment and their socio-economic impacts together 
with examples of best practice. 

3.1

 Overview of local and regional energy cooperatives 

While cooperatives have existed for a long time (e.g. in  the  agriculture sector) 
energy  cooperatives  are  relatively  new.  Nevertheless,  RE  cooperatives  are  one 
of the most common forms of local energy ownership around the EU and they 
are  gaining  popularity.  Even  though  there  is  no  common  legal  definition  for 
energy cooperatives so far (as noted in section 2.1 above there is an EU proposal 
for defining a ‘renewable energy community’, however it is not as specific as an 
‘energy  cooperative’  or  a  ‘RE  cooperative’),  there  are  various  descriptions 
available.  REScoop  defines  a  RE  cooperative  as  ‘a  business  model  where 
citizens  jointly  own  and  participate  in  projects  for  sustainable  energy 
[including]  both  renewable  energy  (RES)  and  energy  efficiency  (EE)’86.  The 
EESC  describes  an  energy  cooperative  as  ‘a  voluntary  association  with  an 
unlimited number of members and legal personality [with] the objective […] to 
meet  the  energy  needs  of  its  members’87.  Like  other  cooperatives,  energy 
cooperatives  should  follow  some  key  internationally  agreed  cooperative 
principles:  

  They  are  open  and  voluntary  –  cooperatives  are  voluntary  organisations 
open  to  all  persons  able  and  willing  to  use  their  services  and  take  on 
membership responsibilities. 

  They  entail  democratic  ownership  –  each  member  has  a  vote  (‘one 
member-one vote’) and participate in setting the policies and decisions of 
the cooperative, some members are elected representatives. 

86 Creupelandt D. and Vansintjan, D. REScoop – Mobilizing European Citizens to Invest in Sustainable Energy, 

Deliverable 2.3 REScoop – Municipality Approach. 

87  European  Economic  and  Social  Committee,  2016,  Prosumer  Energy  and  Prosumer  Power  Cooperatives: 

opportunities and challenges in the EU countries, Opinion TEN/583. 

29 

 
 
 
 
 
 
 
 
                                                 
  They  allow  economic  participation  –  citizens  can  buy  shares  of  the 
cooperative and get access to its products or services; members contribute 
equitably  and  democratically  control  the  capital  of  the  cooperative,  they 
usually  receive  limited  compensation  and  any  surpluses  are  usually 
allocated to supporting the activities of the cooperative. 

  They  are  autonomous  and  independent  –  cooperatives  are  not  controlled 
by  private  companies  or  public  authorities;  if  any  agreements  with  other 
organisations are undertaken, they should guarantee the democratic control 
of the members over the cooperative. 

  They provide information and training - cooperatives offer their members, 
representatives  and  employees  education  and  training  to  ensure  members 
can  effectively  contribute  to  the  development  of  the  cooperative,  while 
offering  information  about  the  benefits  of  the  cooperative  to  the  general 
public. 

  They  collaborate  with  other  cooperatives  at  local,  regional,  national  and 

international levels. 

  They care for the local community – cooperatives work for the sustainable 

development of their communities88 89. 

From  an  economic  perspective,  cooperatives  are  a  different  ownership  model 
compared  to  conventional  business  organisations.  Contrary  to  corporations  or 
other  businesses,  which  are  owned  by  investors,  cooperatives  are  owned  by 
members who are often also the end-users of their services and the net earnings 
are usually divided proportionally among the members according to the volume 
of  transactions  rather  than  their  shareholding.  Furthermore,  maximising  the 
return on capital is usually not a key objective for cooperatives – there is cap to 
profit distribution even when part of the net income is allocated as a return on 
capital  shares.  Finally,  cooperatives  present  a  democratic  governance  structure 
where individuals have equal voting rights and no barriers to become members 
and join the cooperative90.  

88 Creupelandt D. and Vansintjan, D. REScoop – Mobilizing European Citizens to Invest in Sustainable Energy, 

Deliverable 2.3 REScoop – Municipality Approach. 

89 Roberts, J, Bodman, F and Rybski,R 2014. Community Power: Model Legal Frameworks for Citizen-owned 

Renewable Energy. 

90 Bauwens, T. Gotchev, B. and Holstenkamp, L. What drives the development of community energy in Europe? 

The case of wind power cooperatives. 

30 

 
 
 
 
 
 
 
 
                                                 
The  existence  of  RE  cooperatives  is  driven  by  several  factors:  support 
mechanisms for RE, planning policies, public attitudes and local culture. As RE 
cooperatives  use  RE  technologies  that  are  not  yet  competitive  compared  to 
traditional  fossil  fuel  technologies,  they  rely  on  market-independent  support 
mechanisms  for  RE,  such  as  feed-in  tariffs,  in  order  to  have  predictable  cash 
flows.  Therefore,  cooperatives  are  more  often  found  where  these  support 
mechanisms  are  (or  were  previously)  available.  Planning  and  administrative 
procedures  for  the  setting  up  of  RE  projects  can  affect  the  willingness  of 
cooperatives to undertake such projects, especially if the complexity and cost of 
the procedures is not simplified for smaller projects. Less onerous administrative 
and planning procedures favour the existence of cooperatives. In addition, local 
attitudes towards the cooperative model in general and energy activism and the 
development  of  RE  can  either  facilitate  or  hinder  the  emergences  of  RE 
cooperatives91.  

3.2

 Socio-economic impact of energy cooperatives 

Energy  cooperatives  have  several  key  socio-economic  impacts,  some  of  which 
are also shared with some of the other types of local energy ownership models. 
One of the most important impacts of energy cooperatives is their contribution 
to energy democracy and ‘energy citizenship’. While the former concept refers 
primarily  to  joint  decision-making  concerning  energy  (and  climate)  policies92, 
the  latter  refers  more  broadly  to  ‘triggering  a  wider  consciousness  among 
citizens  and  communities  of  energy  issues’  that  in  turn  enables  them  to 
contribute  more  broadly  to  the  energy  transition93.  This  means  not  only  that 
citizens  and  energy  communities  will  become  active  consumers  or  prosumers 
but  also  that  they  will  gradually  start  participating  in  the  operation  of 
distribution  grids,  energy  supply  and  energy  service  companies  for  example 
through energy cooperatives94. Such a democratisation of the energy system can 
ensure  wider  acceptance  and  uptake of RE  projects95  and  lead to  lower  energy 
prices, especially for energy poor consumers96. 

91 Bauwens, T. Gotchev, B. and Holstenkamp, L. What drives the development of community energy in Europe? 

The case of wind power cooperatives. 

92 Kunze, C. and Becker, S. 2014, Energy Democracy in Europe: A survey and outlook. 
93 Roberts, J, Bodman, F and Rybski,R 2014. Community Power: Model Legal Frameworks for Citizen-owned 

Renewable Energy, p. 4. 

94 Roberts, J, Bodman, F and Rybski,R 2014. Community Power: Model Legal Frameworks for Citizen-owned 

Renewable Energy, p. 4. 

95 Huybrechts, B. and Mertens, S. 2014, The Relevance Of The Cooperative Model In The Field Of Renewable 

Energy. 

96 Kunze, C. and Becker, S. 2014, Energy Democracy in Europe: A survey and outlook. 

31 

 
 
 
 
 
 
                                                 
Providing  energy  at  lower  prices  and  addressing  energy  poverty  are  important 
benefits of energy cooperatives. In Belgium, the cooperative supplier Ecopower 
has received recognition for having the fairest billing structure of all suppliers in 
the Flemish region. In the UK, cooperatives provide low-cost or free electricity 
allowances to their members as a way of addressing fuel poverty in Brixton97. In 
addition,  cooperatives  allow  consumers  to  choose  where  their  energy  comes 
from  and  encourage  them  to  install  RE  generators  or  undertake  energy 
efficiency measures98. 

Energy cooperatives can also contribute to the local economy. They can directly 
create jobs in the local market, e.g. for the management and maintenance of the 
RE installations, and contribute to decreasing the capital outflow resulting from 
fuel  imports,  which  can  indirectly  generate  jobs  in  other  sectors99.  Energy 
cooperatives  and  community  projects  are  also  more  likely  to  contract  local 
companies  or  use  local  banks  and  reinvest  their  profits  in  the  community100. 
Energy  cooperatives  aim  to  maximise  local  value  and  thus  contribute  to  the 
social and economic welfare of local communities. More specifically, they can 
promote a ‘circular’ economy at the local level where RE profits are invested to 
promote  other  energy  objectives  such  as  building  renovations  and  energy 
savings101.  

Last but not least, energy cooperatives contribute to the achievement of climate, 
energy  and  environmental  objectives.  On  the  one  hand,  they  can  bring  EU, 
national  and  regional  policy  goals  closer  to  the  citizens  improving  local 
acceptance  for  energy  transition  projects102.  On  the  other  hand,  they  can 
contribute  to  meeting  EU,  national  or  regional  climate  policy  goals  by 
contributing 
installation  of  RE  capacity,  energy  savings  and 
improvements  of  energy  efficiency.  For  example,  energy  cooperatives  support 
local authorities to meet their climate and energy objectives (including through 
commitments under the Covenant of Mayors initiative)103. 

the 

to 

97 Community Power, Friends of the Earth and REScoop, The Benefits of Community Ownership. 
98 Community Power, Friends of the Earth and REScoop, The Benefits of Community Ownership. 
99 Kunze, C. and Becker, S. 2014, Energy Democracy in Europe: A survey and outlook. 
100 Community Power, Friends of the Earth and REScoop, The Benefits of Community Ownership. 
101 Creupelandt D. and Vansintjan, D. REScoop – Mobilizing European Citizens to Invest in Sustainable Energy, 

Deliverable 2.3 REScoop – Municipality Approach. 

102 Community Power, Friends of the Earth and REScoop, The Benefits of Community Ownership. 
103 Creupelandt D. and Vansintjan, D. REScoop – Mobilizing European Citizens to Invest in Sustainable Energy, 

Deliverable 2.3 REScoop – Municipality Approach. 

32 

 
 
 
 
 
                                                 
3.3

 Relevant  aspects  of  the  regulatory  environment  and 
the electricity market design 

As a result of their specific ownership model and principles, energy cooperatives 
are different forms of energy stakeholders compared to traditional energy market 
actors such as large companies or utilities. Therefore, the regulatory framework 
should  adequately  consider  and  address  their  unique  features  in  order  to 
facilitate their existence and participation in the energy market.  

At the EU level, the policies that have the largest impact on energy cooperatives 
are the Renewable Energy Directive (RED, Directive 2009/28/EC), the Energy 
Efficiency  Directive  (EED,  Directive  2012/27/EU),  the  common  rules  for  the 
IEM  in  electricity  and  gas  (Directives  2009/72/EC  and  2009/73/EC)  and  the 
state aid rules (Communication 2014/C 200/01104). The RED and the EED aim 
to  promote  renewable  energy  and  energy  efficiency  respectively  and  lay  down 
provisions for the Member States to introduce appropriate support mechanisms, 
which  can  favour  the  creation  of  energy  cooperatives  by  driving  the  overall 
energy transition in the EU. The IEM directives, on the other hand, govern the 
functioning of the common market and outline rules on, for example, access to 
the  distribution  networks,  balancing  obligations  and  permitting  of  energy 
suppliers. Therefore, the IEM directives affect the environment in which energy 
cooperatives  operate  and  compete  with  incumbent  market players105  106.  At  the 
same  time,  the  state  aid  rules  can  render  some  of  the  incentives  (e.g.  feed-in 
tariffs or other forms of compensation) for RE producers incompatible with the 
internal  market107.  Section  4  explores  in  further  details  the  potential  gaps  and 
inconsistency of the EU legislation concerning local energy communities. 

In  addition  to  EU  policies,  national  legislation  transposing  or  complementing 
EU legislation can further affect energy cooperatives. Nevertheless, the situation 
across  the  Member  States  varies.  The  following  table  presents  an  overview  of 
the key regulatory measures that can affect prosumers and energy cooperatives 
in the EU Member States based on a review of the country reports produced for 
the  Commission’s  2017  ‘Study  on  Residential  Prosumers  in  the  European 
Energy Union’.  

In  most  Member  States  there  is  no  legal  definition  of  a  ‘local  energy 

104  European  Commission,  2014,  Guidelines  on  State  aid  for  environmental  protection  and  energy  2014-2020 

(2014/C 200/01), 28.6.2014. 

105 Roberts, J, Bodman, F and Rybski,R 2014. Community Power: Model Legal Frameworks for Citizen-owned 

Renewable Energy. 
106 Interview with REScoop. 
107  Community  Power  and  Client  Earth,  2015,  Promoting  citizen  participation  in  the  energy  transition: 

recommendations for an EU legal framework to support community energy. 

33 

 
 
 
 
 
                                                 
to 

refer 

that  exist 

self-consumptions  and  sometimes 

community’,  ‘energy  cooperative’  or  related  concepts.  The  most  relevant 
definitions 
to 
prosumption/prosumers. So far only Poland and Greece appear to have defined 
energy  communities  or  cooperatives  in  their  legislation.  In  Poland108,  2016 
amendments  to  the  RES  Law  introduced  a  definition  of  ‘energy  cooperative’ 
that  refers  to  cooperative  generation  activities  from  RE  installations  up  to 
10MW (for electricity), up to 30MW (for heat) and biogas installations up to 40 
million  m³. In Greece109, the recently adopted energy communities law defines 
‘energy  community’  as  a  ‘cooperative  solely  aiming  at  promoting  social  and 
solidarity-based  economy  and  innovation  in  the  energy  sector,  addressing 
energy  poverty  and  promoting  energy  sustainability,  generation,  storage,  self-
consumption,  distribution  and  supply  of  energy  as  well  as  improving  end-use 
energy efficiency at local and regional level’ (see section 2.2.4 for more details). 

Even  though  Member  States  have  opted  for  different  types  of  RE  support 
mechanisms, including feed-in tariffs, feed-in premiums or quota obligations110, 
all  Member  States  provide  some  kind  of  incentives  for  RE  installations, 
including tax incentives in some countries. However, only some countries have 
special  provisions  that  allow  priority  access  to  the  grid  for  renewable  energy 
(and in most cases this still entails various fees for the producer) or a simplified 
procedure  for  the  permitting  of  small  RE  installations  as  evidenced  by  the 
following table.  

Table 2: Overview of the provisions concerning RE installations, prosumers and local 
energy communities in the Member States 
Relevant definition in the 
Member 
energy legislation 
State 

Tax incentives 
for RE 
installations 

Priority access 
to the grid for 
RE installations 

Simplified 
permitting 
procedures for RE 
installations 

Support 
mechanisms 
for RE 
installations 

AT 

BE 

 

 

Definition of ‘self-
consumption’ 

No definition available. The 
Flemish region has 
introduced the concept of 
‘prosumer tariff’ but there is 
no legal definition of it. The 
Walloon region has 
developed the concept of 
‘self-producer.’ 

  

  

fees for 
connection & 
for using the 
grid 

depending on 
whether the 
installation is for 
commercial use 

 

  

  

for solar 
installations 

Only fixed fee 
for connection; 
simplified 
procedure for 
installations 
smaller than 
25kVA 

BG 

Definition for ‘energy for 
self-consumption’ 

 

 

  

  

simplified 
procedure for 

for installations up 
to 30kW 

108  European  Commission,  2017,  Study  on  “Residential  Prosumers  in  the  European  Energy  Union”,  Poland 

national report. 

109 Greek Draft Law ‘Energy Communities and other provisions’, Article 1. 
110 REScoop, Report on financial barriers and existing solutions. 

34 

 
 
 
 
 
                                                 
Member 
State 

Relevant definition in the 
energy legislation 

Support 
mechanisms 
for RE 
installations 

Tax incentives 
for RE 
installations 

Priority access 
to the grid for 
RE installations 

Simplified 
permitting 
procedures for RE 
installations 

installations 
smaller than 
30kW 

 

  

fees for the 
application & 
for using the 
grid 

no permit needed 
for installations up 
to 5MW 

 

  

fee for 
connection 

no permit needed 
for installations up 
to 10kW 

 

 

  

no permit needed 
for PV installations 
on rooftops or mini 
CHP and heat 
pumps 

  

for wind 
turbines fees 
only for the 
connection to 
the closest 
technically 
feasible point  

 

no permit needed 
for installations up 
to 100kW 

 

 

fee for 
connection 

no permit needed 
for installations up 
to 20kW 

  

for installations up 
to 30kW 

  

for some small 
installations (size 
depends on RES) 

 

  

no permit needed 
for PV installations 
on buildings 
connected to the 
grid 

  

no permit needed 
for ‘household 
power plants’ 

CY 

Definition of ‘self-
production’ 

CZ 

No definition available 

DE 

No definition available 

  

 

 

DK 

No definition available 

 

EE 

EL 

ES 

FI 

FR 

No definition available. 
There is a general term of 
‘micro producers’, which 
includes residential 
prosumers.      

Definition for ‘energy 
community’ in the new 
2018 law (see section 2.2.4) 

Definition of ‘self-
consumption’ 

No official definition 
available but there are 
several relevant terms 
based on nominal or 
maximum output.  

General definition of ‘self-
consumption’ and 
definition of ‘collective self-
consumption’  

HR 

Definition for ‘prosumers’  

 

 

 

 

 

 

 

 

 

 

HU 

Definition for ‘residential 
prosumers’  

 

 

35 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Member 
State 

Relevant definition in the 
energy legislation 

IE 

No definition available but 
a definition of ‘micro-
generation’ is provided by 
the Electricity Supply Board 
Networks.  

Support 
mechanisms 
for RE 
installations 

 

IT 

Definition of ‘self-producer’    

LT 

Definition of ‘consumer that 
produces electricity’ 

 

LU 

Definition of ‘self-producer’    

LV 

MT 

Definition of ‘autonomous 
producer’ 

No definition available 

 

NL 

No definition available 

PL 

PT 

RO 

SE 

SI 

SK 

Definitions for ‘prosumer’ 
and ‘energy cooperative’ 

No official definition but the 
concept of ‘producer-
consumers’ and ‘self-
consumers’ have been 
used.  

Provisional definition for 
‘prosumer’ in the Energy 
Strategy 2016-2030) but it 
has not been approved by 
the Government yet.  

No definition available 

Definition of ‘prosumers’ 

No definition available 

 

 

 

 

 

 

 

Tax incentives 
for RE 
installations 

Priority access 
to the grid for 
RE installations 

 

 

Simplified 
permitting 
procedures for RE 
installations 

 

for micro-
generators up to  

6kW 

 

fees for the 
application & 
connection 

for installations up 
to 20kW 

 

 

 

lower 
connection 
costs 

for installations up 
to 10kW 

 

 

fee for 
connection 

no permit for 
installations up to 
10MW 

 

 

no fees for 
small 
installations 

no permit for 
installations with 
total peak 
generation 
capacity of up to 
1500 kVA 

 

no permit needed 
for household solar 
installations  

 

 

no fees for 
‘micro-
installations’ 

no permit needed 
for ‘micro-
installations’ 

 

no permit needed 
for installations up 
to 1MW 

 

 

no permit needed 
for installations up 
to 100kW 

 

for installations up 
to 10kW except 
wind turbines 

 

 

 

 

36 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Member 
State 

Relevant definition in the 
energy legislation 

Support 
mechanisms 
for RE 
installations 

Tax incentives 
for RE 
installations 

Priority access 
to the grid for 
RE installations 

Simplified 
permitting 
procedures for RE 
installations 

UK 

No definition available 

 

 

 

 

no permit needed 
for PV, CHP, wind 
or hydro 
generation rated 
up to 3.68kW (16A) 

Source: National reports (except Greece) produced in support of the European Commission’s 2017 ‘Study on 
Residential Prosumers in the European Energy Union’ and Greek Draft Law ‘Energy Communities and other 
provisions’. 

3.4

 Best practices  

There  are  a  growing  number  of  energy  cooperatives  in  the  EU,  notably  in 
countries like Belgium, Denmark, Germany, France and Spain but increasingly 
also  in  other  Member  States.  They  perform  different  activities  and  provide  a 
variety  of  services  across  the  energy  sector  such  as:  self-production  and 
consumption;  production  of  renewable  energy  for  export  to  the  grid  and  retail 
supply;  ownership  or  operation  of  storage  facilities,  micro-grids  and  other 
distribution infrastructure for electricity and district heating networks; provision 
of  energy  efficiency  and  other  services;  aggregate  demand  response  and 
distributed generation of RE to provide flexibility services111.  

Successful  energy  cooperative  share  some  key  good  practices  that  in  turn  help 
them overcome the various barriers and risks they might face: 

  Organisational  set-up  –  follow  the  internationally  agreed  cooperative 

principles and define objectives for the cooperative. 

  Stakeholder  involvement  –  involve  citizens  as  shareholders  and  keep  the 
local community and local authorities informed about the activities of the 
cooperative  exploring  possibilities  for  joint  actions  (e.g.  with  the  local 
authorities). 

111 Roberts, J. 2018, Existing activities of renewable/energy communities  - case studies. 

37 

 
 
 
 
 
 
 
 
 
 
                                                 
  Financial organisation – manage the financial risks involved in running a 
cooperative  by  getting  an 
technical 
maintenance)  to  service  providers,  and  paying  variable  dividends  to  the 
members of the cooperative112. 

insurance,  outsourcing 

(e.g. 

Energy cooperatives can face a range of barriers and risks, including: 

  Bureaucracy and regulations - these are the main non-technical barriers for 
RES  projects;  navigating  the  bureaucratic  procedures  (e.g.  permitting 
procedures,  certification  or  other  local  rules  for  setting  up  RES  projects) 
can  be  more  difficult  and  time-consuming  for  small  organisations 
compared to large energy companies. 

  Changing regulations and support systems and differences across countries 
– this is a common  barrier for the whole RES  market but it affects  more 
gravely  small  organisations  that  rely  on  RES  support  systems  for  their 
financing;  in  addition,  differences  between  the  national  support  systems 
and  their  consistency  result  in  energy  cooperatives  flourishing  in  some 
Member States (e.g. Germany, Denmark) more than in others. 

  Community  opposition  to  certain  types  of  renewable  energy  –  this  is 
another  common  barrier  for  the  whole  RES  market  as  it  can  result  in 
opposition  to  new  RES  projects;  dealing  with  misinformation  and 
effectively informing the local community can be another strain on small 
organisations’ resources and time113. 

The  following  sections  present  only  some  illustrative  examples  of  energy 
cooperatives in the EU with the aim to show the variety of services that can be 
provided through the cooperative model and highlight best practices and lessons 
for other energy cooperatives. 

3.4.1

 Production of renewable energy 

The  majority  of  the  energy  cooperatives  are  engaged  in  energy  production, 
usually from RES such as solar photovoltaic (PV), onshore and nearshore wind, 
micro-hydro or biomass, either for self-consumption or sale on the grid.  When 
some energy communities are licensed retail electricity suppliers, they  are also 
legally obliged to match their forecasted electricity output in real time or provide 
financial  compensations  for  any  imbalances.  Usually  to  meet  these  balancing 

112 REScoop, REScoop 20-20-20 Best practices, Report I. 
113 REScoop, REScoop 20-20-20 Best practices, Report I. 

38 

 
 
 
 
 
 
 
 
                                                 
responsibilities energy cooperatives contract a third balancing responsible party, 
which  can  be  costly  and  challenging  for  small  RE  operators114.  Important 
success  factors  for  RE-producing  cooperatives  can  be  the  involvement  of 
citizens  as  shareholders  and  the  collaboration  with  local,  regional  or  national 
authorities as exemplified by the following cooperatives. 

Middelgrunden Wind Turbine Cooperative, Denmark 

One of most famous examples of energy cooperatives is the Danish Middelgrunden  Wind 
Turbine Cooperative115, formed in 1997. The cooperative partnered with the Copenhagen 
municipal  utility  to  build  20  wind  turbines  (2MW  capacity  each),  off  the  shore  of 
Copenhagen  that  started  operating  in  2000.  The  cooperative  owns  half  of  the  turbines, 
while  the  other  10  are  owned  by  DONG  Energy  –  the  private  energy  company  that 
evolved  from  the  original  municipal  energy  utility.  The  Middelgrunden  Wind  Turbine 
Cooperative has over 8,500 members who mostly live in or around Copenhagen and own 
the 40,500 shares of the cooperative. The cooperative is organised as a partnership where 
each  partner  has  one  vote,  regardless  of  the  number  of  shares.  There  is  also  one  wind 
turbine  called  the  ‘children's  wind  turbine’ for  which shareholders’  children  vote  on  their 
behalf  and  learn  about  the  cooperative  decision-making  process.  In  addition,  the 
cooperative  receives  support  from  the  Danish  association  of  owners  of  wind  turbines 
(‘Danmarks  Vindmølleforening’).  This  association  has  successfully  lobbied  the  national 
government to create favorable conditions for the expansion of wind energy116. 

Combrailles Durables, France 

Combrailles Dubrailles cooperative in France has 170 members, it began as an association 
to  promote  renewable  energy  before  it  grew  to  own  several  PV  installations  and  explore 
the  opportunities  for  installing  a  wind  energy  project.  At  the  start,  the  cooperative 
collaborated  with  the  municipality  to  put  a  PV  installation  on  the  roof  of  a  municipal 
school. The cooperative then used the knowledge and experience from this first project to 
install  further  PV  capacity  in  a  neighbouring  village.  In  the  course  of  its  projects  the 
cooperative  learnt  that  involving  the  local  community,  including  by  offering  shares, 
enhanced the support for the RES projects and tapped into the expertise and professional 
networks  of  the  members.  In  addition,  by  starting  with  a  smaller  project  the  cooperative 
had  an  opportunity  to  gain  knowledge  and  expertise  before  embarking  on  a  larger 
project117. 

To build financial stability, renewable energy generation might not be the first 
activity  of  an  energy  cooperative,  but  something  that  is  only  pursued  a  later 
stage  of  the  cooperative’s  development  once  it  has  achieved  more  financial 
maturity, as evidenced by the Som Energia cooperative in Spain. 

114 Roberts, J. 2018, Existing activities of renewable/energy communities  - case studies. 
115  Middelgrunden  Wind  Turbine  Cooperative:  http://www.middelgrunden.dk/middelgrunden/?q=en/node/35 

(accessed 12 July 2017). 

116 Hoeschele, W. 2017, Danish Energy Cooperative Lets Consumers Collectively Build Wind Turbines. 
117 REScoop, REScoop 20-20-20 Best practices, Report I, pp.34-35. 

39 

 
 
 
 
 
 
                                                 
Som Energia, Spain 

Founded in 2010, Som Energia is the first RE cooperative in Spain, which grew quickly and 
gained  over  6,000  members  in  only  two  years.  An  important  success  factor  for  the 
cooperative  is  its  financial  sustainability  secured  through  a  simple  business  model  at  the 
beginning  and  the  participation  of  volunteers.  The  cooperative  started  by  selling  RE 
sourced  from  third  parties  to  its  members  using  a  low-cost  web-based  system  for  its 
operations.  Even  though  obtaining  a  permit  to  operate  and  sell  on  the  public  energy 
system  was  not  very  costly,  it  was  time  consuming  and  complicated.  Over  time,  the 
cooperative  obtained  some  RE  projects  that  had  already  secured  feed-in  tariffs  and 
invested in its own RE capacity, usually small-scale projects close to their members118.  

3.4.2

 Provision of district heating 

Some energy cooperatives are also engaged in the provision of heating or CHP, 
often from biomass (e.g. woodchips) but also from solar thermal or ‘waste’ heat 
from  large  electrical  power  plants.  Key  aspects  that  cooperatives  aiming  to 
produce and sell heat should consider are the readiness of consumers to source 
their  energy  from  a  cooperative  (some  consumers  may  be  reluctant  to  switch 
from a larger district heating provider), the availability of local resources and the 
possibility  to  use  different  technologies.  The  availability  of  other  technology 
options can help hedge against various risks including natural catastrophes that 
can affect the biomass supply or regulatory risks related to RES support schemes 
119.  

Bioenergy village (Bioenergiedorf) Heubach, Germany 

In the village of  Heubach, the local ‘bioenergy village’ cooperative owns a biomass CHP 
generator (gasifier) that supplies 70 houses with their heat. The energy is produced through 
an  innovative  wood  gasification  technology  that  supplies  the  base  load  of  the  local 
heating  systems  and  feeds  bio-electricity  into  the  power  grid.  The  86  members  of  the 
cooperative,  which  include  a  local  kindergarten,  town  hall  and  apartment  buildings,  are 
also its customers. The project benefitted from a loan provided by the regional branch of 
the national development bank (KfW), subsidies from the local government and the EU. In 
addition,  steady  cash  flows  are  ensured  thanks  to  a  20-year  guaranteed  price  for  the 
electricity and the sale of power and heat to the local consumers120. 

3.4.3

 Operation of distribution networks 

A  small  number  of  energy  cooperatives  also  own  and/or  operate  power 
distribution  systems  or  district  heating  networks.  In  most  cases,  these  are  very 
old rural area cooperatives that created the networks in the early 20th century. As 
such  cooperatives  tend  to  be  small,  they  are  exempted  from  EU  unbundling 
rules,  which  required  energy  suppliers  to  be  separated  from  operators  of 
distribution  networks.  A  few  energy  cooperatives  also  became  owners  and/or 

118 REScoop, REScoop 20-20-20 Best practices, Report I, pp.39-42. 
119 REScoop, REScoop 20-20-20 Best practices, Report II. 
120 REScoop, REScoop 20-20-20 Best practices, Report II, pp.16-17. 

40 

 
 
 
 
 
 
                                                 
operators  of  their  local  networks  after  winning  concession  tenders121.  An 
important  success  factor  for  cooperatives  that  wish  to  own  and  operate  local 
distribution networks is securing the necessary capital. 

ElektrizitatsWerke Schonau (EWS), Germany 

EWS Schonau was set up by a local energy cooperative in order to purchase the local grid 
in  1991  before  the  energy  market  was  liberalised.  Even  though  the  organisation  faced 
different  obstacles,  such  as  a  strong  and  influential  incumbent  company,  some  local 
opposition and insufficient financial resources, EWS managed to raise enough finance after 
a  public  fund-raising  campaign  and  finalised  the  purchase  of  the  grid  in  1997.  At  a  time 
when  there  were  no  support  mechanisms  for  RE  or  prosumers,  EWS  sought  to  provide  its 
customers not only with energy but also with the opportunity to sell their electricity on the 
grid  with  guaranteed  access  and  feed-in  tariffs.  With  time,  EWS  grew  and  now  owns  also 
the  gas  network  of  Schonau  and  Wimbach,  the  grids  in  eight  neighbouring  villages  and 
some  generation capacity. EWS supplies the electricity for about 137,000  people and the 
gas for around 8,500 people122. 

E-Werk Prad Genossenschaft, Italy 

Founded in 1926  in the municipality of  Prato allo Stelvio in Bolzano-Bozen Italy, the E-Werk 
Prad cooperative wanted to supply the local area with electricity. The cooperative raised 
a bank load to build their first hydropower plant. Over time, the cooperative expanded its 
activities and now produces power from hydro-energy, wind, solar and biogas and owns a 
district  heating  network  to  transport  the  heat  from  the  biogas.  The  cooperative  supplies 
power and heat to around 1,200 members. In addition, the cooperative buys energy from 
local citizens who own RE installations. To deal with the growing share of PV in the energy 
mix,  E-Werk  Prad  is  exploring  different  storage  options  and  a  control  network  based  on  a 
smart grid system123.  

3.4.4

 Provision of energy efficiency or other energy services 

Some  energy  cooperatives  provide  a  range  of  services  to  their  customers  from 
supply  of  renewable  energy,  to  funds  and  advice  about  undertaking  energy 
efficiency  measures.  While  some  energy  cooperatives  are  dedicated  to  energy 
saving services, others use profits from RE generation to fund energy efficiency 
measures among their members or address energy poverty124. 

Energie ID, Belgium 

The  Ecopower  energy  cooperative  in  Flanders,  Belgium,  provides  its  members  and 
customers  not  only  energy  but  also  a  service  for  evaluating  their  energy  consumption. 
Energie ID is an online tool that allows members to observe their consumption in real time, 
as well as the compare their consumption over time based on historical data. Through this 
service the cooperative can identify energy efficiency needs and advise its members via a 
social media platform125. 

121 Roberts, J. 2018, Existing activities of renewable/energy communities - case studies. 
122 REScoop, REScoop 20-20-20 Best practices, Report I, pp.60-62. 
123 REScoop, REScoop 20-20-20 Best practices, Report I, pp.63-64. 
124 Roberts, J. 2018, Existing activities of renewable/energy communities  - case studies. 
125 Roberts, J. 2018, Existing activities of renewable/energy communities  - case studies. 

41 

 
 
 
 
 
 
                                                 
Coopem, Belgium 

As  a  part  of  its  Covenant  of  Mayors  commitments,  the  Belgian  city  of  Mouscron  set  up  a 
cooperative together with its citizens called ‘Coopem’ (Cooperative Energy of Mouscron). 
The majority of the cooperative is owned by the citizens while the city has a 15% share. The 
cooperative  aims  to  provide  attractive  solar  energy  investment  opportunities  to  its 
inhabitants. It helps households install solar PV on their roofs by advancing the payment of 
regional solar energy subsidies, which are otherwise paid over five years, and handling the 
technical  and  administrative  process  of  installation.  The  cooperative  also  targets  local 
businesses by offering them a leasing plan for solar PV panels and selling green certificates 
to finance the initial investments126.  

Repowering London, UK 

Repowering  London  is  a  not-for-profit  organisation  that  supplies  renewable  energy  while 
also  financing  energy  efficiency  measures  and  combating  energy  poverty  among  its 
customers. Through solar energy projects in social housing in Brixton, the organisation feeds 
part  of  its  electricity  to  the  grid  benefitting  from  feed-in  tariffs.  The  rest  of  the  electricity  is 
provided to the housing estates at discount prices in order to address the energy poverty of 
the  inhabitants.  In  addition,  20%  of  the  total  net  profits  are  invested  in  the  Community 
Energy  Efficiency  Fund  (CEEF),  which  promotes  and  finances  low-cost  energy  efficiency 
measures127.  

RE  cooperatives  are  also  testing  new  energy  service  activities  such  as  virtual 
mini-grids,  virtual  power  plants  and  energy  storage  as  well  as  the  use  of  new 
technologies such as blockchain for peer-to-peer energy trading128.  

3.5

 Lessons for energy cooperatives 

Energy  cooperatives  are  focused  on  providing  local  community  benefits  rather 
than  generating  profits  for  their  members,  which  is  almost  impossible  when 
competing  with  larger  incumbent  companies  on  the  energy  market.  Like  other 
local  energy  ownership  models,  the  success  of  energy  cooperatives  is  greatly 
dependent  on  political  commitment  to  RES  development,  a  clear  legal 
framework at both EU and national level and access to financing (see section 2 
for  more  details).  The  illustrative  examples  of  energy  cooperatives  presented 
above  show  a  number  of  additional  lessons  that  can  be  useful  for  cooperative 
initiatives across the EU: 

  Cooperation  with  local  and  regional  authorities  (LRAs)  –  collaborating 
with  public  authorities  can  facilitate  the  access  to  finance  needed  for 
cooperative  investments  and  secure  wider  acceptance  and  support  for the 
cooperative projects. 

126 Energy Cities, Cities’ actions: Mouscron’s community energy model. 
127 REScoop, REScoop 20-20-20 Best practices, Report II, pp.21-23. 
128 Roberts, J. 2018, Existing activities of renewable/energy communities  - case studies. 

42 

 
 
 
 
 
 
 
                                                 
  Involvement  of  the  local  community  –  when  local  citizens  are  involved 
and/or  participate  in  the  cooperative,  they  are  not  only  more  likely  to 
support  the  activities  of  the  cooperative,  but  they  can  also  provide 
expertise and knowledge. 

  Starting small and keeping costs low  – before energy cooperatives invest 
in bigger projects, it might be a good idea to start with a smaller project or 
service  that  will  keep  the  costs  low  and  allow  the  cooperative  to  gain 
knowledge and expertise. 

  Exploring different funding options – energy cooperatives should explore 
all  available  incentives  for  RES  development  together  with  options  for 
public or private bank loans. 

  Exploring new opportunities – energy cooperatives should not be afraid to 
explore  new  opportunities  provided  by  technology  development  and 
emergence of new services. 

43 

 
 
 
 
 
 
4. Analysis of relevant EU legislation 

As  outlined  in  section  3.3,  the  most  relevant  EU  legislation  for  energy 
cooperatives  and  other  forms  of  local  energy  communities  are  the  energy 
legislation and the State aid guidelines. As we are reaching the deadline for the 
EU  2020  climate  and  energy  framework  and  the  2020  targets,  EU  energy 
legislation is undergoing a revision process. While providing a brief analysis of 
the current provisions, the rest of this section focuses primarily on the proposals 
for  updates  of  the  EU  energy  legislation  that  are  likely  to  influence  the 
development of local energy ownership models for years to come. 

4.1

 Current legislation 

The RED (Directive 2009/28/EC) and the EED (Directive 2012/27/EU) are two 
key  instruments  for  implementing  the  EU  2020  climate  and  energy  policy 
framework. Together they promote the overall development of renewable energy 
and  investments  in  energy  efficiency  and  can  thus  stimulate  the  emergence  of 
RE  or  other  energy  cooperatives.  Nevertheless,  they  do  not  currently  contain 
specific  provisions  for  energy  communities  or  cooperatives.  The  RED 
acknowledges the role of small and medium-sized enterprises and the emerging 
roles  for  consumers  and  requires  Member  States  to  ensure  simplified 
authorisation  procedures  for  smaller  RE  installations129.  The  EED  requires 
Member  States  to  encourage  simplified  authorisation  procedures  for  micro-
cogeneration  units  for  individual  citizens  and  installers130.  Both  directives 
promote  the  development  of  information,  awareness-raising,  guidance  and 
training  programmes  for  citizens  on  the  benefits  and  practicalities  of  installing 
RE  and  undertaking  energy  efficiency  measures  and  generally  foresee  both 
participative and leadership roles for LRAs. However, none of the two directives 
explicitly  recognise  prosumers  or  energy  communities  or  provides  a  definition 
or  guidelines  on  what  they  are,  which  is  a  significant  gap  in  the  current  EU 
legislation131. 

This  lack  of  specific  treatment  of  community  energy  at  the  EU  level  and  its 
common  inclusion  under  the  umbrella  of  ‘small’  projects  result  in  an 
unfavourable framework for the development of community energy. On the one 
hand, the lack of a common understanding of what community energy is results 

129 RED, recitals 43, 54 and Article 13.  
130 EED, Article 15. 
131 Community Power and Client Earth, 2015, Promoting citizen participation in the energy transition: 

recommendations for an EU legal framework to support community energy. 

45 

 
 
 
 
 
 
                                                 
lack  of 
in  fragmented  national  regulatory  frameworks  and  a  general 
understanding  what  the  needs  of  energy  communities  are  (e.g.  for  access  to 
finance, connection to the grid, administrative burden).  On the other hand, the 
oversimplification  of  ‘small’  RE  projects  leads  energy  communities  with 
installed capacity above a certain threshold to experience additional difficulties 
and lack of support (e.g. larger projects may not be eligible for feed-in tariffs)132. 

The  IEM  directives  (Directives  2009/72/EC  for  electricity  and  2009/73/EC  for 
natural gas) are some of the main instruments for implementing the IEM policy 
across  the  EU.  They  outline  common  rules  for  the  market,  for  example,  on 
access  to  the  distribution  networks,  balancing  obligations  and  permitting  of 
energy  suppliers. However, they  have  been  criticised  for  not  being  sufficiently 
aligned with the decarbonisation agenda and the specific needs and features of 
RES. The rules of the IEM directives can negatively affect some new, smaller or 
non-traditional energy system actors resulting in their exclusion from the energy 
market. For instance, the principles of equality and non-discrimination can result 
in contradictory treatment and eventual exclusion of energy community projects. 
The  principle  of  non-discrimination  suggests  that  all  potential  ‘system  users’ 
have the right to non-discriminatory access to the energy system. The principle 
of equality implies that similar network users are treated similarly and generally 
aims  to  prevent  groups  or  companies  from  preventing  the  entrance  of 
competitors on the market. Therefore, acknowledging that energy communities 
are  different  types  of  actors  and  are  in  sufficiently  different  positions  or 
situations  than  traditional  energy  market  actors,  would  result  in  their  equal 
treatment, through special measures to overcome the unique barriers they face, 
being  deemed  discriminatory.  Community  energy  is  sufficient  distinct  from 
traditional energy market participants and can thus warrant different treatment in 
accessing the grid133.  

In addition, the State aid guidelines (Communication  2014/C 200/01134) aim to 
ensure fair competition across the internal market by preventing Member States 
that  distort 
from  providing  economic  advantages 
competition. Even though some support mechanisms for renewable energy can 
be  compatible  with  competition  in  the  internal  market,  EU  policy  makers  are 
moving  towards  market-based  approaches  and  the  abolition  of  RE  subsidies. 
The latest ‘Guidelines on State Aid for Environmental Protection and Energy’135 

to  certain  activities 

132  Community  Power  and  Client  Earth,  2015,  Promoting  citizen  participation  in  the  energy  transition: 

recommendations for an EU legal framework to support community energy. 

133  Community  Power  and  Client  Earth,  2015,  Promoting  citizen  participation  in  the  energy  transition: 

recommendations for an EU legal framework to support community energy. 

134  European  Commission,  2014,  Guidelines  on  State  aid  for  environmental  protection  and  energy  2014-2020 

(2014/C 200/01), 28.6.2014. 

135  European  Commission,  2014,  Guidelines  on  State  aid  for  environmental  protection  and  energy  2014-2020 

(2014/C 200/01), 28.6.2014. 

46 

 
 
 
                                                 
tariffs 

linked 

that  are  not 

to  market  prices136.  This 

favour competitive bidding processes that are open to all energy producers based 
on non-discrimination and technology neutrality, and therefore discourage fixed 
feed-in 
trend 
disproportionately affects community energy projects that have limited financial 
resources and rely on stable and long-term support for their steady cash flows. 
While  allowing  for  some  exemptions  concerning  small-scale  RE  installation  is 
seen  as  positive,  it  does  not  adequately  reflect  the  scope of  community  energy 
and might exclude community projects above a certain threshold. The limitation 
to  provide  either  investment  or  operating  aid,  but  not  both,  can  be  good  for 
limiting the support received by large RE projects. However, it could be a hurdle 
for  community  energy  projects  that  face  challenges  both  at  the  inception/ 
planning and operation phases. In addition, local energy communities might face 
difficulties adequately participating in a competitive bidding process due to their 
limited  financial  and  human  resources  and,  in  many  cases,  lack  of  choice  of 
location for their projects137. 

Even  though  the  current  legislative  framework  can  foster  the  development  of 
community  energy  projects  as  part  of  the  overall  energy  transition,  it  does  not 
explicitly  recognise  their  role  and  specific  needs138.  For  instance,  energy 
cooperatives  do  not  aim  to  generate  profits  and  might  face  challenges  in 
accessing  finance,  while  stringent  rules  about  access  to  the  grid  may  make  it 
more  costly  for  them  to  sell  their  energy.  All  these  aspects  necessitate  that 
energy cooperatives are supported and offered incentives, which may be not in 
line with the State aid guidelines139. Therefore, the different instruments of the 
EU  energy  policy  (RED,  EED,  IEM)  and  the  state  aid  guidelines  should  be 
consistent and focused on addressing the specific barriers non-traditional market 
actors  (e.g.  cooperatives,  housing  associations,  energy  service  companies, 
prosumers) can face140. 

136 Community Power and Client Earth, 2015, Promoting citizen participation in the energy transition: 

recommendations for an EU legal framework to support community energy. 

137 Community Energy, 2014, Response to Consultation on draft guidelines on environmental and energy aid for 

2014-2020. 

138 Roberts, J, Bodman, F and Rybski,R 2014. Community Power: Model Legal Frameworks for Citizen-owned 

Renewable Energy. 
139 Interview with REScoop. 
140 Community Power and Client Earth, 2015, Promoting citizen participation in the energy transition: 

recommendations for an EU legal framework to support community energy. 

47 

 
 
 
 
                                                 
4.2

 Post-2020 outlook  

The ongoing revision of the EU energy legislation141 in view of its 2030 climate 
and energy commitments and the implementation of the Energy Union offer an 
opportunity  to  define  a  clearer  role  and  framework  for  the  participation  of 
energy  communities  in  the energy  system.  While  all  proposals  can  affect local 
energy communities, the most relevant proposals are those for a new RED and 
new IEM Directive for electricity. 

The proposal for a new RED (COM(2016) 767 final142) contains provisions that 
aim  to  facilitate  the  participation  of  individual  prosumers  and  energy 
communities in the energy system. For example, it promotes the establishment 
of  ‘one-stop-shops’  for  the  permitting  procedures  for  RES  projects  and  time 
limits  for  the  maximum  period  the  permitting  process  takes  (Art.  16),  together 
with  a  simple  notification  to  Distribution  System  Operators  (DSOs)  for  small 
RE projects (Art. 17). In addition, the new RED strives to enable consumers to 
produce  and  self-consume  energy  individually  or  collectively  (e.g.  in  multi-
apartment  buildings)  and  ensure  they  are  remunerated  for  the  power  they  feed 
into  the  grid  (Art.  21),  it  also  provides  a  definition  for  a  ‘renewable  energy 
community’  and  empowers  energy  communities  to  participate  in  the  energy 
market (Art. 22)143.  

The  proposal  for  a  new  IEM  Directive  for  electricity  (COM(2016)  864 
final/2144)  recognises  the  role  energy  communities  can  have  in  the  energy 
transition, provides a general definition of a ‘local energy community’ (Art. 2, 
for  full  definition  see  section  1)  and  requires  that  Member  States  provide  an 
enabling  framework  and  ensure  that  local  energy  communities  have  access  to 
the energy system (Art. 16)145.  

In  June  2018,  the  European  Council  and  the  European  Parliament  reached  an 
agreement  about  the  final  text  of  the  revised  RED146  and  now  the  Directive  is 

141 European Commission, 2016, Commission proposes new rules for consumer centred clean energy transition: 

https://ec.europa.eu/energy/en/news/commission-proposes-new-rules-consumer-centred-clean-energy-
transition (accessed 17 July 2018). 

142 European Commission, 2016, Proposal for a Directive on the promotion of the use of energy from renewable 

sources (recast), COM(2016) 767, final. 

143 European Commission, 2016, Proposal for a Directive on the promotion of the use of energy from renewable 

sources (recast), COM(2016) 767, final. 

144  European  Commission,  2017,  Proposal  for  a  Directive  of  the  European  Parliament  and of  the  Council    on 

common rules for the internal market in electricity,  COM(2016) 864 final/2. 

145  European  Commission,  2017,  Proposal  for  a  Directive  of  the  European  Parliament and of  the  Council    on 

common rules for the internal market in electricity,  COM(2016) 864 final/2, p.52 and pp. 68-69. 

146 European Council, 2018,  Renewable energy: Council confirms deal reached with the European Parliament, 

Press Release 417/18, 27/06/2018. 

48 

 
 
 
 
 
                                                 
ready  for  formal  adoption147.  However,  the  trilogue  or  inter-institutional 
negotiations  concerning  the  new  IEM  Directive  for  electricity  only  started  in 
June 2018148. The following sections discuss in more detail the main provisions 
in these proposals that can affect local energy communities together with the key 
positions of relevant stakeholders. 

4.2.1

 Acknowledging local energy communities and prosumers 

These two proposals are welcomed by stakeholders and constitute key pieces of 
legislation  for  the  development  of  local  energy  communities  and  prosumers  in 
the  post-2020  framework.  They  recognise  the  role  of  citizens,  consumers  and 
energy  communities  in  the  energy  system  and  outline  specific  definitions  and 
actions  to  promote  their  role.  Complementing  the  more  general  definition  of  a 
‘local energy community’ in the proposal for a new IEM Directive for electricity 
with  a  more  specific  ‘renewable  energy  community’  definition  in  the  proposal 
for a new RED will ensure a common understanding of what a RE community 
is. This will allow a level-playing field across the EU and can stimulate Member 
States  that  do  not  have  specific  definitions  or  provisions  on  the  topic  to  adopt 
some. Additionally, defining very concrete conditions for what constitutes a RE 
community  will  prevent  abuse  from  any  pseudo-local  energy  communities  or 
energy cooperatives149.  

The definition of a ‘renewable energy community’ outlined in the Commission 
proposal for a new RED (Art. 22) is: 

‘an SME or a not-for-profit organisation, the shareholders or members of 
which  cooperate  in  the  generation,  distribution,  storage  or  supply  of 
energy from renewable sources, fulfilling at least four out of the following 
criteria: 

(a)  shareholders  or  members  are  natural  persons,  local  authorities, 
including  municipalities,  or  SMEs  operating  in  the  fields  or  renewable 
energy; 

(b) at least 51% of the shareholders or members with voting rights of the 
entity are natural persons; 

147  European  Parliament,  2018,  Legislative  Train  Schedule:  Resilient  Energy  Union  with  a  Climate  Change 
Policy, JD - Review of the Renewable Energy Directive 2009/28/EC to adapt it to the EU 2030 climate and 
energy targets, 20 July 2018. 

148  European  Parliament,  2018,  Legislative  Train  Schedule:  Resilient  Energy  Union  with  a  Climate  Change 
Policy, JD - Review of directive 2009/72/EC on common rules for the internal market in electricity focusing 
on consumers' role, 20 July 2018. 

149 REScoop, 2017, What local energy communities need from clean energy package. 

49 

 
 
 
 
 
 
 
                                                 
(c)  at  least  51%  of  the  shares  or  participation  rights  of  the  entity  are 
owned  by  local  members,  i.e.  representatives  of  local  public  and  local 
private socio-economic interests or citizen having a direct interest in the 
community activity and its impacts; 

(d) at least 51% of the seats in the board of directors or managing bodies 
of  the  entity  are  reserved  to  local  members,  i.e.  representatives  of  local 
public  and  local  private  socioeconomic  interests  or  citizens  having  a 
direct interest in the community activity and its impacts; 

(e)  the  community  has  not  installed  more  than  18  MW  of  renewable 
capacity  for  electricity,  heating  and  cooling  and  transport  as  a  yearly 
average in the previous 5 year’150. 

Nevertheless, the  CoR believes that  the definition should cover not only ‘local 
authorities’ but also ‘regional or local authorities’ and that the threshold for the 
size  of  the  energy  production  of  RE  communities  should  not  be  too  restrictive 
and propose that the definition allows 30 MW of renewable capacity instead of 
18  MW151.  In  its  opinion  on  the  revision  of  the  RED,  the  EESC  stresses  the 
importance of having clear and coherent definitions of energy communities and 
prosumers  across  the  different  legislative  documents.  In  addition,  the  EESC 
emphasises  the  need  for  clear  rules  about  the  activities  of  local  energy 
communities and prosumers, including simplified procedures for power storage, 
trading  and  self-consumption  as  a  way  of  ensuring  their  full  access  to  the 
market, and calls for the current state aid rules to be updated accordingly152. 

Moreover, the coherence between  the different definitions across the proposals 
can be improved to ensure RE communities are a sub-category of local energy 
communities and reflect the fact that local energy communities can also provide 
energy  saving  and  energy  efficiency  services153  and  storage154.  In  addition,  the 
general definition should be clarified to ensure local energy communities have a 
level playing field to participate in all aspects of the energy system (i.e. not only 
energy  production  but  also  the  possibility  to  own  and  operate  distribution 
networks  and/or  community  networks)155.  The  general  definition  should  also 
highlight  the  fact  that  local  energy  communities  aim  to  provide  local  social, 

150 European Commission, 2016, Proposal for a Directive on the promotion of the use of energy from renewable 

sources (recast), COM(2016) 767, final, pp. 87-88. 

151 European Committee of the Regions, 2017, Renewable energy and the internal market in electricity, Opinion: 

CDR 832/2017, Amendment 18. 

152 European Economic and Social Committee, 2017, Revision of the Renewable Energy Directive TEN/622. 
153 REScoop, 2017, What local energy communities need from clean energy package. 
154 REScoop, 2017, The Market Design Initiative: creating a space for local energy communities. 
155 Energy Cities and REScoop, 2018, Committee of the Regions Opinion: Stakeholders consultation: "Models of 

local energy ownership". 

50 

 
 
 
 
 
                                                 
economic and environmental benefits and not merely profit driven156. 

The  new  RED  proposal  also  aims  to  outline  some  general  principles  for 
promoting  local  energy  communities.  Setting  up  ‘one-stop-shops’  for  the 
permitting  procedures  for  RES  projects  as  proposed  in  the  new  RED  is  a 
significant  improvement  that  can  reduce  the  administrative  burden  faced  by 
individual  prosumers  or  local  energy  communities,  especially  if  implemented 
properly at the national level. The proposal for a new RED also aims to ensure 
that RE communities are considered in the development of tenders and bidding 
processes. In order to be effective, the proposal should be clarified and require 
Member  States  to  ensure  RE  communities  can  benefit  from  available  support 
schemes (e.g. by designing tendering processes that take into account the special 
feed-in 
circumstances  of  small  bidders,  providing  direct  access 
tariffs/premiums  or  reduced  participation  criteria  and  adding  local  benefit 
requirements to competitive bidding)157. 

to 

The new RED text agreed by the Council and Parliament in June 2018 largely 
keeps the key provisions for the promotion of local energy communities (‘one-
stop shops’ and simple notification procedures to DSOs) while providing further 
details  and  rules  about  their  implementation.  The  agreed  text  also  contains  a 
revised definition: 

‘”renewable energy community” means a legal entity; 

i.  which,  according  to  applicable  national  law,  is  based  on  open  and 
voluntary  participation,  is  autonomous,  and  is  effectively  controlled  by 
shareholders  or  members  that  are  located  in  the  proximity  of  the 
renewable energy projects owned and developed by that community; 

ii. whose shareholders or members are natural persons, local authorities, 
including municipalities, or SMEs; 

iii.  whose  primary  purpose  is  to  provide  environmental,  economic  or 
social  community  benefits  for  its  members  or  the  local  areas  where  it 
operates rather than financial profits’158. 

Compared  to  the  original  definition  proposed  by  the  Commission,  the  text 
resulting  from  the  inter-institutional  negotiations  is  clearer  concerning  the  role 

156 REScoop, 2017, The Market Design Initiative: creating a space for local energy communities. 
157 REScoop, 2017, What local energy communities need from clean energy package. 
158  European  Council,  2018,  Proposal  for  a  Directive  of  the  European  Parliament  and  of  the  Council  on  the 
promotion of the use of energy from renewable sources-Analysis of the final compromise text with a view to 
agreement, Interinstitutional File: 2016/0382 (COD), p.55. 

51 

 
 
 
 
 
 
 
 
                                                 
of  RE  communities  to  provide  broader  community  benefits  but  lacks  clarity 
concerning  their  ‘local’  ownership  and  explicit  recognition  of  ‘regional’ 
authorities. Nevertheless, the provisions of Article 22 now clarify the activities, 
in  which  RE  communities  can  participate,  and  state  that  Member  State  ‘shall 
ensure  that  renewable  energy  communities  are  entitled  […]  to  generate, 
consume,  store  and  sell  renewable  energy,  including  through  power  purchase 
agreements’ and ‘carry out an assessment of the existing barriers and potential 
of development of renewable energy communities in their territories’159. 

A  key  condition  going  forward  is  ensuring  coherence  between  the  definitions 
and  provisions  in  the  RED  and  the  new  IEM  Directive  for  electricity.  For 
instance, some stakeholders propose that the general definition of ‘local energy 
communities’  in  the  new  IEM  Directive  for  electricity  is  clearer  about  the 
different  governance  structure  of  such  communities  compared  to  traditional 
market  actors  and  their  purpose  to  empower  citizens.  At  the  same  time  the 
definition of ‘active customers’ should clarify the activities in which customers 
can participate160. The latter need is also stressed by the EESC in its opinion on 
electricity market design, which advocates for all consumers to have a right to 
generate, store and trade energy while local energy communities have a right to 
support, develop or rent community networks161. 

4.2.2

 Electricity market design 

A  key  gap  in  the  EU  legislation  is  the  lack  of  recognition  that  citizens  and 
energy communities have a distinct legal and factual situation than other market 
participants.  Having  to  operate  under  regulatory  frameworks  designed  for  a 
centralised  energy  system  with  large  energy  companies  and  being  treated  as 
large  incumbent  energy  companies  has  resulted  in  both  explicit  and  implicit 
disadvantage for energy communities. Therefore, the different instruments of the 
EU legislation should be coherent and ensure that the specific needs of energy 
communities are recognised so they can benefit from proportionate and different 
treatment when necessary and do not meet implicit barriers to their participation 
in  the  energy  transition.  For  example,  citizens  and  small  RE  producers 
(including  energy  communities  when  relevant)  should  be  exempted  from 
licensing,  permitting  and  other 
balancing 

responsibility,  cumbersome 

159  European  Council,  2018,  Proposal  for  a  Directive  of  the  European  Parliament  and  of  the  Council  on  the 
promotion of the use of energy from renewable sources-Analysis of the final compromise text with a view to 
agreement, Interinstitutional File: 2016/0382 (COD), pp.97-98. 

160  Energy  Cities  and  REScoop,  2018,  The  new  energy  market  design:  how  the  EU  can  support  energy 

communities and citizens to participate in the energy transition. 

161 European Economic and Social Committee, 2017, Electricity Market Design, Opinion TEN/625. 

52 

 
 
 
 
                                                 
administrative requirements, auctions or tenders for RE support162.  

The proposal for a new IEM Directive for electricity provides an opportunity to 
bring  clarity  and  promote  the  role  of  local  energy  communities  further.  The 
inter-institutional  negotiations  of  the  draft  text  started  in  June  2018.  In  its 
starting  position,  the  European  Parliament  stresses  the  need  to  empower 
citizens’ participation in the energy system while also integrating a larger share 
of  RES  and  prosumers  in  the  electricity  system.  It  calls  for  the  provision  of 
incentives  and  market  conditions  for  energy  storage  (including  smart  grids), 
participation of RES in balancing services and phasing out of support for mature 
RES163.  The  general  approach  agreed  by  the  European  Council  focuses  on  the 
needs to avoid cross-subsidies and discrimination of market participants, install 
smart  meters,  develop  storage  facilities  and  define  the  role  of  energy 
communities164. In its opinion on the new RED and IEM policy documents, the 
CoR stresses the importance of LRAs in supporting consumers’ participation in 
the energy system, the need for local energy communities to operate under clear 
rules and consumers to participate in demand responses165. The EESC calls for 
consumer  participation 
in  electricity  and  for  energy 
communities to operate as a basic supplier166.   

include 

trade 

to 

According  to  other  stakeholders,  the  proposal  for  a  new  IEM  Directive  for 
electricity  should  ensure  the  common  rules  for  the  electricity  market  open  the 
possibility  for  energy  communities  to  own,  operate  or  manage  energy 
infrastructure  such  as  local  distribution  networks  or  ‘micro-grids’.  More 
specifically, there is an opportunity to revise  Article 15 on active customers to 
clearly  define  the  right  of  active  customers  to  participate  in  different  activities 
across the energy system including self-consumption, demand response, storage 
and  energy  efficiency167.  Article  16  on  local  energy  communities  of  the 
proposed Directive should be clarified concerning the practical implementation 
of the provisions of the Directive in relation to these communities. In addition, 
existing rules for priority access and dispatch of RE should be maintained rather 
than abolished as proposed. Furthermore, small RE producers should be allowed 
to bundle small loads and generation into bigger units or virtual power plants for 

162 Energy Cities and REScoop, 2018, Committee of the Regions Opinion: Stakeholders consultation: "Models of 

local energy ownership". 

163 European Parliament, 2018, Common rules for the internal electricity market, Briefing. 
164  European  Council,  2017,  A  more  competitive  and  consumer-oriented  internal  electricity  market  –  Council 

reaches general approach, Press Release 807/17, 18/12/2017. 

165 European Committee of the Regions, 2017, Renewable energy and the internal market in electricity, Opinion: 

CDR 832/2017, Amendments 23-25. 

166 European Economic and Social Committee, 2017, Electricity Market Design, Opinion TEN/625. 
167  Energy  Cities  and  REScoop,  2018,  The  new  energy  market  design:  how  the  EU  can  support  energy 

communities and citizens to participate in the energy transition. 

53 

 
 
 
                                                 
sale on the market as a way to guarantee their market access168 169.  

So  far,  there  is  no  proposal  for  revising  the  State  aid  guidelines  after  2020. 
However,  when  this  happens,  the  guidelines  should  be  carefully  reviewed  to 
ensure  they  adequately  address  the  needs  of  local  energy  communities  and  are 
coherent with the provisions agreed in the EU energy legislation. 

168 REScoop, 2017, The Market Design Initiative: creating a space for local energy communities. 
169 Energy Cities and REScoop, 2018, Committee of the Regions Opinion: Stakeholders consultation: "Models of 

local energy ownership". 

54 

 
 
 
                                                 
5. Conclusions and recommendations 

Even though most Member States do not have specific provisions for promotion 
of  local  energy  communities,  different  forms  of  local  energy  ownership  (e.g. 
energy  cooperatives)  have  emerged  and  are  developing  across  the  EU.  Local 
energy  communities  can  offer  a  variety  of  benefits  to  the  local  community  – 
from strengthened ownership and democratic participation in the energy market, 
to  economic  and  environmental  benefits  for  the  local  community  and  wider 
national  or  EU  level.  Nonetheless,  local  energy  communities  face  a  variety  of 
challenges  that  can  impede  their  operation  and  prevent  the  realisation  of  the 
local benefits, these challenges include: 

  Conflicting  policy  priorities  at  different  political  levels  and  changing 

policies (e.g. investment incentives, support schemes); 

  Market design rules that can discriminates against smaller actors and limit 

the ownership of local energy infrastructure;  

  Lack  of  coherent  national  strategies  and  approaches  for  supporting 

community energy;  

  Complex administrative and regulatory frameworks for new energy market 

participants; 

  Lack  of  sufficient  guidance  and  access  to  finance  for  local  energy 

communities170. 

Therefore, the successful development of local energy ownership models in the 
EU will depend on: 

  Stable  policies  and  political  support  for  renewable  energy  and  energy 

transition171: 

o  Stable  policies  and  financial  support  mechanisms  for  RE  (e.g  tax 

incentives, feed-in tariffs); 

o  Rules that guarantee equal/non-discriminatory access to markets for 
local energy communities, not only for RE generation but also, for 
example, on ownership and management of energy infrastructure. 

170 Roberts, J. 2018, Energy communities in Europe: inspiring examples of citizen and municipal ownership & 
cooperation, presentation at the Committee of the Regions: Stakeholders Consultation on “Models of Local 
Energy Ownership”. 

171 Based on the analysis in sections 2 and 3. 

55 

 
 
 
 
 
 
 
 
                                                 
  Targeted promotion of local energy communities: 

o  Acknowledgment  in  policies  and  legislation  of  their  role  and 

specific needs;  

o  Establishment  of  rules/policies  (e.g.  public  procurement)  that 

promote local collaboration; 

o  Adoption  of 

simplified  and  proportionate 

regulatory  and 

administrative procedures; 

o  Easier access to technical information, guidance and finance172. 

Building upon these findings and the analysis carried out in this report, the rest 
of  this  section  outlines  a  set  of  recommendations  for  policy-makers  to  support 
the  development  of  local  energy  communities.  To  the  extent  possible  specific 
recommendations are provided for EU, national or local policy-makers. 

5.1

 EU policy-makers 

Even though the success of EU energy policy depends to a large  extent on the 
transposition and implementation by the Member States,  EU legislation has an 
important  role  for  setting  a  level-playing  field  and  minimum  requirements  for 
the  promotion  of  local  energy  communities  and  leading  by  example.  While 
remaining flexible and allowing a variety of national approaches, EU legislation 
should  also  ensure  local  energy  communities  are guaranteed  minimum  support 
and a stable regulatory environment. 

5.1.1

 Maintain  a  stable  policy  environment  for  promotion  of 
renewable energy 

As evidenced by the examples in this report, local energy communities are often 
engaged  in  the  production  and  sale  of  RE.  In  order  to  address  the  lack  of 
sufficient  finance  and  the  risks  in  running  their  activities,  local  energy 
communities rely to a significant extent on public support mechanisms for RE. 
Therefore,  policy-makers  should  maintain  a  stable  policy  framework  for  the 
promotion of RE, especially concerning financial support. With the latest  State 
aid guidelines EU policy-makers are signalling a move away from non-premium 
based and market-independent support mechanisms (e.g. fixed feed-in tariffs) to 
more market-based support schemes and bidding processes, which might reduce 

172 Roberts, J. 2018, Energy communities in Europe: inspiring examples of citizen and municipal ownership & 
cooperation, presentation at the Committee of the Regions: Stakeholders Consultation on “Models of Local 
Energy Ownership”. 

56 

 
 
 
 
 
 
 
 
                                                 
their  feed-in 

the  financial  resources  available  to  local  energy  communities  or  completely 
exclude them from the market through complicated requirements in the bidding 
processes. Unsurprisingly, some Member States have consequently abolished or 
tariffs  or  other  mechanisms  for  supporting  RE. 
reduced 
Considering the EU commitments under the Paris Agreement and its ambitious 
2030 and 2050 climate and energy policy goals, EU policy-makers should set an 
energy  policy  framework  supporting  this  ambition  that  allows  and  encourages 
Member States to promote the development of RE in their territories. While the 
design of the specific support mechanisms remains a national competency, EU 
legislation  and  policy  should  not  limit  the  possibilities  for  Member  States  to 
continue  supporting  RE  with  both  market  based  and  market  independent 
financial support measures. To the extent possible the EU legislation should set 
a  framework  that  does  not  allow  retroactive  or  retrospective  changes  to  the 
support schemes for RE173.  

5.1.2

 Establish  energy  market  rules  that  can  support  an  energy 
transition in all aspects of the system 

The proposals under the new clean energy package, including the proposals for a 
new IEM Directive for electricity and a new RED, are significant improvements 
to the current EU legislative framework. They recognise the importance of local 
energy  communities  and  aim  to  guarantee  their  participation  in  the  energy 
system not only as producers of energy but also as DSOs. While this is a good 
basis, the provisions should be clarified further to ensure consistent and effective 
implementation by the Member States. In addition, the rules should be expanded 
to cover the variety of services local energy communities provide such as energy 
efficiency  and  energy  savings,  storage,  management  of  local  distribution 
networks,  aggregation  and  flexibility  services.  Furthermore,  the  rules  and 
corresponding  administrative  procedures  should  be  simplified  as  much  as 
possible  for  small  RE  producers  and  local  energy  communities  to  ensure  that 
explicit or implicit administrative burdens and costs do not discriminate against 
these  market  participants  when  they  want  to  perform  activities  usually 
undertaken  by  large  energy  companies  (e.g.  network  management,  balancing). 
The  rules  should  also  not  limit  the  possibilities  for  small  individual  RE 
capacities or local energy communities to aggregate their production and supply 
energy as a bigger unit, including through the use of novel approaches such as 
virtual power plants. 

173 Roberts, J. 2016, Prosumer Rights: Options for a legal framework post-2020. 

57 

 
 
 
 
 
                                                 
Ensure consistency and coherence between different policies 

While  related,  the  conditions  for  promotion  of  renewable  energy  and  the  rules 
for  the  IEM  are  not  set  under  the  same  policy  instruments.  Hence,  it  is 
paramount that the provisions in different EU legislative documents are coherent 
in  their  treatment  and  promotion  of  local  energy  communities  and  do  not 
provide  contradictory  rules.  For  instance,  the  definitions  for  ‘local  energy 
community’  proposed  in  the  new  IEM  Directive  for  electricity  and  for 
‘renewable  energy  community’  put  forward  in  the  new  RED  should  be 
streamlined and coordinated to ensure RE communities are an example or sub-
category  of  local  energy  communities,  which  can  in  turn  perform  a  variety  of 
services  (as  outlined  in  the  previous  recommendation).  Moreover,  the  relevant 
EU  energy  legislation  should  acknowledge  the  specific  features  and  needs  of 
local  energy  communities  and  allow  for  special  treatment  and  support  where 
relevant. This should be adequately reflected by the EU state aid guidelines. 

5.2

 National policy-makers 

In addition to transposing EU legislation and implementing the common energy 
policy, national policy-makers can define more specific national objectives and 
incentives for local energy communities. 

5.2.1

 Acknowledge  the  role  and  specific  needs  of  local  energy 
communities in relevant national policies and legislation 

Important  steps  have  been  taken  for  recognising  the  role  of  local  energy 
communities in the energy transition at the EU level through the definitions and 
provisions in the clean energy package proposals. Member States should follow 
suit  and  adopt  similar  definitions  and  provisions  about 
local  energy 
communities.  What  is  more,  national  policy-makers  might  assess  the  potential 
contribution  of  such  communities  in  meeting  the  national  energy  policy  goals 
(e.g.  for  RE  or  energy  efficiency)  and  define  concrete  objectives  for  the 
community energy. This can act as a driver for the creation and growth of local 
energy communities, especially in Member States where they are less common. 
Nevertheless,  national  policy-makers  should  be  careful  not  to  propose 
definitions or objectives that are too restrictive and may exclude some types of 
individual producers and consumers and local energy communities. 

58 

 
 
 
 
 
 
 
 
 
5.2.2

 Establish  policies  and  rules 
communities and local collaboration 

that  promote 

local  energy 

Together  with  defining  objectives  for  community  energy,  which  can  signal  a 
strong political commitment and stability of the regulatory framework, national 
policy-makers can establish specific policies/rules for promotion of local energy 
communities. These rules can take different forms and target various aspects of 
the  local  energy  ownership  models.  For  instance,  the  local  aspect  can  be 
promoted  by  setting  some  minimum  requirements  about  the  location  of  the 
citizens,  cooperatives  or  other  owners  of  community  energy  projects  or  by 
defining  some  guidelines  about  the  location  of  the  projects  themselves.  Rules 
can also be defined about the potential benefits to ensure they remain within the 
local  community  and  support  the  social  and  economic  development  of  the 
community  rather  than  shareholders  of  the  projects.  Furthermore,  national 
policies  can  also  incentivise  the  sustainability  and  environmental  aspects  of 
community energy projects by, for instance, providing financial incentives (e.g. 
tax  relief,  investment  aid)  or  reductions  in  the  energy  charges.  They  can  also 
provide  additional  incentives  for  projects  that  are  self-sufficient174  or  provide 
multiple  services  and  benefits  such  as  RE  provision  combined  with  storage, 
energy efficiency or measures for addressing energy poverty.  

5.2.3

 Adopt 
regulatory 
administrative procedures for local energy communities 

proportionate 

simplified 

and 

and 

Administrative burdens and restrictive procedures and bureaucratic requirements 
can be significant barriers to the development local energy communities as they 
can  pose  extra  costs  and  strain  the  limited  human  and  financial  resources  of 
local  energy  communities.  Therefore,  national  policy-makers  should  offer 
simplified  and  proportionate  administrative  procedures  for  small  RE  projects 
(e.g. led by individual citizens) and local energy communities. The requirements 
for  setting  up  ‘one-stop-shops’  for  the  permitting  procedures  for  RES  projects 
proposed in the new RED are an important basis upon which Member State can 
build  solutions  tailored  to  their  national  context.  An  important  aspect  that 
Member  State  need  to  address  in  this  regard  are  also  the  waiting  times  and 
duration of the various administrative procedures, which, if too long, can deter 
new  local  energy  communities  from  undertaking  any  activities.  Moreover,  RE 
communities  should  not  be  required  to  participate  in  competitive  bidding 
processes to receive operating support175. 

174 Roberts, J, Bodman, F and Rybski,R 2014. Community Power: Model Legal Frameworks for Citizen-owned 

Renewable Energy. 

175 Roberts, J, Bodman, F and Rybski,R 2014. Community Power: Model Legal Frameworks for Citizen-owned 

Renewable Energy. 

59 

 
 
 
 
                                                 
5.2.4

 Ensure  local  energy  communities  have  access  to  technical 
information, guidance and finance 

As evidenced by the examples in this report successful local energy community 
projects and energy cooperatives secured and widely used the financial options 
available  to  them,  be  they  public  support  systems  or  finance  available  through 
EU  initiatives  or  commercial  banks.  National  policy-makers  can  set  up 
dedicated  finance  support  schemes  for  local  energy  communities,  to  especially 
help them during the planning and set-up project phases. Such mechanisms can 
be e.g. grant-to-loans, guarantees or cheap credit opportunities176. Additionally, 
national policy-makers should facilitate the access of local energy communities 
to technical information and guidance about setting up, financing and operating 
community projects. 

5.3

 Local and regional authorities 

LRAs can complement the EU and national policies for promoting local energy 
communities  with  further  initiatives  at  the  local  level.  LRAs  can  also  be 
important  partners  to  and  participants  in  different  local  energy  community 
models. 

5.3.1

 Adopt  local  policies  for  the  development  of  local  energy 
communities 

LRAs  can  complement  EU  and  national  policies  by  adopting  further  local 
objectives  for  the  contribution  of  local  energy  communities  to  local  energy 
targets.  For  instance,  many  cities  are  already  taking  part  in  the  Covenant  of 
Mayors  initiative  and  have  established  local  sustainable  energy  and  climate 
action  plans  (SECAPs).  The  preparation  of  the  SECAPs  is  supported  by 
guidance  documents,  advice  and  good  practice  examples  provided  by  the 
Covenant  of  Mayors.  Even  though  the  guidance  documents  do  not  explicitly 
focus  on  local  energy  communities,  they  emphasise  the  importance  of  policies 
that foster the development of local energy projects, RES and energy efficiency 
and can provide examples of successful initiatives. Therefore, the SECAPs can 
motivate  LRAs  to  adopt  policies  for  the  development  of  RE  and  energy 
efficiency investments at the local level. Local energy communities can in turn 
help implement and fulfil the SECAPs or similar action plans by contributing to 
the  share  of  renewable  energy  in  the  local  economy  or  providing  energy 

176 Roberts, J, Bodman, F and Rybski,R 2014. Community Power: Model Legal Frameworks for Citizen-owned 

Renewable Energy. 

60 

 
 
 
 
 
 
 
                                                 
local  energy 
efficiency  measures.  Hence,  LRAs  should 
communities can best contribute to meeting local energy goals (and other goals, 
such  as  social  policy  goals)  and  establish  mechanisms  that  support  their 
development, including advisory services or provision of financial support. 

identify  how 

5.3.2

 Explore  the  opportunities  to  partner  with  or  establish  local 
energy communities 

To strengthen the contribution of local energy communities to local policy goals 
LRAs  can  also  partner  with  existing  communities  or  establish  new  ones  in 
cooperation with local citizens. LRAs and local energy communities are suitable 
partners as LRAs can provide space for RE projects, administrative support and 
access  to  capital  at  preferential  rates,  while  local  energy  communities  can 
provide technical expertise and oversee the operation of the projects. In addition, 
as  seen  in  Germany,  LRAs  can  also  play  a  significant  role  in  the  energy 
transition  by  taking  on  more  responsibilities  for  the  local  energy  distribution 
networks by owning or managing them through subsidiary utility companies. 

61 

 
 
 
 
 
 
Annex 1: List of references 

All weblinks listed below were functional as of 17 July 2018. 

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70 

 
 
 
 
 
 
 
 
EN

ISBN 978-92-895-0989-3
doi:10.2863/603673

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