Legal and Policy
About this Aspect
Understanding the legal and policy aspects of energy communities is essential for ensuring their successful development and operation. This chapter will explore the regulatory frameworks, policies, and legal considerations that shape how energy communities function. By grasping these foundational elements, you will be better equipped to navigate the complexities of establishing and managing an energy community, ensuring compliance with laws, and maximizing the benefits of supportive policies. This knowledge is crucial for anyone involved in or considering participation in energy communities, as it provides the tools necessary to align with evolving regulations and contribute to sustainable energy transitions.
How Energy Laws Work in the EU
Regulations vs. Directives
In the European Union, there are two main types of legislation: the regulations and the directives. Once a regulation is proposed by the European Commission and accepted by the European Parliament and the European Council, each member state has to incorporate it into the national legislation. In the case of the directives, there are not so strict rules for the implementation as each member state can transpose the decisions differently while following the basic proposals.
Regarding community energy and energy communities, since most of the provisions are in directives there is a “loose” framework to transpose the decisions, meaning that not every country sets the same rules, or makes use of all the proposals provided in the directives.
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For example, Renewable Energy Communities (RECs) and Citizen Energy Communities (CECs) definitions have been provided in RED, however not all the member states have accepted them as forms of energy communities, providing the legal aspect. Also, energy communities are based on cooperative principles, but this doesn’t mean that each country has to accept and include in the legislation all these principles.
In order to check exactly what has been transposed from the directives, for each country, have a look at the transposition tracker a very valuable tool from REScoop.eu.
Key legislation in the European Union
OVERVIEW
In the European Union, several key legislations impact community energy and energy communities, supporting the EU’s objectives for decarbonisation, energy security, and a more inclusive energy system. Here are the most relevant EU legislations to be aware of.
Have a look at some key EU legislations.
The Renewable Energy Directive (RED II and RED III)
Description
The Renewable Energy Directive (RED II) establishes the framework for promoting renewable energy across the EU, aiming for at least 32% of the EU’s energy consumption to come from renewable sources by 2030. RED III, which is under discussion, will build upon and potentially update RED II’s provisions.
Key Provisions
Introduces the concept of Renewable Energy Communities (RECs), which allows citizens, local authorities, and small businesses to produce, consume, and sell renewable energy.
Provides support for community-based renewable energy projects, including the right to access and use the grid on fair terms.
RED III is expected to enhance these provisions and set more ambitious targets.
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Clean Energy for All Europeans Package
Description
This package, adopted in 2019, is a comprehensive set of legislative measures aimed at creating a more integrated and consumer-centric energy system.
Key Provisions
- Includes the Electricity Regulation and Electricity Directive, which focus on creating a more competitive and integrated electricity market.
- Emphasizes the role of citizen energy communities and the need for regulatory support for their development.
- Promotes fair competition and greater participation for local and community-based energy projects.
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European Green Deal
Description
The European Green Deal is the EU’s flagship strategy for achieving climate neutrality by 2050. It encompasses various legislative and policy measures aimed at reducing greenhouse gas emissions and promoting sustainability.
Key Provisions
- Sets ambitious targets for reducing emissions, increasing the share of renewables, and improving energy efficiency.
- Encourages the development of local and community-driven energy solutions as part of the transition to a greener energy system.
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Energy Efficiency Directive (EED)
Description
This directive focuses on improving energy efficiency across the EU, aiming to achieve at least a 32.5% improvement in energy efficiency by 2030.
Key Provisions
- Requires member states to implement measures that enhance energy efficiency, including those involving local and community energy initiatives.
- Supports energy efficiency in buildings, industry, and transport, which can benefit community-led projects that promote energy savings.
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Governance Regulation
Description
The Governance Regulation establishes a framework for the implementation of the EU’s climate and energy policies, including national energy and climate plans (NECPs).
Key Provisions
- Requires member states to develop and implement NECPs, which should include plans for integrating community energy and renewable energy projects.
- Encourages transparency and public participation in the development of national and local energy strategies.
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Electricity Sharing In Different Countries
Community energy and electricity sharing vary from country to country. The main purpose of these schemes are for the members of the community to be able to cover their electricity needs, but also incentivise the concurrence of production and consumption of energy among the members, so that the energy is not lost.
Below are some examples of the sharing schemes that South European countries use.
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Greece
Electricity sharing takes the form of virtual net metering. Consumption does not happen in real-time. Instead, the electricity produced is shared with the national grid and the production-to-consumption balance is calculated on a monthly billing basis.
Example of how virtual net metering works: At the end of a set period (usually each month), the total amount of electricity generated by the community’s project is measured. If an EC member has a 5% share in that RE project, 5% of the electricity produced by the generation plant is deducted from the total amount of electricity consumed and the member pays the supplier only for the remaining amount of electricity consumed.
Italy
Electricity sharing uses feed-in tariffs, not sharing as defined by EU legislation. Feed-in tariffs are a policy instrument to support investments in RES.
Feed-in tariffs are designed to provide a fixed-price incentive to guarantee a certain benefit for each unit of electricity produced over a long-term contract, typically 10 to 25 years. Today, feed-in tariffs are being phased out as renewable electricity is already fully competitive and its development does not need to be incentivised in this way.
Portugal
Electricity sharing is done through collective self-consumption scheme or renewable energy community (CER – Comunidade de Energia Renovável). The electricity generated is allocated to the points of consumption at 15-minute intervals and is then deducted from the customer’s consumption in their monthly bill.