How can managing authorities support the development of energy communities?
As the cohesion policy discussion continues, Member States have a unique opportunity to support the development of energy communities by creating supporting financing programs based on cohesion, and recovery funds.
On the 8th of July, CEE Bankwatch and REScoop.eu hosted a webinar for managing authorities looking to support energy communities at the national level. The event was support by Mathieu Fichter of the European Commission, DG Regio.
This webinar was centered around introducing the definition and potential forms of energy communities, as well as providing guidance on existing schemes to support their financing. The webinar also provided an opportunity for participants to share the state of play of cohesion programming in their country. We discussed the key drivers for the development of energy communities as well as barriers.
Energy communities face specific barriers to their development, as often the financing tools proposed for traditional market actors do not fit their development track. They are facing unfit administrative procedures, and their value-added is poorly recognized by tradition call for project or tender processes. Therefore, together with CEE Bankwatch, REScoop.eu proposes the following guidelines for managing authorities :
- Adapt the licensing and administrative procedure to the strength of energy communities : In essence, energy communities are small scale local projects looking to maximise community value. Therefore, administrative procedures should be adapted to fit the size, scope, and organisational capacity of energy communities. As such, they should be rewarded for focusing on activities other than traditional financial return, for example, including social and environmental justice indicators in licensing, administrative, and procurement procedures. When making an investment decision, managing authorities should look beyond financial indicators and traditional ways of assessing investment risk and value the societal benefits resulting from the communities' projects.
- Include specific indicators targeting community value : energy communities are geared toward creating environmental, social and community value. Therefore, managing authorities should look to creating indicators measuring the value produced in those area rather than traditional financial indicators. The framework of development for energy communities should not be the same as traditional development project but rather target governance, representativity and redistribution – which are the main value added of those initiatives.
- Create one-stop shops for energy communities: In order to simplify administrative and validation processes of the initiative, Member States should implement one-stop shops (OSS) for energy communities at the national, regional or municipal level, based on the service type. An OSS approach would enhance the monitoring of energy community development, whilst facilitating interactions with public authorities and the implementation of specific administrative procedures.
- Create specific financing tools for energy communities : Energy communities need targeted financing tools. Several examples of successful funding schemes exist that support the development of energy communities whilst simultaneously preserving their democratic governance and ownership. The ‘revolving fund’ model, as is used in the Netherlands, allows for the financing to bridge the gap between the pre-feasibility phases of the project and financial close. The managing authority can then exit the project as the capital provided by citizens takes over. Another successful model is the ‘loan-to-grant programme’ deployed by the Scottish government. In this scheme, the managing authority gives a loan that can become a grant in case the project is not successful – within reasonable limits.
- Support network organisation to encourage bundling and capacity building at the local level : Energy communities prefer to collaborate, rather than compete. Therefore, community organisations often work together at the regional or national level. These organisations have two crucial roles, namely, to support the aggregation of projects in order to mitigate risks, and to provide capacity building to starting energy communities. The first role allows managing authorities to scale community energy projects whilst incentivising the development of specific area services (i.e. renovation of energy-poor households). The second role is crucial to recognise and support the development of new initiatives.