If the most recent crises hold any lessons for Europe, it is that it needs to break itself away from external energy-related dependencies. As Europe enters the more difficult phases of its energy transition, there is a need to boost investment across the energy sector so that Europeans can benefit from clean, affordable, secure, and democratically-controlled renewable energy. 

Reviving the EU economy involves not just support to large industries. No European consumers – from large industries to SMEs and ordinary households – will be able to fully benefit from a renewables-based energy system until we get rid of fossil fuels from Europe’s energy mix.

One of the pillars underpinning the European Commission’s approach towards competitiveness is tackling high and volatile energy prices for European companies and households. This is supposed to be furthered through the Affordable Energy Action Plan, an advanced draft of which was recently leaked. However, most of the proposed actions in the Draft Plan centre on large industry, putting households and SMEs in a bit of a blindspot. 

To ensure its success, the Affordable Energy Action Plan needs to support and leverage the potential of local community-led action. Long and bureaucratic regulatory and administrative procedures might complicate the creation of gigafactories. However, for community-led initiatives, the burden of existing regulations and procedures has a more pronounced impact hindering local citizens from investing in, owning, and consuming electricity and heat from local renewable energy production.

C Som Energia Noncomercial Creative Commons 2
Cooperative solar farm in Spain. CC BY-NC 2.0: Som Energia

The tip of the spear: energy communities stepping up to secure local and affordable renewables during the energy crisis

From community solar projects in Greece to district heating projects in Denmark and the Netherlands or offshore wind parks in Belgium, an already thriving community energy movement continues to grow. Energy communities make up a growing segment of the energy industry.

Local communities that can secure ownership of renewable energy production are able to shield themselves from the impacts of high and volatile wholesale energy prices. Be it through retail supply from local production, energy sharing, entering into PPAs with local municipalities or industries, or providing flexibility and energy efficiency (e.g., housing renovations) services, energy communities can help lower overall energy demand and costs.

These citizen-led approaches have proven to stand up to the challenges of multiple energy price crises. Back in the 1970s, in response to oil supply shocks, Danish citizens resoundingly rejected their government's plan to invest in nuclear. Instead, they promoted and invested in solar, wind, and cooperatively and municipally-owned district heating. Today there are over 650 community-led heating and cooling initiatives across the EU, with over 1,920,000 connections. During the latest energy crisis in 2022, the annual price of heating actually went down in some areas of Denmark by more than 50 per cent.

The Danes are not alone. In Germany, as a response to the energy crisis, 28 cooperative district heating initiatives came on line during the third quarter of 2023 alone. Energy communities in other countries, such as the Netherlands and Spain are following suit. 

Adobe Stock 231029489
Middelgrunden wind turbines in Copenhagen. (c) balipadma - stock.adobe.com

Energy communities also shielded their members from high electricity prices during the recent energy crisis. In the Belgian regions of Flanders and Wallonia, energy cooperatives Ecopower and Cociter, both citizen energy communities, were able to either cap or keep prices below that of the market due to their ability to supply their members’ full needs through self-owned renewable energy production located within their respective regions.

Energy communities are also becoming a key element of the EU’s energy efficiency industry. The Irish energy community Ecovision has renovated over 900 homes through citizen-led renovations, reaching 12GWh of energy savings per year. Furthermore, as not-for-profit projects, they favour local contractors, ensure the quality of the works with the home owners, and help the citizens access funding and advice to decrease the price of the renovation to achieve the highest level of savings and comfort for the lowest price. These Citizen-led Renovation (CLR) projects have expanded to Portugal, Spain, Bulgaria, Belgium and France.

While both the Commission and the Draghi Report acknowledge that there is a 400-800 billion euros shortfall in annual public investments to achieve the Bloc’s  decarbonisation objectives, citizens can mobilise hundreds of millions of euros in additional clean energy investments. Targeted public financing with social conditionalities can unlock even greater volumes of private capital. A study found that in wind production alone, citizens could contribute around 176 billion euros towards just wind energy production alone, by 2030, leading to an aggregated generation potential of 195,805 GW per year.

Creative Commons c Greenpeace Romania
(c) Greenpeace Romania

Putting the pieces together: empowering community-led decarbonisation efforts through the Action Plan for Affordable Energy Prices

Aside from the Draft Plan’s misguided approach to supporting nuclear and gas, it says many of the right things and even hints at supporting energy communities through the forthcoming Citizens Energy Package. Nevertheless, it will be of utmost importance to create strong links and synergies between other Actions in the Affordable Energy Action Plan and support for social economy and local community-led approaches under the Citizen Energy Package. The objective of enhancing the ability of local communities, citizens, local authorities, and companies to join forces through an energy community cannot be achieved through the Citizens Energy Package alone.

Key asks for the Affordable Energy Action Plan

As an overarching aim, the Action Plan for Affordable Energy Prices should prioritise the simplification of regulations for local ownership of production, sharing and supply of renewable electricity and heat by energy communities, along with citizen-led approaches to renovations and energy savings. To support this aim, in the Final Action Plan for Affordable Energy:

  1. The Commission should commit to set up an EU level policy objective for community ownership of renewable energy production, supported by national and sub-national objectives for citizen and local community ownership and production of renewables.
  2. No support should be given to fossil fuels, including LNG terminals in third countries, as fossil gas is directly linked to high electricity prices, thus contravening the Action Plan’s objectives.
  3. The Commission should commit to explore, in cooperation with the EIB, setting up an EU investment support and guarantee scheme to boost financing models for investing in renewables production initiatives by energy communities, including electricity, heating and cooling, and in citizen-led renovations and energy savings initiatives. This would make good on Commissioner Jorgensen’s commitment during his Commissioner hearings that he aims to finance citizen-owned energy.
  4. Energy communities should be included in the scope of actions that aim to reduce barriers for new actors to conclude PPAs. Energy communities need to be able to access guarantees to derisk investments, and they could benefit from guidance to Member States on how to enable access to PPAs.
  5. More concrete support should be dedicated to energy communities that want to prioritise addressing energy poverty and vulnerable households, particularly through the Social Climate Fund and the Just Transition Fund .
  6. A dedicated TSI should  be set up to help Member States implement the Clean Energy Package and Fit for 55 provisions on energy communities, such as requirements for Member States to assess national potential, integrate energy communities into national and local energy planning (electricity distribution, heating and cooling, local and regional spatial planning for renewables development) and put in place enabling frameworks for RECs, in particular to simplify regulations for grid connections, sharing and supply of electricity by energy communities.
  7. Energy communities should  be supported to contribute to enhancing price crisis preparedness through helping lower peak demand. In addition to supporting flexibility through new network tariff methodologies, time of use tariffs should reward smart local energy sharing that results in reduced use of the grid and contributes to local congestion management.
  8. Energy communities should be included within the Tripartite Contract for Affordable Energy so that they can benefit from measures to facilitate investment and benefit from tenders under social criteria.
  9. The Commission should commit to clarifying and simplifying rules designed to allow Member States to provide dedicated state aid to energy community initiatives and other social economy actors.