The Croatian government has transposed the CEC and REC definitions through the Electricity Market Act and the Renewable Energy Law, respectively. All participation and governance principles from the EU definitions are mentioned, and CECs even require autonomy, as well as place limitation on participation from medium and large enterprises. CECs must also state in their founding documents how they will ensure open and voluntary participation. The legal form for energy communities is limited to non-profit organisations, although it is unclear whether this covers cooperatives. This creates legal uncertainty, which could hinder uptake. Interestingly, governance and participation principles are not as elaborated for RECs as they are for CECs. There is also regulatory oversight, at least for CECs, to ensure transparency around conformance to the principles by energy communities.
There are substantial limitations on eligibility in terms of geographical scope. This potentially risks being overly restrictive in allowing participation, and it is likely that it will artificially impact energy communities’ ability to undertake different activities, essentially limiting their right to operate across the market. Furthermore, there is no official clear relationship between the REC and CEC definitions. While both definitions are almost fully aligned on eligibility, and governance/participation principles, the principles are elaborated more for CECs than they are for RECs. Yet, CECs are also very geographically restrictive, creating confusion around the difference between RECs and CECs, and hence two definitions. As such, the relationship between these two definitions deserves clarification. Otherwise, citizens and communities that want to use these concepts will need further clarity or certainty. These two aspects hold back an otherwise rather sound and useful definition that has the potential to promote social innovation. Overall, the transposition of the definition can be perceived as a box-ticking exercise. However, the framework poses several restrictions that could disincentivize citizens from engaging with the concept.
Criteria of EU definition reflected in national definition
- Open participation is covered
- Voluntary participation is covered
- Autonomy is covered
- Effective control (based on geographic proximity) is covered
- Open participation is covered
- Voluntary participation are covered
- Autonomy is covered
- Limits eligibility to participate
- Places restrictions on effective control
Level of detail in the elaboration of principles contained in EU criteria
- The principles of open and voluntary participation, and effective control (based on geographic proximity) and autonomy, are copy-pasted from the Renewable Energy Directive. They have not been further elaborated.
- Eligibility is defined in line with the Renewable Energy Directive. There is no inherent prohibition on participation outside the scope of close proximity. This could represent a conflict with the CEC definition, which limits eligibility to members or shareholders located in close proximity to the project(s).
- Eligibility is limited to natural persons, local self-government units, a micro-enterprise or a small enterprise whose place of residence, business establishment or business premises is in the area of the local self-government unit (meaning) where the citizens' energy community is headquartered
- Openness is determined by the CEC in accordance with its ‘conditions of participation in the energy community of citizens’. Those who are denied membership or from leaving may file an objection with the Agency.
- Voluntary participation is determined by the CEC in accordance with its ‘conditions of participation in the energy community of citizens’. The rules for exiting the community refer to general rules for changing supplier. This might not foresee the members relationship with the energy community as a shareholder.
- Autonomy is implemented via a requirement for voting rights to be independent of ownership share and according to the one-person-one-vote principle; ownership is also limited to not more than 40% of the share of the CEC. We would assess this as very positive.
- Effective control - Owning shares in the CEC is limited to natural persons, local governmental units and micro- and small-enterprises. Large enterprises may however become a member; control of the CEC excludes medium and large enterprises.
Based on the provisions, the Electricity Law seems to limit CECs to “the exchange” of energy that is produced and consumed by the community, within a certain spatial scope, suggesting a geographical proximity limitation which need not apply to CECs – this would implicitly limit the ability of CECs to engage in activities across the energy sector and could impede the exercise of rights by CECs. This element drags down what could be considered very constructive details for the governance and participation principles.
Clearly defined purpose
For RECs and CECs, the language sticks to that of the Directives.
ICA cooperative governance principles reflected
Yes, to the extent that they are a copy paste. Autonomy is also reflected in detail.
Legal entities allowed
For RECs, the legal form is not identified. For CECs, energy communities are limited to legal entities operating under the law governing financial operations and accounting of non-profit organisations. It is not clear whether this includes cooperatives or not.
Citizen participation is ensured
Designated authority to oversee
CECs are overseen by the national regulatory authority. CECs must be registered in the register of energy communities of citizens maintained by the Agency, which must contain certain minimum information about the CEC. This data is published on the Agency’s website. If this data changes, the CEC must notify the register within 8 days. It is unclear whether RECs are also overseen by the regulator.
Number of definitions
Coherency between both definitions
The relationship between the CEC definition and the REC definition is not clear. The fact that more detail has been elaborated in the participation and governance rules for energy communities means that a REC is seen as a subset of a single energy community concept. However, this question has not been officially clarified, and therefore the relationship between RECs and CECs is unclear. Furthermore, the CEC definition appears to be narrowly framed primarily around the activity of energy sharing, which has also been recently adopted. This would defeat the purpose of having two definitions in the first place.