Germany has transposed the REC definition, but not yet the CEC definition. Specifically, the REC definition has been transposed through changes that have been made to the existing ‘citizen energy company’ definition under the Renewable Energy Act 2022. The national rules that apply for cooperatives in general under the Cooperatives act also still apply. It is still unclear whether the citizen energy company definition will also be used to transpose the CEC definition. More clarity on this would be welcome.
The new Citizen Energy Company definition transposes the elements of the REC definition from the Renewable Energy Directive. This definition applies specifically to the ability to access support schemes under the Renewable Energy Act. As such, it is not clear whether it is generally applicable. In particular, the new definition attempts to address shortcomings with the previous definition, which allowed for the creation of fake energy communities to gain specific advantages in the tender process for onshore wind projects. The definition was also expanded to apply to both onshore wind and photovoltaic (PV) projects. As such, the definition applies to the ability to receive market premiums, be exempted from participating in auctions and tenders, and receive investment support under a new grant-to-loan programme.
Support to Citizen Energy Communities under the Renewable Energy Act 2022 is overseen by the National energy regulator. As such, there is an oversight role that can monitor the implementation of the concept and its impact on competition and in enabling energy community projects.
Criteria of EU definition reflected in national definition
The Criteria of the EU REC definition are reflected in the citizen energy company definition:
- Requirement of proximity
- Effective control
Open and voluntary participation are not explicitly covered, but they apply by virtue of the applicable Cooperatives act, which requires cooperatives to be based on open and voluntary participation. However, it is unclear how open and voluntary participation would be applied to other legal forms used for citizen energy companies, other than cooperatives.
Level of detail in the elaboration of principles contained in EU criteria
Eligibility to participate in a Citizen Energy Company is elaborated:
- Natural persons (at least 50 as voting shareholders is required)
- Micro, small or medium enterprises may hold voting rights
- Local authorities and associations that have legal capacity may hold voting rights
The Renewable Energy Act 2022 elaborates on how the principles of the EU definition should be implemented. Specifically:
- Open and voluntary participation are elaborated in the Cooperatives Act
- Proximity and Effective control – at least 75% of voting rights must be held by natural persons whose dwelling is registered in a postcode that is wholly or partly within a radius of 50 km of the planned installation (for solar PV, the distance is measured from the outer edge of the respective installation, and for wind the distance is measured from the center of the tower of the respective turbines)
- Autonomy – no member or shareholder may hold more than 10% of the voting rights in the Citizen Energy Company
There are special limitations that apply to mergers of several legal entities into one company, and for holdings by another Citizen Energy Company. It is okay to merge several legal entities for partnerships into one Citizen Energy Company , as long as each member of the company fulfills all the requirements of the definition. It is okay for a Citizen Energy Company to hold 100% of the voting shares of another Citizen Energy Company if the latter fulfils all the requirements of the definition. These provisions allow for Citizen Energy Companies to merge with each other and to create special purpose vehicles for individual projects.
Clearly defined purpose
ICA cooperative governance principles reflected
Most, but not all are mentioned explicitly. The energy cooperatives that are established following the German Cooperatives Act follow the cooperative principles included there e.g. open and voluntary membership, democratic member control, member economic participation, autonomy and independence, concern for community etc.
The definition in the Renewable Energy Act 2022 also strengthen the link to cooperative principles, namely autonomy.
Legal entities allowed
This is not mentioned in the Renewable Energy Act, although cooperatives are mentioned. As such, the legislation leaves it open, but it is implied that cooperatives are the main legal form intended for RECs.
Citizen participation is ensured
Yes. There is a requirement to have at least 50 natural persons as voting shareholders.
Designated authority to oversee
The Federal Network Agency, which oversees auctions and tenders, from 31 December 2024, must report annually on the experience with support schemes to secure citizen energy and citizen participation.
Number of definitions
Coherency between both definitions