Overall assessment

Updated December 2023

The Law of the Republic of Lithuania on Renewable Energy defines RECs as non-profit-making legal entities who own and develop renewable energy production facilities and have the right to produce, consume, store and/or sell energy in installations. An analysis on several criteria of the EU definition is provided, such as the requirement of proximity and autonomy. The same Law also states that, in support schemes, energy from RES should be prioritized. Overall, the REC definition, at least on paper, can be considered a good practice. The Law of the Republic of Lithuania on Electricity introduced provisions for citizen energy communities (CECs), which constitute the legal basis for a Resolution published by the State Energy Regulatory Board on approving the procedure for granting and cancelling the status of the Citizen Energy Community and providing information about the Citizen Energy Community. According to the Regulator, there are seven legal entities that have acquired the status of a CEC in Lithuania.

Detailed assessment

Criteria of EU definition reflected in national definition

For RECs:

  • Open and voluntary participation is mentioned
  • Eligibility is covered
  • Requirement of proximity and effective control is covered
  • Autonomy is addressed

For CECs:

  • Open and voluntary participation is mentioned
  • Eligibility is covered
  • A reference to effective control is missing

Level of detail in the elaboration of principles contained in EU criteria

For RECs:

  • Open and voluntary participation is not further elaborated
  • Eligibility – includes natural persons, medium-sized, small and micro-enterprises as defined in the Law on Small and Medium-Sized Business Development of the Republic of Lithuania, municipalities and / or municipality institutions and public institutions
  • Geographical proximity and effective control - at least 51 per cent of the votes at the general meeting of shareholders belong to shareholders who are natural persons whose place of residence has been declared in the municipality where the construction or installation of the energy production facility is planned or in other municipal elderships bordering this municipality
  • Autonomy - at least 51% of the votes at the General Assembly belong to the members who live or operate in the region where it is planned to build or install an energy production facility belonging to the REC by right or ownership or on other legal grounds.

For CECs:

  • Open and voluntary participation is not further elaborated.
  • Eligibility - shareholders, members or participants of the CEC can be natural persons, as well as very small and small enterprises, as defined in the Small and Medium-sized Business Development Law, while also municipalities and/or municipal institutions, when they are not prohibited from being shareholders or members specified in the law.
  • There is no reference to effective control.

Clearly defined purpose

For both RECs and CECs, the law mentions that the main purpose established in the founding agreement and/or statutes of the community is to provide environmental, economic or social benefits to its shareholders, members or participants or to provide those benefits in the areas where it operates, thus its main purpose is not to seek profit. The articles of association must also state how revenues from renewables production are distributed. The additional link to supervision from the regulator means that there are some safeguards that renewable energy communities will not be used to engage in for-profit objectives.

ICA cooperative governance principles reflected

Yes, to the extend listed in the RED II.

Legal entities allowed

Article 20(1) of the Law specifies that the status of a REC shall be granted to a public body established in accordance with the Law on Public Institutions of the Republic of Lithuania and the activities specified in Paragraphs 5 and 6 of this Law, the activities of which are based on open and voluntary participation of stakeholders. A public body acquires the status of a renewable energy community at the time of the issuance of a permit to produce electricity by the State Energy Regulatory Council. The Law on Public Bodies applies to the Renewable Energy Community to the extent that this law does not provide otherwise. The law also mentions that a CEC is a legal entity established on the basis of the Law on Public Institutions, the Law on Associations, the Law on Associations of Owners of Apartment Buildings and Other Purpose Buildings or the Law on Gardeners' Associations, or a legal entity of another legal form, which is a non-profit entity that, based on the founding agreement and/or articles of association or other founding documents of a legal entity, may consume, share and produce electricity, including production from renewable sources, engage in supply, demand response and energy storage, provide energy efficiency services and/or electric car charging services to its shareholders, members or participants or other services related to activities in the electricity sector, except for distribution, and which, meeting the requirements established by the law, has acquired the legal status of a CEC in accordance with the procedure established in legislation. The national provisions that specify the functions of the National Energy Regulatory Council in the electricity sector mention that such Council determines the procedure and conditions for submitting applications for the status of a CEC and the granting of this status, as well as the scope of information provided to the Council by the distribution network operator about CECs and active users and the procedure for providing this information. Following this reference, the National Energy Regulatory Council published in March 2023 a Resolution regulating the approval of the description of the procedure for granting and cancelling the status of a CEC and providing information about the citizen energy community. Till now, seven legal entities have required the status of CECs in Lithuania according to the website of the regulator.

Activities

For RECs:

A REC should own and develop energy production facilities from renewable sources and has the right to produce energy in them, consume it, store it in energy storage facilities and/or sell it. Actually the law states that a non-profit legal entity acquires the status of a REC at the time of issuing a permit to develop electricity production capacity or a permit to produce electricity, if it meets of course the requirements specified in the legislation with regards to membership, main purpose and governance of the community. It is clarified that RECs are exempted from having to have balancing responsibility for installations and from having to pay a mandatory production contribution, which typically must be paid by producers of renewable electricity. This exception holds true for up to 400kw and after 2026 this threshold will be 200kw. The law further sets the requirements that a REC should adhere to in order to sell to its participants or other consumers the electricity produced in their production facilities. Specifically for heat, the law mentions that in order to supply its participants or other users with heat produced in energy production facilities managed by ownership or other rights, the REC must meet the requirements for the heat supplier set out in the Law on the Heat Economy of the Republic of Lithuania and other legal acts.

For CECs:

A CEC may consume, share and produce electricity, including production from renewable sources, engage in supply, demand response and energy storage, provide energy efficiency services and/or electric car charging services to its shareholders, members or participants or other services related to activities in the electricity sector, except for distribution. The law further sets the requirements that a CEC should adhere to in order to sell to its shareholders, members or participants or to other consumers the electricity produced in their production facilities.

Citizen participation is ensured

The Law states that at least 51 per cent of the votes at the general meeting of shareholders should belong to shareholders who are natural persons whose place of residence has been declared in the municipality where the construction or installation of the energy production facility is planned or in other municipal elderships bordering this municipality. Thus, there are some requirements that could ensure citizen participation in a REC. There is no such reference for CECs.

Designated authority to oversee

Article 2(9) highlights that the State Energy Regulatory Board shall inspect, supervise and control the compliance of RECs. If a REC violates the provisions of the Law, the suspension or revocation of the permit to produce electricity shall be decided in accordance with the procedure established in Article 17 of the Law on Electricity. Similarly for CECs the Board checks, supervises and controls whether CECs meet the requirements set forth in the law and the operational goals set forth in the founding agreement and/or statutes.

Number of definitions

2 – RECs and CECs

Coherency between both definitions

The national law states that a CEC cannot be a REC at the same time, without further specifying any other relationship between the 2 definitions.