France

Criteria of EU definition reflected in national definition

Renewable Energy Communities

• Open and voluntary are covered
• Autonomy is covered
• Geographic proximity is covered
• Effective control is covered

Citizen Energy Communities

• Voluntary and open are covered
• Effective control is covered

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

For Renewable Energy Communities:

Autonomy

Under the 2023 Decree, the principle of autonomy was simplified compared to the original ordinance, although it still contains some concrete rules.

• The main reference for whether a REC is autonomous is the standard of autonomy adopted for SMEs under Article 3 of EU Recommendation 2003/361/EC (Recommendation on SMEs). This may result in challenges for RECs that do not register as a company (see available legal forms below). Subject to Article 3, RECs may not hold more than 25% of shares in another enterprise. This criteria is likely to act as a hurdle towards the creation of an SPV, or participation in a second-level energy community, by a REC. Ultimately, this could arbitrarily hinder collaboration between different energy communities that want to undertake more complex activities and to mature, for instance supply members, provide flexibility, set up one-stop shops, etc.
• There are safeguards to prevent control by companies or their employees. An employee of a company holding more than 10% of the voting rights and 10% of the equity and quasi-entity of a company, or of a company controlling or that is controlled directly or indirectly by said company, may not hold (directly or indirectly):
  1. Individually, more than 10% of the voting rights and 10% of the equity and quasi-equity (current accounts of partners, and convertible bonds that are not subject to a unilaterally decided conversion option) of the REC;
  2. Jointly, more than 33% of equity and quasi-equity and voting rights, nor more equity and quasi-equity and voting rights than other natural persons, communities or their groups, collectively

A company and its employees must not, together, hold more than 40% of the equity and quasi-equity and voting rights of the REC.

The limitations on companies and their employees owning shares in a REC should help prevent hijacking of RECs by traditional market actors. 

Eligibility

Eligibility is limited to natural persons, local governments and their groupings, funds eligible for the denomination of social entrepreneurship, SMEs that are considered autonomous under Article 3 of the EU’s Recommendation on SMEs,  Sociétiés d’Économie Mixte (SEMs, or in English, Mixed Economy Companies), renewable energy developers that are recognised as a socially useful solidarity enterprise, and companies that do not have participation in energy communities as a main commercial or professional activity. Associations of natural persons, SMEs, local authorities and joint stock companies are also eligible. 

SEMs are specific legal forms that exist in French law to allow local authorities to blend public and private funds so that they can develop and invest in renewable energy projects. It is therefore important that such legal forms are eligible to participate in energy communities, as it allows local authorities to be directly involved. 

Geographical proximity

Geographical proximity is determined depending on where different members are located. For natural persons, associations of natural persons, and SMEs, close proximity is residence or location in the department or a bordering department where the project is being implemented (there are exceptions for departments that do not have more than two neighbouring departments). For regions and departments, proximity is equated to renewable energy projects developed on their respective territories. For municipalities and groups of municipalities, proximity is equated to renewable energy projects that are installed on the territory of the municipality or group or on the territory of a neighbouring municipality or group of municipalities. 

Effective control

Effective control is limited to local actors, and is based on different categories of eligible members/shareholders. Natural persons are deemed to constitute a category when there are 20 of them. A category is presumed to exercise effective control when it has, directly or indirectly, more than 40% of voting rights and if no other category has more proportion of voting rights than its own. The statutes of the energy community must guarantee this. 

For Citizen Energy Communities:

• Eligibility is open to any type of member or shareholder
• Autonomy requirements apply equally for CECs and RECs.
• Effective Control is based on different categories of eligible members/shareholders. For companies, it is limited to small enterprises. Natural persons are deemed to constitute a category when there are 20 of them. A category is presumed to exercise effective control when it has, directly or indirectly, more than 40% of voting rights and if no other category has more proportion of voting rights than its own. The statutes of the energy community must guarantee this. 

Clearly defined purpose

Their primary purpose is to provide environmental, economic or social community benefits for its shareholders or members or for the local areas where it operates, rather than financial profits (i.e. copy-paste of the EU legislation for both definitions). Nevertheless, the Decree provides special rights for enterprises with a special recognition of social utilities (i.e. socially useful solidarity enterprise) that develop renewable energy. For instance, as eligible members of an energy community, they do not have to be autonomous in order to be able to participate to an energy community. This would seems to further encourage the development of social enterprises to develop energy communities.

ICA cooperative governance principles reflected

Yes, to the extent they are included in the EU definition – there is a prohibition on making financial profit one of the main objectives.

Legal entities allowed

Article L291-3 of the Energy Code now elaborates which legal entities are allowed to become energy communities, including joint-stock companies, collective interest cooperative societies, and associations.

Citizen participation is ensured

No. Nevertheless, unless 20 natural persons participate directly in the REC or CEC, it must include at least two categories of persons that must benefit from the energy community and its activities. This prevents the creation of energy communities solely between local authorities or by SMEs on their own. However, it does not prevent the creation of an energy community solely by natural persons, as long as there are at least 20 members. If a SME leaves an energy community in which a local authority is also a member, the local authority has a pre-emptive right for up to two months to buy back the shares. 

Designated authority to oversee

No.

Number of definitions

2

Coherency between both definitions

Under the Energy Code, RECs and CECs remain separate concepts with no explicit articulation about how they relate to each other. Nevertheless there is alignment on standards of effective control and autonomy.