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Rural Energy Community Advisory Hub

What is an energy community?

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Energy communities are open and voluntary and combine non-commercial aims with environmental and social community objectives.

There are 3 directives which describe the key elements of two types of Energy Communities. Renewable Energy Communities and Citizen Energy communities. Under Citizen energy communities falls both the Gas and Electricity Market directive.

The three directives

Article 2(16) Recast Renewable Energy Directive

Renewable Energy Community

A legal entity:

(a) which, in accordance with the applicable national law, is based on open and voluntary participation, is autonomous, and is effectively controlled by shareholders or members that are located in the proximity of the renewable energy projects that are owned and developed by that legal entity;

(b) the shareholders or members of which are natural persons, SMEs or local authorities, including municipalities;

(c) the primary purpose of which 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"

Article 2(11) Recast Internal Electricity Market Directive

Citizen Energy Community

A legal entity that:

(a) is based on voluntary and open participation and is effectively controlled by members or shareholders that are natural persons, local authorities, including municipalities, or small enterprises;

(b) has for its primary purpose to provide environmental, economic or social community benefits to its members or shareholders or to the local areas where it operates rather than to generate financial profits;

(c) may engage in generation, including from renewable sources, distribution, supply, consumption, aggregation, energy storage, energy efficiency services or charging services for electric vehicles or provide other energy services to its members or shareholders;"

Article 2(70) Proposal Recast Internal Gas Market Directive

Citizen Energy Community

A legal entity that:

(a) is based on voluntary and open participation and is effectively controlled by members or shareholders that are natural persons, local authorities, including municipalities, or small enterprises;

(b) has for its primary purpose to provide environmental, economic or social community benefits to its members or shareholders or to the local areas where it operates rather than to generate financial profits; and

(c) engages in production, distribution, supply, consumption, or storage of renewable gas in the natural gas system, or provides energy efficiency services or maintenance services to its members or shareholders; "

Two definitions of energy communities

‘Citizen energy communities’ – Directive (EU) 2019/944 - (Electricity cover)

‘Renewable energy communities’ – Directive (EU) 2018/2001 – (Renewable energy cover)

Common elements under both definitions:

GOVERNANCE
“Participation must be open and voluntary” (renewable energy directive)
“Households should find it easy to both enter & leave the energy community” (Electricity directive)

OWNERSHIP & CONTROL
Both definitions emphasise participation and effective control by citizens, local authorities & smaller businesses whose primary economic activity is not the energy sector!

PURPOSE
Their PRMARY purpose is to generate social & environmental benefits rather than focus on financial profits.

SIMILAR ACTIVITIES
‘Citizen energy communities’ & ‘Renewable energy communities’ can exercise similar activities:

  • Generation
  • Aggregation
  • Energy storage
  • Distribution
  • Consumption
  • Provision of energy related services
  • Supply
  • Sharing

NOTE: Communities and community members must comply with the same obligations as other market participants

 

The differences between the two communities

Difference

CITIZEN ENERGY COMMUNITIES

RENEWABLE ENERGY COMMUNITIES

Geographical scope

Electricity directive does not bind energy communities to immediate vicinity.

Local communities ‘must be in the vicinity’ of renewable energy projects owned/developed by that community.

Activities

Operate in electricity sector and are technology-neutral (fossil fuel source or renewable)

Broad range of activities related to all forms of renewable energy

Participants

Any actor can participate, but stakeholders involved in large-scalecommercial activity where energy is the primary economic activity cannot make decisions.

Restricted Membership – Natural persons, local authorities, MSMEs, who’s membership/ participation is not their primary economic activity.

Autonomy

‘Decision-making powers should be limited to those members or shareholders that are not engaged in large-scale commercial activity in the energy sector.’

‘Capable of remaining autonomous from individual members or other traditional market actors that participate in the community as members or shareholders.’

Effective control

Exclude Medium-sized and large enterprises from being able to exercise effective control.

Can be controlled MSMEs that are ‘located in the proximity’ of the renewable energy project.