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1. Executive Summary

The Nordic countries are all looking for ways to enable a green transition, and a part of this is the electricity grids. The Clean Energy for all Europeans Package (CEP) released by the European Commission in 2019 put citizens at the middle of the energy transition. Through Article 16 of the Electricity Market Directive (2019/944; “Electricity Directive”) the new concept Citizen Energy Communities (CEC) was established and through the recast of the Renewable Energy Directive (REDII) the concept of Renewable Energy Community (REC) was established.

In 2022, Nordic Energy Research, on behalf of the Electricity Market Group, commissioned Technopolis Group to conduct a study that looks into how Energy Communities are currently implemented into the Nordic countries and into how other models are implemented in Europe, as well as into questions linked to market access, grid ownership and operation, and tariffication.

The overall objective of the study is to support the Nordic authorities in their implementation of the requirements of Article 16, to support the exchange of views on lessons learned and to profit from the common experiences in the Nordic and European countries. The study addresses the following aspects:

The implementation of Citizen Energy Communities in the Nordics and in Europe
Identification of different models for energy communities
Identification of whether certain conditions in an energy system might imply that energy communities will be less likely to contribute to additional benefits.

1.1. Methodology

The study is based on:

An overarching desk research and literature review on Energy Communities in Europe
Seven country studies (Denmark, Sweden, Finland, Norway, Germany, Austria and the Netherlands), consisting of country specific desk research of relevant literature, studies and national policy documents as well as interviews. In total interviews with 40 interviewees were conducted within the scope of this study.
A comparative mapping of the different aspects of the Energy Communities and the implementation of the directives in the respective country.

1.2. Conclusions

In the countries included in the study, few have fully transposed the definitions of REC and CEC into their national legislation. Even fewer seem to use the definition in the general discourse. Most often, they are simply referred to as Energy Communities (or a rather similar translation into the respective language) in which many different models are included. There are several attributes in which the communities differ, most prominently are: organisational form, technology, energy sharing models and activities conducted. The combination of difference in transposition of the definitions and large disparity in models for energy communities renders a cross-model comparison rather sprawly and to an extent inconclusive. Instead, it underlines the importance of simple and clear definitions in both legal documents and general discourse. This will help clarify which possibilities and responsibilities apply to the respective model and simplify the decision making when initiating a community.

Similarly, there is a large diversity of concepts and terminology used for community initiatives in energy across Europe. Both in the academic literature, general discourse and consultations, a wide range of terms are used, such as Energy community, Community Energy, Citizen Energy Community, Renewable Energy Community, Clean Energy Community and more. This exacerbates conceptual confusion and makes horizontally comparing both policy recommendations and research findings cumbersome and less stringent. A reduction on the number of concepts as well as a clear definition of what is encompassed in and required for each concept would facilitate more expedient policy analysis, recommendations and translation of lessons learnt.

Another important observation is that although interest in Energy Communities among the public is increasing, the public awareness of the concept is low, omitting both possible community initiatives and potentially important inputs to the public debate regarding Energy Communities.

Thus far, the studied countries have not found a conclusive way to circumvent the conflict between economic viability for the communities and fairness in shared costs for the collective grid. Without a simple, efficient as well as cost- and input-reflecting solution for electricity sharing, many potential initiatives are unviable and are either decreased in scope or never started. The choice of electricity sharing model for each country should be individually assessed, based on factors such as population density, foreseeable expansion needs of collective electricity grid, and current energy mix.

1.3. Recommendations

Given our general observations, the context of the Nordic countries and the currently evolving knowledge surrounding Energy Communities, we present three recommendations to help enable Energy Communities without promoting an unfair division of costs.

1.3.1. Introduce Clear and Coherent Definitions of Energy Communities

Clear definitions in both legal documents and general discourse lessen uncertainties and hesitation in the initial phase of establishing an energy community.

1.3.2. Ensure Accessibility to Establish Energy Communities

Two of the main barriers to the deployment of Energy Communities identified is related to awareness and knowledge. Firstly, few citizens are aware of the possibility of establishing or joining an energy community, thus acting as a first hindrance to possible deployment of an unknown number of communities. Secondly, the knowledge needed to establish an energy community, both technical and judicial, acts as a barrier for many citizens that do not have the prior knowledge or the time to fully acquire the necessary know-how. To mitigate these barriers, we propose two main strategies:

Ensure clear and simplified legislation.

Counteract all risks of ambiguity. Partly, to provide an explicit and easily comprehensible framework for potential founders and members. Partly, to discourage geographically differentiated interpretations by e.g., local authorities or DSOs.

Promote support organisations.

Support organisations and/or networks can benefit the dissemination of information that raise awareness in the general population. It can also provide a platform for knowledge sharing through handbooks or pamphlets. Furthermore, they can act as intermediaries between inquisitors and competency.

These support organisations can either be privately run or organised as a state entity. For example as a “one-stop-shop” solution.

1.3.3. Enable Electricity Sharing

The possibility to share electricity within the community in an efficient and cost-effective/-representative way seems to be of key importance to increase the establishment of Energy Communities. The national context is very relevant when looking at the potential benefits of a more restrictive or allowing legislation regarding electricity sharing. Thus, a model that would fit all are neither viable nor recommended. Given the current state of the respective legislation, the following steps are recommended:

Enable electricity sharing through the collective grid, with clear and defined renumeration-schemes for the respective contribution to the collective grid, ensuring consistent calculations across regions.
Include room for experimentation or “sandboxing” in the legislation on electricity sharing.

1.4. Caveat

A caveat from the study team is that the topic of Energy Communities is very topical and both research and regulation is evolving rapidly. The studied countries have and are still developing their regulations and surrounding frameworks (such as support structures). Currently the European commission is working on a reform of the EU electricity market design which may have a substantial impact on the coherence and relevance of the conclusions and recommendations of this study. Hence, we would raise a finger of caution regarding the relevance of the conclusions over time.