Go to content
Photos: Ritzau/Scanpix and Pixabay

3. Brief Literature Overview

There has been a large interest for Community Energy and citizen involvement historically across Europe and it has received even more traction with the implementation of CEP. This has also led to more studies that are more directly applicable to the concepts of REC and CEC. The field is constantly growing and since IEMD and REDII were released in 2019 and 2018 respectively, extensive research on the actual results and effects are not yet available. Although our study covers more literature, this chapter will focus on the more prominent, recent, and relevant (to this study) projects and studies. This overview should be seen as providing context, rather than an all-encompassing literature overview.

3.1. Sweco and Oslo Economics (2019)

When evaluating the distributed electricity production in the Nordic countries, Sweco and Oslo Economics found that installed capacity of renewable electricity production for self-consumption had significantly increased between 2005 and 2017 (from 1 880 MW in 2005 to 2 570 MW in 2017). Much of the increased capacity was driven by the increase in photovoltaic installations. However, the most dominant electricity production in the Nordic countries in 2017 was still wind power, which accounted for about three quarters of the electricity production for potential self-consumption in Sweden and Denmark. Of the Nordic countries, Denmark had in 2017 the largest estimated electricity production for potential self-consumption of 3 636 GWh. Sweden had the second largest estimated production of 722 GWh, Norway and Finland had an estimated production of 145 GWh and 114 GWh respectively, and Iceland had the lowest estimated production of only 30 GWh.
When evaluating the regulatory framework, Sweco and Oslo Economics found that most Nordic countries have a legislation that promotes the development of distributed electricity production. For all countries except Iceland there are national support schemes and tax deductions specifically directed at small-scale distributed production, in addition to general support schemes for renewable electricity production. And while there are differences in definitions and specific designs, the general regulatory framework and support system for the promotion of distributed production share many similarities across countries. For example, all Nordic countries have a system where prosumers have the right to be connected to the public energy grid to which they can sell their excess electricity to a competitive price.
Sweco and Oslo Economics (2019) found very few barriers to the development of distributed electricity production and self-consumption in the Nordic countries. They argue that the regulatory system in the Nordics has been designed to ensure that there are no discriminatory or disproportionate procedures on the market. It should be noted that this study focuses on self-consumption in general and not specifically on the legislation for Energy Communities. It is highlighted that perceived obstacle exits, which could hinder the development of distributed electricity production. This includes for example the complexity of the regulatory framework and a perceived uncertainty regarding future policies. As such, Sweco and Oslo Economics suggest that there are large growth potentials in the Nordics and and estimate that the distributet electricity production potentially used for self-consumption could increase to 24 000 GWh in 2040, depending on the technological advancements. (Krönert et al, 2019).
Krönert, F., Henriksen, G. L., Boye, S., Edfeldt, E., Weisner, E., Nilsson, M. F. & Uusitalo, O. (2019). Distributed electricity production and self-consumption in the Nordics

3.2. The Current State of Research on Energy Communities (2021)

In their overview of the current state of research on energy communities Gruber, Bachhiesl and Wogrin (2021) find that a majority of energy communities in the literature generate their electricity using photovoltaic installations and that they often use storage systems to reduce their reliance on the public grid. They also find that P2P trading is an essential part of energy communities and suggest that with P2P trading the energy flows can be further optimised which allows for more of the locally produced energy to be consumed within the energy community. Moreover, they find that micro-grids are not as common as they expected as they only occurred in 16% of the studied literature, thus making Gruber, Bachhiesl and Wogrin (2021) conclude that micro-grids are not a technological necessity for the creation and sustainability of an energy community. Lastly, Gruber, Bachhiesl and Wogrin (2021) find that third-party aggregators can be an important component in an energy community and suggest using them on a more widespread basis to make the development of energy communities easier.

3.3. The NEWCOMERS Project (2019–2022)

One of the largest contemporary European initiatives for research on energy communities is the NEWCOMERS project.
The NEWCOMERS (New Clean Energy Communities in a Changing European Energy System) project (2019–2022) was an EU-funded project aimed at exploring and evaluating a variety of different new clean energy communities across Europe. By analysing how different types of clean energy communities operate, in what regulatory, institutional, and social conditions they emerge and thrive, but also what kind of benefits they could offer their members and society at large, the programme hoped to provide practical recommendations to policy makers. These recommendations were intended to help policy makers successfully support new clean energy communities and subsequently contribute to the decarbonisation of the European energy system.
The NEWCOMERS project had six partner countries across Europe, in which ten different energy communities were examined and used as case studies (Germany, Italy, the Netherlands, Slovenia, Sweden, and United Kingdom). The different energy communities were studied using a multi-method approach which included online surveys among community member, qualitative interviews with community members and managers, and an in-dept business model analysis of the 10 different case studies. The study also included a field experiment of a virtual energy community in Slovenia, an analysis of the socio-technological system in the six partner countries and a large-scale survey among the general population in nine European countries (France, Germany, Italy, the Netherlands, Poland, Slovenia, Spain, Sweden, United Kingdom).
It is worth noting that the NEWCOMERS project uses a broader definition of Energy Communities than both CEC and REC.

3.3.1. NEWCOMERS Findings

In their studies, the NEWCOMERS project found that for new clean energy communities (CEC in their reporting, CLEC here to avoid confusion) to survive and thrive they need to develop new and often highly innovative business models. The NEWCOMERS project was able to identify relatively standardised and stable business models, but the report with key project findings (2022) highlights that the new business models are often highly influenced and linked to each country’s national policy frameworks. The reports also highlight that the communities do not operate in a vacuum and that the development of new business models will affect the relationships within the European energy system. The NEWCOMERS project further emphasised in its key project findings report that only a small number of the studied energy communities were engaged with active management of electricity networks or trying to engage with emerging flexibility markets. In addition, they found that whilst CLECs differ in context and operational models, they all largely share the same overarching goal of contributing, in some capacity, to the success of the energy transition.
With respect to actors and networks, the NEWCOMERS project reported in their report on key project findings that CLECs are increasingly forming partnerships with each other and local government to accelerate the local energy transition. In addition, they found that CLEC members are increasingly sharing and acquiring knowledge regarding renewable energy and energy efficiency. The project did however also find that the studied countries differ considerably in supportive infrastructure and that many communities to a large degree are reliant on third party actors for technical expertise and operational support.
While the NEWCOMERS project is able to identify numerous benefits with CLECs the key project findings report (2022) highlights (i) finances (lowering energy costs); (ii) the opportunity to become self-sufficient; (iii) environmental concerns (being able to contribute to energy transitions and reduction of CO2 emissions); and (iv) social benefits (communal living, social recognition, and social approval) as the most commonly mentioned motivators for individuals to join a CLEC. The economic benefits are especially mentioned as a motivating factor by non-members, wereas already active members place special emphasis on the social benefits of a CLEC membership. In the key project findings report it can also be seen that by joining a CLEC, members indicate that they have gained an increased feeling of empower­ment. It is also suggested that members have become more environmentally conscious overall after joining a community. On a society level there are additional benefits. As an example, it is suggested in the key project findings report that CLECs have the ability to mobilise people to invest and take action, that they can promote learning and the spread of know-how both regionally and nationally, in addition to increasing the proportion of renewable energy in the supply mix. With locally produced energy there is also a reduced need for system balancing.
A consistent finding from the citizens surveys highlighted in the key project findings report is that the vast majority of households consider CLECs as an important or very important element in the transitions to more sustainable energy systems. It is also highlighted that non-CLEC members consider CLEC as most beneficial if they are run by citizens, has a large member influence and lead to decreased energy costs. Despite the large benefits there are however very few incentives identified by the NEWCOMERS project for CLECs to offer flexibility services, and if they do offer flexibility, it is often facilitated by a commercial actor.
The NEWCOMERS project was also able to identify favourable environments for the creation and viability of CLECs. It found that apart from positive publicity, CLECs benefit from support from the local government to overcome administrative and legal hurdles. CLECs would also benefit from new housing legislations to encourage new clean energy investments by renters and landlords, in addition to increased dissemination of information and promotion of a less consumption-oriented culture. An increased dissemination of information and knowledge about CLEC could contribute to the diffusion of energy communities, as not being aware of energy communities was the most common reason given for not having joined a CLEC.
The NEWCOMERS project also found that there are multiple ways of scaling up or diffusing CLECs, which includes members sharing knowledge, experience, and information with others outside the community on either online platforms, social media, or mouth-to-mouth in both formal or informal settings. Furthermore, the key project findings report suggests that a way of diffusing the benefits of CLECs could be through licensed partnerships, where a licenced supplier could replicate the partnership with a new community elsewhere. To enable successful scale-ups there is however a need for increased incentives provided by legislation, regulation, and policies. There is also a lack of knowledge and understanding among politicians and decision-makers of how to effectively support the development of CLECs. Here the key project findings report suggests that simple guidelines could help improve the scalability of CLECs. In regard to regulation and policies, the NEWCOMERS project suggested that there is a need for adaptation to national circumstances to promote the development of local energy communities (NEWCOMERS, 2022).
NEWCOMERS. Key Newcomers Project Findings: A short overview. https://www.newcomersh2020.eu/upload/files/D7_1%20-%20short.pdf, 2022 (Accessed: 2023-02-02)

3.3.2. NEWCOMERS Recommendations

Based on the findings, the NEWCOMERS project recommends that three key principles should guide policy makers in their work, namely, Recognise, Priorities and Simplify. In the final policy recommendations report, it is specified that this would include recognising the benefits, which  energy communities offer their members and local communities, prioritise the CLECs by offering policy support and by simplifying the existing legislation and regulations. Along these three key principles five main categories of policy recommendations were formulated.

The first category; Recognising the value and strengthening the role of energy communities, argues that consistent, unambiguous, and lasting support to CLECs are required at all governmental levels to further the position of CLECs in the European energy system. The authors suggest that this support can be provided by creating clear and nationally adopted definitions of the term energy community to provide increased legal clarity. The authors also suggest preferential regulatory treatment in European legislation is a way to strengthen CLECs position.
Moreover, they recommend that policy makers develop and expand the concept of ‘collective-self consumption’ further to allow multiple users to be considered a ‘single entity settlement’ (Andor et al, 2022).
Andor et al. (2022), NEWCOMERS Final policy recommendations. July 2022. Available at: https://www.newcomersh2020.eu/upload/files/Newcomers_policy-final.pdf
The second category; Informing about energy communities, recommends that policy makers and CLEC members to launch awareness raising campaigns to increase the understanding and knowledge of the benefits and opportunities, which CLECs can offer. To increase the visibility of CLECs is especially important as lack of awareness was the most common reason for people not to have joined a CLEC.

In the third category, Creating incentives for energy communities, they recommend setting national targets for the development of the CLEC sector to be met by 2050, with interim targets for 2030. They also recommend that policy makers create and incentivise the connection of small operators to the energy grid and facilitate P2P markets, by different tax incentives and dedicated financing schemes which would create a pull effect for the CLECs.
The fourth category; Creating a supportive regulatory environment, suggests that it is important to not just level the playing field of the European energy market, but that there is a need for actively encouraging and promoting the creation of CLECs in the legal framework. This would include simplifying current procedures and regulations, in addition to allowing space for new alliances between professional and volunteer-based citizen-led CLECs to emerge.

In the last category, Creating supportive networks for energy communities, the authors suggest that setting up advisory services, umbrella organisations, and other intermediaries across the EU would benefit the development of CLECs, as it would provide legal, financial, and technical advice for potential but also already operating CLECs (Andor et al, 2022).
Andor et al. (2022), NEWCOMERS Final policy recommendations. July 2022. Available at: https://www.newcomersh2020.eu/upload/files/Newcomers_policy-final.pdf

3.4. Empowering Citizens for Energy Communities, Interreg Europe (2022)

The findings made by the NEWCOMERS project are to a large degree supported by the Empowering citizen for energy communities report written by Interreg Europe (2022), which suggests that energy communities could be a key tool in Europe’s energy transition and in the fight against climate change. For example, the report suggests that renewable energy communities could be a driving actor of the energy transition in the heat sector by energy communities jointly investing in renewable district heating networks which would allow older houses to switch from fossil fuels to renewable heating. The report also suggest that energy communities and prosumers could account for 45% of EU electricity consumption by 2050. However, for this to be achievable Interreg Europe suggests that energy communities need increased support from regional authorities to provide the right framework, expertise, advice and enable access to financing, as well as making sure that regulatory issues can be easily understood and navigated (Interreg Europe, 2022).
Interreg Europe. (2022) Empowering Citizens for Energy Communities – A Policy brief form the Policy Learning Platform on Low-Carbon economy. Available at: https://www.interregeurope.eu/sites/default/files/good_practices/PolicyBrief_RECommunities_final.pdf

3.5. European Energy Communities – Interreg North Sea Region (2021)

Similarly, in the European Energy Systems position paper written in 2021 by Interreg North Sea Region, where the opportunities and obstacles to the IEMD and REDII are analysed, it is suggested that EU countries should include guidelines in their legal frameworks of how energy communities are to be supported for local authorities to be able to set up community energy plans. It is also recommended that the European Commission makes an inventory and provides clear guidelines for how countries can support energy communities in overcoming the obstacles which arise when energy communities function as market players. It is for example recommended that the Electricity Directive 2019 needs an amendment or appendix to more clearly dictate the obligations of DSOs to ensure that CEC can access the public grid without being exposed to restrictive tariffs or permits, as the current directive leaves room for interpretation. In addition, the paper suggests that there is a need of a European Civic Energy Forum to provide capacity building measures and to function as a knowledge resource pool to help aid the clean energy transition (Interreg North Sea Region, 2021).
Interreg North Sea Region(2021). European Energy Communities: With recommendations derived from the Interreg North Sea Region project ‘Delivering Community Benefits of Civic Energy (COBEN)

3.6. Polycentric Energy Governance: Under what Conditions do Energy Communities Scale? (2022)

In their paper “Polycentric energy governance: under what conditions do energy communities scale” Petrovics, Huitema and Jordan (2022) are able to identify 23 different conditions which they suggest are important for the scaling and development of energy communities. Petrovics, Huitema and Jordan subsequently divide these 23 different conditions into three dimensions, namely: (i) external condition; (ii) interactions between initiatives; and (iii) functioning of initiatives, to be able to address what happens within, between and in the context of individual initiatives. They suggest that an increased understanding of how the different dimensions and conditions interact could help policy makers improve their support of energy communities in their development. They also suggest that energy communities now have entered a new phase, which is characterised by digitalisation and the emergence of market-oriented business models. According to the authors, this has resulted in a move away from a community logic to emphasis on market logics, consequently hollowing out of the energy community citizenship and made members of energy communities as mere producers or consumers of energy (Petrovics, Huitema & Jordan, 2022).
Petrovics, D., Huitema, D. and Jordan, A. (2022) ‘Polycentric energy governance: Under what conditions do energy communities scale?’ Environmental Policy and Governance, 32(5), pp. 438–449. doi:10.1002/eet.1989.