Go to content
Photos: Pixabay and iStock

4. Implementation of Renewable Energy Communities and Citizen Energy Communities in the Nordics and Europe

As previously mentioned, the transposition of the REC and CEC definitions into the respective national legislation varies widely among the studied countries. Denmark and Austria have transposed both of the definitions into the national legislations while Finland has chosen to use a singular definition “local energy community” which encompass both RECs and CECs. The remaining countries are at various stages in the transposition process. Consequently, the transposition of the enabling and incentivising frameworks for the respective models has also progressed at different rates.

4.1. Country Specific Implementations in Brief

In the Nordic countries, Finland and Denmark have implemented the REDII and IEMD in their legislative framework, while Sweden and Norway have not yet implemented the relevant concepts in their legislation. In Denmark, in 2021, RECs were included in the law on promotion of renewables, while the definitions of both RECs and CECs were defined in an executive order which added to the law on electricity supply. In Finland, the definition Local Energy Communities (LEC) was integrated in the legislation in 2021, although there is currently no legal differentiation between REC and CEC.
At the time of this study, Sweden has not transposed Energy Communities into the national legislation. The Swedish Energy Regulator has drafted a proposal on how to transpose the directives into the national legislation but no formal proposal on legislation regarding transposing Energy Communities has been made so far. Norway, lastly, has not implemented CEC or REC as concepts in neither the national legislation nor in practice. Since Norway is not an EU Member State they do not have to transpose the EU legislation directly. As part of the European Economic Area (EEA), the directives will be implemented in Norway if the EEA and EFTA agree that the directive is relevant to the EEA agreement.
In European countries outside the Nordics the transposition is also of various stages, depending on the country. Of the non-Nordic countries included in this study, Austria is most far ahead in terms of transposition. Energy communities were established within the legal framework in 2019, with the passing of the Renewable Energy Act, a direct translation of the European directive into Austrian law. Additionally, the “Complete Legislation for Electricity Markets and Organization Law”, has established a clear definition of and framework for Citizen Energy Communities. In the Netherlands, the two concepts of CEC and REC are to be joined into one concept in the Energy Law, called energy community. In Germany, there is also no single definition of citizen energy communities or renewable energy communities. Recently, REScoop.eu launched a transposition tracker to visualise the transposition of the concepts CEC and REC in each EU member state according to an assessment of a set of indicators. The tracker is continuously updated to assure a relevant depiction of the respective transposition (REScoop, 2023).
Rec and CEC definitions (2023) REScoop. Available at: http://rescoop.eu/transposition-tracker.

4.2. Synthesis of the National Legal Frameworks

Although the transposition of the Clean Energy for all Europeans package into the respective national legislations are at varying stages of progress, all the studied countries have existing legislation that regulate the initiation, activities, and organisation of Energy Communities.
In the Nordic countries, there are one or two main laws that make up the national legal framework, and which are implemented by one or two relevant (energy) agencies. In Denmark, the main laws regulating Energy Communities are the Law on Promotion of Renewables and the Law on Electricity Supply. The main public bodies regulating and supervising the Danish energy market are the Danish energy agency (DEA), responsible for tasks linked to energy production, supply, and consumption, and the Danish Utility Regulator (DUR), responsible for securing consumer interests in the utility sectors. Both agencies answer to the Ministry of Climate, Energy and Utilities. In Sweden, the main legislative framework is the Electricity Act, which regulates the energy market and the implementation of energy communities. The Swedish Energy Agency (Energimyndigheten) is the government agency responsible for promoting energy-efficient measures and investments in renewable energy technologies. Furthermore, the Swedish Energy Market Inspectorate supervises the Swedish energy market actor’s compliance with laws and regulations at the national and EU level. In Finland, the Electricity Market Act is the main legislation regulating Energy Communities, which formalises the rights of actors in the electricity market. The Energy Authority implements, supervises and reinforces policies set by the legislation. Finally, in Norway, the main national legislative frameworks are in the Energy Act, Energy Regulations, and the Grid regulation and the Energy Market Regulation.
In the case study of countries outside the Nordic countries, the same situation can be seen. In Austria, there are two main legislative frameworks: (1) the Renewable Energy Act, the direct translation of EU regulation regarding energy communities into national law, and (2) the Complete Legislation for Electricity Markets and Organization Law. The Austrian Ministry of Climate Action and Energy is the ministry responsible for implementing and translating the EU directives into national legislation, while E-Control is the Austrian government’s regulatory authority for electricity and natural gas markets. In Germany, the most important national regulations are the Renewable Energy Sources Act, and the Energy Industry Act, as well as laws on particular legal company models, such as the law on cooperatives, which play important roles with respect to energy communities. The federal government plays a role in the oversight of these laws, as well as the federal grid agency (“Bundesnetzagentur”) on an implementation level. Finally, in the Netherlands, the laws that were of importance until now were the Electricity Act and the Gas Act, which as of this year or the next will be combined in the Energy Act, which will encompass the regulation for all energy carriers. The main regulatory authorities for the energy system, and renewable energy communities, are the Ministry of Economic Affairs and Climate (Ministerie van Economische Zaken en Klimaat, EZK), which is responsible for the policy side, and the Netherlands Enterprise Agency (Rijksdienst voor Ondernemend Nederland, RVO), responsible for the implementation of the policies.

4.3. Energy Communities in Practice

In the following, we shall provide an overview of the definitions of Energy Communities in the seven countries of analysis and compare the different models for Energy Communities of the countries.
In almost all countries of analysis, except Austria, there is little or no differentiation made between REC and CEC in the general discourse; often they are referred to as energy communities. Thus, much of the literature and the interviewees do not discern between the two definitions. In the following, we will use the term Energy Communities as an umbrella term for the different forms and models in the different countries. While, using the specific terms REC and CEC when a differentiation is being made.
The country studies shed light on the different roles of energy communities in the analysed countries showing that scale of Energy Communities varies. In Norway, the interest and need for Energy Communities is rather low due to a historically robust energy system and low energy prices. Hence, although there are some active Energy Communities and new projects aim at establishing more, the imple­men­tation remains at an early stage and is rather small scale. Similarly, Energy Communities in Sweden are at an early stage, and the definition of Energy communities has not yet been included in the national legislation. However, active Energy Communities exist and both political as well as public interest in locally produced energy is growing. The same situation applies to Finland, where around 100 Energy Communities are established, yet the system remains in its infancy. Denmark has a long history of citizen ownership and is one of the EU countries with the highest share of citizen ownership of energy assets. Although Danish legislation discerns between CECs and RECs, in general conversation people refer to Energy Communities (Energifælleskaber).
Energy Communities have a longer history in Germany being established since 1995. There was a strong increase in numbers between 2006 and 2013. Yet, the foundation of new Energy Communities, especially of those focusing on solar power (which constitute the largest part of ECs in Germany), has been decreasing since then. In total, there are around 1,700 Energy Com­mu­ni­ties in Germany. The Netherlands has around 700 Energy Com­mu­ni­ties and the numbers are currently increasing. The high interest is also reflected explicitly in the national Energy Law. Austria is the only country that distinguishes between CEC and REC in the general discourse. REC may produce energy from renewable sources and consume, store, or sell self-generated energy, CEC is a legal entity that generates, consumes, stores, or sells electrical energy. Overall, there are around 100 RECs and between 3 and 10 CECs. In general,  interest in Energy Communities is increasing and since March 2022 there is a first funding call for energy communities.

4.4. Comparative Analysis of Models for Energy Communities

Due to the high variety of models across the countries, no systematic definition formodels of Energy Communities can be established. Yet, various factors, such as focus on Renewable Energy Communities (REDII) versus Citizen Energy Communities (EMD), technology, legal form and regulations, location, property ownership, and stakeholders, seem to be important when analysing the formats of Energy Communities in the countries. In the following, the role of these factors in the respective countries will be summarised:
In Norway, most projects aiming at implementing energy communities are driven by property owners and real estate companies trying to increase local power production and self-sufficiency of energy for buildings. Further, Distribution System Operators (DSO) are engaging in research projects to strengthen their knowledge of the potential of energy communities. There are also some pilot projects to develop energy communities for production and sharing renewable energy on remote island off the coast of Norway. 
In Sweden, the main factors defining the model of implementation are the organisational structure and the model for electricity sharing. Four different models of organisation can be identified: First, wind power cooperatives are organised as incorporated associations. Second, eco-villages with individuals focusing on sustainability and self-sufficiency are established. Third, there are solar power cooperatives within tenant-owned apartment buildings (“Bostads­rätts­föreningar”). Fourth, rural communities run small scale heating systems.
In Finland, the Electricity Market Act allows for three types of communities. The single-property communities use the produced energy for the community members. Based on “compensatory calculation” the production is monitored and shared among the members. In case the production exceeds the needs of the residents, the excess is sold to an energy provider. . Cross-property energy communities produce and consume energy on different, but immediately adjacent properties. This way, an energy community can be established when, for instance, the site of consumption is not suitable for production. The energy community is connected to the grid via single connection points instead of a ring connection. Further, there is a possibility to create de-centralised energy communities across the country. This can for example comprise energy production at summer cabins and consumption of the energy at the members' homes. In this model, members pay grid service charges and taxes as usual and currently both sites must have same supplier.
In Denmark, the main difference in energy communities lie in the organisational structure of the different types of communities, type of energy produced (eg. heat or electricity) and model for energy sharing. Energy communities exist as eco-villages, small-scale heating systems in rural communities, and cooperatives focusing on local wind and solar panels on residential buildings.
In Germany, factors such as the technological focus and the legal framework define the different models for energy communities. Traditionally, the largest sector of energy communities are cooperatives focusing on solar power to produce energy. Increasingly, there is a shift to wind energy parks organised as companies with limited liability (GmbH & Co KG). The limited partners "Kommanditisten" are citizens. Moreover, there are alternative legal frameworks such as “Gesellschaft bürgerlichen Rechts” that are more attractive for smaller projects (<€100,000). There are also examples of energy communities, where several municipalities found a public agency to organise energy supply and operate electricity grids (Joint municipal company). This way, all citizens can take part in the community independently of personal investments in the setup. There is also an opt-out option for citizens living in municipalities with municipal energy communities, ensuring that participation is voluntary.
In the Netherlands, models of implementation depend on the national legal framework. The main forms of organisation are cooperatives, foundations, Associations of Owners (Vereniging van Eigenaren), and companies. A requirement for receiving subsidies for energy communities is that the community is organised as a cooperative or a foundation.
In Austria, there are three types of energy communities: (1) in Joint/Communal Communities several people can produce and use electricity together on the same property, using joint infrastructure, (2) Local Energy Communities (REC) are usually implemented by municipalities and SMEs and are connected via a common transformer substation and (3) in Nationwide Energy Communities (CEC) members receive energy from the same DSO and are not geographically bound. Most Energy Communities are mainly organised as cooperatives (often having their own infrastructure), or as associations with the latter often not having any infrastructure of their own but combining the members’ facilities. In terms of technology, focus lies on energy production with solar panels. In the future, wind power and biomass will probably play a more important role.

4.5. General and Country/Model Specific Barriers

4.5.1. Knowledge Barriers for Both Community Members and Policy Makers

A barrier that is mentioned by most countries, is the lack of awareness and knowledge among local, regional, and national policy makers and the general public. The lack of awareness among local and regional policymakers prevents municipalities from assigning space for energy communities or allowing communities when they take initiative. In Germany, for example, it can be difficult to convince mayors of the possibility to start an energy community in their municipality. The lack of awareness among national policy makers prevents energy communities to be properly integrated in the national governance framework.
The lack of awareness among the general public creates barriers as this can make it difficult to convince the local citizens to accept an energy community (as the German country case study shows), or to gather a sufficient number of people to start an energy community (as the Norwegian country case study shows).
Furthermore, setting up energy communities requires specific knowledge. In most countries, a barrier is that community members lack the technical and legal knowledge required inthe starting phase of the community. This barrier is present in most countries, including Sweden, the Netherlands, Germany, and Norway. The knowledge deficit creates barriers for the energy communities as it can be difficult and time-consuming for their members to acquire the knowledge. Sometimes this barrier is reinforced through DSOs or network operators that do not provide information to communities, which they would need to start their energy community.

4.5.2. Financial Barriers Related to Large Upfront Investments

Neither RECs nor CECs may have financial profit as a primary purpose. However, savings are often a significant motivator for members to start or join an EC. Starting up an energy community requires large upfront investments. This creates financial barriers for aspiring community members, especially for less affluent citizens. Even when it is clear that the business case for the energy community can be profitable in the long run, the upfront investment can still create a barrier. Especially when subsidies or other types of funding or loans are not easily available, this barrier can prevent energy communities from being initiated.

4.5.3. Legal Barriers Related to Energy Sharing

The Clean Energy for all Europeans package gives energy communities the right to share energy within the community. The package differentiates between energy supply and energy sharing. However, as energy sharing currently is not clearly defined, the practical framework for energy sharing is to a large degree decided by the respective member state.
Energy sharing in the context of energy communities can be performed in numerous ways. It is worth noting that energy sharing is not confined to the activity of direct and physical sharing of energy among community members but can also be defined as administratively sharing of the energy, such as sharing electricity through the collective grid, offsetting energy components, sharing of remunerations and/or tariff adjustments. If a member state allows an energy community to construct a communal grid the energy community would, in accordance with the EU directive, also need to take on the role and responsibilities of a DSO.
In this report we have looked at the various ways in which the respective country has interpreted energy sharing and provided options for energy communities. Hence, the definitions observed are broad and are rather defined by the various objects of the study than by a predefined definition by the study team. It is worth noting that, at the time of authoring the report, the EU commission has proposed a reform of the EU electricity market design, in which rules on sharing renewable energy are being revamped.
Austria is the country that has the most established governance framework among the investigated countries, which allows energy sharing. Even here, though, the administration of energy sharing is rather complicated. In Denmark, regulations on energy sharing permit electricity sharing within a single building such as a housing cooperative, but electricity sharing outside of a building is only possible through the collective grid and is subject to the general tariffs and taxes. In Finland and in the Netherlands, energy sharing is currently only possible when the communities make use of administrative solutions to enable energy sharing on paper. The energy is shared via the grid and is subject to the general tariffs and taxes. In Finland, one administrative solution is to make use of virtual net metering: the DSO is responsible for this, measuring electricity usage of the community’s members and organising internal credit calculation. The other solution is to apply back metering, where the housing company only has one DSO meter (and subsequently only one supply contract) and divide the energy bill among the shareholders either by non-DSO submeters or with fixed proportions, for example based on area of the respective apartment. In Sweden, energy sharing is only possible when a microgrid has been deployed in a building by a company or a DSO. In Norway, it is only possible to share energy produced within a residential building if the community members form a power production company and act as shareholders of this company. In Germany, there is currently no legal framework for energy sharing or landlord-to-tenant electricity, which limits the development of energy communities.
Some ECs wish to build a (micro-)grid for the community with the purpose of electricity sharing among members. The extent to which this is possible varies per country. In line with the IEMD DSOs have a monopoly on deploying regional and local distribution grids. In Finland, only DSOs are by law allowed to build separate electricity grid lines crossing property limits, an exemption in the law allows energy communities to build separate lines of max 2 MW, connecting a small-scale electricity production to its designated point of use and if multiple properties are owned by the same owner, a network between these properties can be constructed. In Sweden, there is also an exemption in the law, however it only applies to small internal networks within an easily defined area. A few pilot projects have been permitted to develop a common energy system for residential areas. In Norway, also only DSOs are permitted to develop distribution grids, limiting the possibilities to form larger communities that can produce and share energy. In Germany, other actors than DSOs can also apply for concessions of local electricity grid. As a result, several energy communities manage their own electricity grid. In Austria, the ownership of a community’s infrastructure depends on the specific model of energy community. Communities established as associations do not own infrastructure but tend to lease infrastructure. On the other hand, communities run by large cooperatives often own their infrastructure.
In the Nordic countries, energy sharing via an internal grid has an extra dimension to take into account: the principle of fairness. The Nordic countries are sparsely populated and inhabitation is more distributed within the countries, with some areas having a very low population density. This means that energy prices are usually distributed among all those connected to the collective grid, independently of how long the lines required to connect them to the grid are. This is to prevent the cost of maintenance of the grid in sparsely populated areas to be way higher than in the cities. If energy communities would create their own micro-grid, this could mean that network operators would lose (a part of) the income from the energy community members in terms of contributions to the collective grid.

4.5.4. Practical and Technological Barriers Vary per Country

In some of the countries, there are technological barriers related to a lack of digital infrastructure. In Germany, the lack of digital infrastructure is one of the main barriers for renewable energy communities. Also in Norway and Austria there are challenges related to the digitalisation of the grid. Another challenge is that in some countries (e.g. Germany and Austria), the nationwide rollout of smart meters is slow. This limits the opportunities for accurate monitoring or measurement of community- or household-level energy supply or use.

4.6. General and Country/Model Specific Mitigators for Barriers

4.6.1. Legal Barriers Mitigated by Administrative Solutions or Newly Developed Laws

In most of the case study countries, new laws have been, or are being introduced in the next few years that incorporate room for energy communities in the legal framework. In Austria, a new law has been introduced in 2019. In Denmark new regulation has most recently been introduced in 2023. In the Netherlands, new laws will be introduced in the next few years. In Finland, a working group has been set up to identify whether additional regulation changes are needed to further promote energy communities.
For energy sharing, a solution that can mitigate barriers is to introduce locally differentiated tariffs. In Denmark, a study has been made to analyse possibilities for local collective tariffing for energy communities, enabling tariffs tailored to the respective energy community’s contribution to the collective grid. The study resulted in a new regulation, which has entered into force in 2023.

4.6.2. Representative Body to Lobby for Energy Communities

The barriers related to lack of a governance framework for energy communities can be mitigated by representative bodies of energy communities thatlobby for the inclusion of energy communities in the governance framework. A good example at EU level is REScoop
Rescoop (n.d) REScoop. Available at: https://www.rescoop.eu/.
, the European federation of almost 2000 European energy cooperatives. This federation lobbies at EU level for inclusion of energy communities in the governance frameworks, as well as supports the national energy community representative bodies.

4.6.3. Knowledge Barriers Mitigated by Education from Representative Bodies

The barriers related to lack of knowledge among local, regional, and national policymakers can be alleviated with the help of representative bodies of energy communities. A representative body can act as an organisation that facilitates the knowledge transfer between energy communities and policy makers. On the one hand, a representative body can educate policy makers about the benefits of energy communities, and on the other hand it can educate (aspiring) energy community members. A good example is the Coordination Office for Energy Communities in Austria. It acts as an intermediary between the energy communities and Austria’s federal states as well as the relevant ministry and other relevant actors, and supports energy communities as well as policy makers.

4.6.4. Financial Barriers Mitigated by Availability of Support and High Energy Prices

The current high energy prices cause the business models for the energy communities to be more profitable. Especially in countries that are still largely dependent on fossil fuels for their energy supply, the energy prices have been very high in recent years. Support from governments in the form of funding or subsidies also supports the mitigation of financial barriers. In Austria, for example, the Coordination Office for Energy Communities sets up funding programmes for the establishment of energy communities. In the Netherlands for example, a subsidy scheme has been introduced to ensure that the energy price for energy communities stays within a certain range. If the energy price was to drop, this does not endanger the business model of the energy community. A subsidy scheme like this can convince banks to invest in energy communities, as their business case is more stable, providing a source of financial capital for upfront investment.

4.7. General and Country/Model Specific Enablers

4.7.1. Governance Framework can also Enable Energy Communities

While previous sections often mention that governance frameworks creates barriers for energy communities, there are also laws that can enable energy communities. In Austria, for example, recent laws established clear definitions of and framework for energy communities, enhancing their adoption. Another example is the Netherlands, where space was created in a previous law specifically to allow experimentation with innovative ideas like energy communities.

4.7.2. Possibilities for Energy Communities to Reduce the Energy Load of Local Grids

In Austria and the Netherlands, energy communities are seen as possible solutions for energy load reduction, grid stabilisation, thus lowering the necessity for (local) grid expansion. In the Netherlands, where grid congestion already poses a problem, the DSOs are eager to collaborating with energy communities to get their support for local congestion alleviation.

4.8. Drivers for Founders and Members of Energy Communities

4.8.1. The Prospect of Control over Energy Supply and Related Financial Savings

A main driver for aspiring energy community members is the prospect of control over their own energy supply, and the related possibilities for financial savings. Especially when energy prices are high, the prospect of (relatively) stable and low energy prices can be a big driver for citizens to take the step to start an energy community. Hence, high or volatile energy prices can act as an increased incentive to start or join an EC.
Also, in some countries the prospect of security of supply in rural areas is a driver. Especially in some of the Nordic countries, energy communities can be found on (remote) islands. These energy communities are sometimes entirely off-grid. An energy community can be the only way to have a security of energy supply, especially when existing connections to the collective grid have limited capacity or when they experience frequent power failures, as is the case on a Norwegian island described in the Norwegian country case.

4.8.2. The Possibility to Contribute to the Acceleration of the Energy Transition

Another driver for implementers is the chance to contribute to the energy transition, or its acceleration. Especially when a country still has a relatively low share of renewable energy, or is not planning on increasing the share of renewable energy, citizens can be compelled to support the transition themselves. Hence, starting a renewable energy community can be a local solution to the national energy transition challenge.

4.8.3. The Promise of Democratisation of and Benefits for the Community

For some implementers, the democratisation of the neighbourhood is an important driver to engage in the establishment of an energy community in their neighbourhood. An energy community, especially when established as a cooperative, often functions as a democratic body in which each citizen can contribute. Especially in Germany and the Netherlands, the cooperative is seen as a way to provide benefits for the community. For example, the profits that an energy community can make from selling their excess electricity to the collective grid can be used to invest in the neighbourhood. Also, an energy community can make sure to also involve marginalised or vulnerable citizens and support them, financially and socially.

4.9. Conditions in Energy Systems that Render Contributions Less Likely

4.9.1. High Share of Renewable Energy in the Energy Mix

When a country already has a high share of renewable energy in its energy mix, citizens are less likely to engage in the establishment of energy communities. In such countries, the environmental and financial benefits are less convincing for citizens. It is not necessary to push the energy transition bottom-up in these countries. Also, with a high share of renewable energy, the energy prices are likely to be lower than in countries that are more dependent on fossil fuels such as natural gas, which push the energy prices higher when they make up a large share of the energy mix.j