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Background Information

As legal entities and practical realities, energy communities are in their infancy in Finland. A considerable number of issues and questions are yet to be answered. This said, elements intrinsically involved in communities have been made legally and technologically possible long before the concept of energy communities became recognised.
Today, the Ministry of Economic Affairs and Employment (Työ- ja Elinkeinoministeriö, TEM) formally recognises three types of energy communities in Finland. The first two types, single property energy communities and cross-property energy communities, are currently implementable in practice. The third type, dispersed energy communities, is presently subject to scrutiny, and work to deliver a feasible and implementable legislative framework for them is currently underway (Elenia & VTT, n.d).

The actual number of active energy communities in Finland is not monitored, although according to Datahub there are more than 80 communities that use the compensation calculation provided by Datahub. Additionally, there are several housing companies that have one singular meter and can be considered ECs. Hence, the estimated number is that there are more than 100 ECs in Finland.
An interviewee highlights that Energy communities comprise a prevalent theme in local energy research. Specific focal areas concern local solutions, like the optimisation of the exploitation of solar energy as well as opportunities for charging. The research is also widely concerned with relevant legislation to identify the most sensible terms regarding the operation of the communities. A central point of concern in the process is the division of roles and responsibilities.

Single-property Energy Communities

Single property energy communities comprise the simplest and most implementable energy community at the moment. Aligned with the term, a key characteristic for these communities is that both the production and the point of consumption are located within the same property. Intended as a clean energy solution for people not living in detached houses, the most typical example of single property energy communities is a housing cooperative (Elenia & VTT, n.d). This said, the single property aspect applies to larger entities too. A few of the interviewed experts estimated that there is much potential for actors like university campuses and business sites to form communities within their properties.
Current energy communities use “compensation calculation” (‘hyvityslaskenta’) to monitor the electricity production and to share the produced electricity among the members of the community. In a cooperative, the consumption is comprised by electricity spent in the premises of its individual members, as well as in the general premises. The calculation prioritises the electricity spent in the general premises with any surplus distributed among the members. If, in turn, the residents are unable to fully spend the generated surplus, the community can choose whether the excess is attributed to the community or to the individual members. In this instance, the electricity is sold tax free. (Single property energy communities are still connected to the main grid and pay for the electricity accessed through the grid, tariffs etc.) (Elenia & VTT, n.d).
The electricity system in Finland recognises DSOs as the sole network operators in their locations and the construction of parallel networks is strictly limited. This is exempted within individual properties wherein energy communities have been enabled to build internal connections without permit requirements. This has provided single property communities with a degree of freedom to optimise their processes.

Cross-property Energy Communities

A cross-property energy community, like single property communities, is a local model in which the production and consumption are connected via a separate electricity line. As the name suggests, however, the difference between the two models is that the cross-property communities establish the mode of production in a property adjacent to the point of consumption. The rationale for this is to allow the community to optimise the production, should a neighbouring property be better suited for it. A commonly presented example for this is a scenario where the energy community resides close to a field optimal for a solar panel (Elenia & VTT, n.d).
Some technical details (e.g., how close together the properties may be) are not strictly defined in the legislation, and are mostly left determined by practicalities. One critical legislative detail in the process, however, concerns the connection to the main grid. Cross-property energy communities may only have a single point of connection to the main grid. Where both properties previously have their respective connections, one must be undone. If the community interconnected at least two connection points to the grid, the entity would become a licensable electricity network.

Dispersed Energy Communities

Dispersed energy communities are yet to be realised in practice. Much of the current policy work concentrates on how best to facilitate them. The defining elements for dispersed communities are that they do not need to be geographically connected. Their members, as well as the production may be located anywhere in Finland. In theory, this mode of community may best optimise generation with the freedom to choose an ideal location anywhere in the country. The lack of limitation to a single location may potentially enable dispersed communities to be considerably larger in size and include thousands of members (Elenia & VTT, n.d).
The point where dispersed communities are distinct from single property and cross-property communities is the increased reliance on the main grid. While local communities must be connected to the grid, the electricity produced within the community is mobilised for consumption via a separate line. Dispersed communities make use of the main grid for this purpose. Therefore, dispersed communities will likely be subject to the same grid service charges and taxes as the general population but avoid the electricity tariff. (Elenia, n.d). This said, the potential for dispersed communities to grow larger beyond local limits may ultimately enable larger investments, such as entire solar fields (Elenia & VTT, n.d).
As mentioned above, dispersed energy communities are not reality of the time of this case. However, it is possible to create a dispersed energy community within the same supplier. At the time of writing, in December 2022, there is an active Working Group focused on the legislative framework for dispersed communities due to finalise their work in February 2023.

Models for Energy Communities & National Legal Framework

The major actor in the Finnish electricity ecosystem is the state-owned national transmission grid operator, Fingrid, operating as a natural customer-centred monopoly. Connected to the main grid (and supervised by Fingrid) are distribution networks operated by about 70 DSOs that form another monopoly (HELEN, n.d).
HELEN (n.d). Electricity distribution in Helsinki. Available at :  https://www.helen.fi/en/electricity/customer-benefits/helen-electricity-ltd
The DSOs act in accordance with the policies reinforced by the Energy Authority, the regulative body for energy markets, renewable energy and energy efficiency (Energy Authority, n.d).
Energy Authority (n.d). About us. Available at : https://energiavirasto.fi/en/energy-authority
The Energy Authority, in turn, implements, supervises and reinforces policies set by the legislation.
Fingrid has also established a Data Hub for the standardisation and centralisation of data exchange on the market. Some of the DSOs are also currently the source of compensation calculation required by energy communities. The Hub went live in February 2022 but is expected to be better realised in 2023, when Data Hub starts to offer the compensation calculation. More importantly, the Hub is expected to take over the compensatory calculation function by June 1, 2023 which will enable anyone to establish a community regardless of their local DSO.
As of 2009, the Energy Market Act has allowed the construction of separate lines. The Act considers the separate line an electric line that connects a unit of production to the owner’s own premises, spin-outs or customers for direct energy supply. According to the Act, DSOs have a monopoly to construct networks in their areas with some exceptions. One of the exceptions concerns a separate line connecting a small-scale electricity production (max. 2 MW) to its designated point of use, or to the grid of a designated property or cluster of properties (Market Energy Act 9.8.2913/588).
The Market Energy Act 9.8.2013/588 chapter 1, Article 3; chapter 3, Article 13 (in Finnish), URL: https://www.finlex.fi/fi/laki/ajantasa/2013/20130588
In September 2016, the Ministry of Economic Affairs and Employment established a working group to explore and propose concrete measures through which the smart electricity system could facilitate the ability of customers to actively participate in the electricity market. The Working group oversaw the agreements regardingl arger, overarching elements pertaining to energy communities (Government of Finland, 2018).
Government of Finland (2018). A Flexible and Customer-driven Electricity System – Final report by the Smart Grid Working Group, Available at: https://julkaisut.valtioneuvosto.fi/bitstream/handle/10024/161147/TEM_39_2018.pdf?sequence=1&isAllowed=y     
This work laid down important groundwork in preparation for the introduction of the directive on energy communities by the European Union in 2019. By 2021, energy communities were formally recognised as micro grids in an update to the Energy Market Act. With the formalisation of the communities came the requirement for a juridical individual (i.e., a collective, like a cooperative, acting as one voice with legal rights and responsibilities) (Tommiska, 2020). Finally, by taking over the compensation calculation function, Data Hub, once it is scaled up in 2023, is expected to enable energy communities to anyone with the wish and means to establish one.
The Finnish energy grid is built on the principle of fairness. As a sparsely populated country, Finland has multiple regions with far less concentrated inhabitation than in the larger cities. If not for the decreed fairness, the costs of maintenance of the grid would end up placing the inhabitants in those sparsely populated areas at a considerable disadvantage. Thus far, this principle blocks the potential for deals for energy communities. The topic emerged in a number of interviews with a tentative consensus on protecting the fairness principle. A few interviewees, however, considered separate pricing possibilities in exchange for the benefit of increasing renewable energy and potentially providing added stability in the networks.

Legal and Practical Barriers

Inhibition on Applications

The main legislative limitation for the future applications concerns the regulations regarding connections to the network. Cross-property communities are strictly regulated in terms of connection-building beyond property lines to prevent more than a single point of connection.  Cross-property communities must take careful steps to avoid resembling a parallel network.  In addition, the Electricity Market Act does not recognise “island” energy communities (i.e., those entirely off the grid). The regulative framework, still partially underway, limits the experimental application element in this sense. Some interviewees brought up the concept of regulative sandboxes in the future as a means to consider future applications. However, they are not a current priority in the legislative work.

State of Networks

A more practical barrier concerns the state of the local networks. The dispersity of the inhabitation in Finland constitutes a factor in the renewal and maintenance of the networks. Grids in concentrated urban areas tend to be newer and laid underground, thus lengthening their lifecycle and rendering the need for maintenance more infrequent. By contrast, grids in more rural, less populated areas tend to run off utility poles, making the maintenance more challenging in practice and its need more frequent. This is expected to negatively impact the likelihood of establishment of energy communities in rural areas.


Additionally, the way in which DSOs approach energy communities will impact the ease at which communities can be maintained. Until the Data Hub incorporates the compensatory calculation service at the beginning of 2023, energy communities depend on their local DSOs for this function. Beyond compensatory calculation, DSOs are anticipated to take on a key role in supporting the implementation and maintenance of energy communities. However, there was a concern voiced in the interviews that DSOs may consider energy communities as competitors, which may suppress interest in collaborating on their part. 

General Uptake in Light of Increased Ownership and Responsibilities

The interviews paint a mixed picture of the public interest in energy communities. Some interviewees expect the uptake to surge once the compensatory calculation becomes available for all on Data Hub. Others have been more sceptical in the light of the responsibilities which the maintenance of an energy community brings. In this respect the challenges are twofold. First is the general burden derived from regular billing, administration and upkeep. Secondly, establishing and maintaining an energy community requires technical understanding and capability. Tasks like repairs have been handled by trained experts in the energy sector thus far. A few interviewed experts expected these requirements to impact the overall public interest.  Nonetheless, other interviewees expected the gradual uptake and upskilling to occur organically in the longer run, once communities become more commonplace.
The most prominent energy community initiative in Finland is located s in Marjamäki industry area in the municipality of Lempäälä.  LEMENE energy community is run by a subsidiary of the municipality-owned energy and property company Lempäälän Lämpö Oy.  It is an innovative and self-sufficient industrial and business district where the inhabitants share generated solar and biogas energy.  The community was proposed and selected for funding as a key project for future energy solutions by the Ministry of Economic Affairs an Employment in 2017 and became subsequently operational in 2019.  One of the eleven key projects financed by the ministry, LEMENE, received a €4.74m funding. This came as a part of a major decision from the government to invest a total of €100m in renewable energy and technologies between 2016 and 2018.
Other funders and financial backers for the project include Lempäälä’s Local Council and Tampere Region Council. In addition, the development of LEMENE has been supported by the University of Tampere and the Tampere University of applied sciences, along with the sector specific industry.
The community area is approximately 300 ha in size, of which 30 ha has been made available for businesses. At present, there are about 300 businesses operating in the area.  With the concentration of public and private support, the community houses 7,300 solar panels (2 + 2 MW), a gas engine capacity of 8.1MW and fuel cell solutions.  The modelled annual production of the solar panels alone is approximately 1,800 MWh.
In adherence to the legislation, LEMENE is connected to the main network, sourcing additional electricity and selling its surplus. If needed (or made legislatively possible), the community has the capacity to function as a reserve for the main grid or become an self-sustaining island capable of going off grid.

Drivers and Benefits


While the DSOs may limit the capacity for energy communities, the communities may also create demand for added services like general maintenance or billing calculation. This function is one which can be carried out by either the energy community or the local DSO.  One interviewee men­tio­ned the possibility of DSOs becoming a vital aid for energy communities where the general level of knowledge and skills may not meet the requirements within the community. It needs mentioning that the established approach to energy communities by DSOs remains to be seen. 


It also remains to be seen how the dynamic between energy communities and DSOs will be in the future. The research regarding communities has explored the potential to cultivate energy communities as local traders at grass root level. Some of the current work is concerned with possible applications for electric vehicles and questions regarding charging options in the future.  Should the collaboration between energy communities and DSOs become commonplace and workable, future applications and services may branch out considerably. 
A resulting awareness may also support the electricity market in managing surges in consumption. As a part of the shift to renewable energy in Finland, a central question has emerged about the rigid nature of green energy, where the supply is limited by natural factors. With the seasons impacting both, wind and available solar capacity, Finnish conditions provide a challenging ground for a sustained source of energy for a large part of the year. Prior to this, the use of coal-fired plants has allowed a degree of flexibility in supply efficiency to meet the consumer demand all year round. Thus, the shift away from fossil fuels has brought about the need to shift the flexibility on the part of the supply to that of the consumers to ensure a secure supply.  Multiple interviewees highlighted the benefit of bringing consumers into the green shift. Prior to the current energy crisis, the electricity ecosystem was of little interest to the general population. The monopoly status of Fingrid and the DSOs in Finland (as is for TSOs and DSOs across Europe), as well as the generally good quality of electricity has not required participation from the consumers. Joining an energy community may help incentivise people to think about their electricity consumption and to make more informed choices.
There was a general consensus among the interviewees that the communities result in financial benefits to their members. The electricity produced by the community costs only the establishment and maintenance for local energy communities. Moreover, the possibility to sell the excess electricity has the potential for communities to become local traders in renewable energy.