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Germany

Background Information

In Germany, there is no single definition of citizen energy communities (CEC) or renewable energy communities (REC). Energy communities comprise a broad variety of different legal models, associated actors and business models. However, all focus is on renewable energy and operate mainly on a local level. Thus, German energy communities rather fit into the EU definition of REC (EU Directive 2018/2001) (Deutsche Energie-Agentur , 2022).
EU-Directive 2018/2001 of the European Parliament and of the Council of 11 December 2018 on the promotion of the use of energy from renewable sources (Renewable Energy Directive (RED II)). http://data.europa.eu/eli/dir/2018/2001/oj
Deutsche Energie-Agentur (Hrsg.) (2022). Energy Communities: Beschleuniger der dezentralen Energiewende. https://www.dena.de/newsroom/publikationsdetailansicht/pub/dena-analyse-energy-communities-beschleuniger-der-dezentralen-energiewende/
Energy communities in Germany engage with around 86 % primarily in electricity energy production (electricity (photovoltaics, wind) and heat (biomass)), but also in energy distribution, as well as investments in renewable energy. Less often energy communities act as grid operators (bioenergy villages, “Bioenergiedörfer”).
Historically, there is a long tradition of the collaborative organisation of energy supply in Germany: In the early 20th century, electricity cooperatives (“Strom-Genossenschaften”) contributed to organising the electricity supply in rural areas in Germany. Since 1995, the number of energy communities with a focus on renewable energies increased. Particularly, in the years 2006 to 2013 890 energy cooperatives were founded, many of them with focus on photovoltaic (Frick et al, 2022).
Frick, V., Fülling, J, Anger, K., Knörzer, U., Tornow, M., Schnee, H. (2022). Mit Suffizienz zur Energiewende. Schriftenreihe des IÖW, 224/22.
 Thisdevelopment were favoured by regulatory changes. First the so-called Renewable Energy Sources Act (“Erneuerbare-Energien-Gesetz (EEG)) was introduced in 2000 and included fixed feed-in tariffs and priorities of renewable energies, which made investments in renewable energies more predictable and profitable. Further, an amendment of the law on cooperatives, the main legal form of energy communities in Germany, facilitated the establishment of cooperatives focusing on simple corporate structures and the possibility of democratic participation of the members. Yet, since 2013 there is less growth in the sector driven by a decrease in photovoltaic based energy communities. This is due to significant lower feed-in tariffs, which make investments less attractive and less plannable. Further, the introduction of tendering in 2017 pose another constraint to energy communities.
Although numbers vary slightly across data sources, there are around 1,700 energy communities in Germany (as of 2016). The biggest group (55%) of energy communities are organised as cooperatives (“Genossenschaften”) mainly focusing on photovoltaic. Another important group (37%) are organised as limited liability companies (GmbH/UG & Co. KG) and operate mainly wind parcs (Kahla et al, 2017).
Kahla, F., Holstenkamp, L., Müller J.R. & Degenhart, H. (2017). Development and State of Community Energy Companies and Energy Cooperatives in Germany. MPRA, Working Paper Series in Business and Law, 27, 81261.
Energy communities in Germany are regulated by the federal government and EU-bodies (and the respective laws, guidelines, and regulations) as well as the federal grid agency (“Bundesnetzagentur”) on an implementation level. Federal states are not relevant for the regulation. Further actors that can play an important role are municipalities, at times directly involved in energy communities ("(see the example of "Regionalwerke"), and financial institutions. Energy suppliers (especially green energy suppliers) are often partners for energy communities with regards to grid operation and energy distribution (see example of “Elektrizitätswerke Schönau”).

Models for Energy Communities & National Legal Framework 

The legal framework of energy communities in Germany is determined by the EU directives on CEC, but mainly REC (Electricity market directive and RED II), and national laws. The most important national regulation is the Renewable Energy Sources Act (“Erneuerbare-Energien-Gesetz” (EEG)). The EEG was introduced in 2000 to increase the share of renewable energy sources in the German energy supply and included a feed-in tariff scheme to foster renewable energy. Since then, the law was amended several times, with new regulations entering in force in 2023. Furthermore, the Energy Industry Act (“Energiewirtschaftsgesetz”) as well as laws on particular legal company models, such as the law on cooperatives (“Genossenschaftsrecht”) play important roles with regards to energy communities.
Regarding the EU directives and guidelines for CEC and REC, Germany has not yet implemented parts of it. Germany is especially lagging behind in the implementation of energy sharing (Boos, Hummel & Wegerich, 2021).
Boos Hummel & Wegerich, 2021.
 RED II permits the joint production and consumption of renewable energy via the local electricity grid. However, its implementation to national law is challenged by difficulties. According to the interviewees, the implementation of energy sharing should provide financial incentives to consume the electricity produced by the cooperative’s or one’s own RE plant.
In Germany, the legal framework for the organisation of an energy community depends on the size and the sector of the project to be implemented. The most common legal frameworks for energy communities in Germany are cooperatives (“Genossenschaften”), limited liability companies (GmbH/UG & Co. KG), and private corporations (“Gesellschaft bürgerlichen Rechts”).
Cooperatives are the most frequent organisational form of renewable energy communities in Germany (around 55%) and produce 3.5% of the renewable energy of the country (DGRV, 2021).
 Since 2006, 896 energy cooperatives have been founded in Germany. 95% of their members are private individuals, they furthermore include banks, farmers, as well as municipalities, public institutions, and churches. The minimum amount of investment of the members differs among the energy cooperatives, on average it is €560. This rather low amount allows different income groups to participate. Most energy cooperatives (“Genossenschaften”) are engaged in solar energy production (80%), but they are also active in the field of electricity distribution (36%) and wind energy production (30%) (DGRV, 2021).
In general, cooperatives are a very established legal structure in Germany and have been used for the organisation of (then fossil) electricity supply in rural areas since the early 20th century (Holstenkamp & Müller, 2013).
Holstenkamp, L. & Müller, J.R. (2013). On the State of Energy Cooperatives in Germany. A Statistical Overview As of 31 December 2012. Working Paper Series in Business and Law, 14.
 The long tradition of cooperatives leads to a clear and well-developed legislation, which facilitates the foundation of cooperatives, and ensures a high acceptance in society. The low rate of bankruptcy among cooperatives furthermore increases the attractiveness of the model. Yet, more bankruptcies can be observed since 2009 due to external factors, such as changing economic forecasts, or projects that do not unfold as planned (Kahla et al, 2017).
Kahla, F., Holstenkamp, L., Müller J.R. & Degenhart, H. (2017). Development and State of Community Energy Companies and Energy Cooperatives in Germany. MPRA, Working Paper Series in Business and Law, 27, 81261.
According to the interviewees, there are two important approaches of cooperatives that ensure long-time market participation and stability: First, some cooperatives offer important services for their members and act as social entrepreneurs (e.g., "regionalwerke"). Second, cooperation with established, larger energy suppliers offers guarantees for stability (e.g., BürgerEnergie Berlin with Elektrizitätswerke Schönau).
  • Energy communities focussing on wind energy production are often organised in the legal form of limited liability companies (GmbH, UG, GmbH & Co. KG) as the construction of wind parks requires more capital. These companies can be regarded as citizen energy communities if the limited partners (“Kommanditisten”) are private citizens.
  • For small projects, energy communities are often organised in the legal form of private corporations (“Gesellschaft bürgerlichen Rechts”), which are rather simple to register and found, yet yield the risk that members are liable with their personal assets.
There are differences in the scope of (financial) participation in the forms of energy communities in Germany: While energy communities organised on the municipality level (e.g., “regionalwerke”) ensure participation of all citizens, renewable energy communities organised as cooperatives or limited liability companies (GmbH & Co. KG) require often larger investments and hence, are not by design open for all income levels. Therefore, some of the interviewees deemed it important to ensure burden sharing and participation of different income groups to guarantee equal opportunities to participate. The organisational form of cooperatives furthermore ensures equal voting rights independently of the financial contribution to the project,
Ahlemeyer, K., Griese, K. M., Wawer, T., & Siebenhüner, B. (2022). Success factors of citizen energy cooperatives in north western Germany: a conceptual and empirical review. Energy, Sustainability and Society, 12(1), 1-14.
 whereas in limited liability companies the shareholders’ votes are weighted by their investments (Ahlemeyer et al, 2022.
Since 2013 there is a shift in the predominant legal form of the energy communities from cooperatives to limited liability companies. While the foundation of cooperatives is decreasing, limited liability companies have increasingly been established. This change is driven by the predominant electricity generation technology. While between 2009 and 2012 the focus lay mostly on electricity production via photovoltaic and was mainly implemented by cooperatives, wind projects have increasingly been set up in form of limited liability companies since 2013. This is also due to changes in the EEG law (Kahla et al, 2017).
Kahla, F., Holstenkamp, L., Müller J.R. & Degenhart, H. (2017). Development and State of Community Energy Companies and Energy Cooperatives in Germany. MPRA, Working Paper Series in Business and Law, 27, 81261.
Furthermore, there are differences in the frequency of the legal forms of energy communities between urban and rural areas: While in rural areas energy communities are often organised as cooperatives, in cities the legal form of private corporations is more often chosen, as the projects are mainly on a smaller scale.
The predominant business field of energy communities in Germany is electricity energy production (86%). Also, around 100 communities operate their own grid (e.g., bioenergy villages (Bioenergiedörfer) and around 150 operate grids and distribute heat and electricity but do not produce electricity. A minority of the energy communities distribute electricity or heat without operating their own grid (Ahlemeyer et al 2022).
Ahlemeyer, K., Griese, K. M., Wawer, T., & Siebenhüner, B. (2022). Success factors of citizen energy cooperatives in north western Germany: a conceptual and empirical review. Energy, Sustainability and Society, 12(1), 1-14.

Legal and Practical Barriers

Energy communities in Germany face a number of practical as well as regulatory challenges.
The regulatory framework and the bureaucracy in Germany represent barriers for energy communities (Deutsche Energie-Agentur, 2022).
Deutsche Energie-Agentur (Hrsg.) (2022). Energy Communities: Beschleuniger der dezentralen Energiewende. https://www.dena.de/newsroom/publikationsdetailansicht/pub/dena-analyse-energy-communities-beschleuniger-der-dezentralen-energiewende/.
 The interviewees emphasised the high relevance of the transfer of European political decisions to national guidelines. This is not been conducted to a sufficient extent in Germany. In particular with regards to energy sharing the lack of guideline poses an obstacle to energy communities. Energy sharing allows members of energy communities to consume the electricity generated by the community. Energy sharing focuses on the common, regional production and usage of renewable energy by using the local electricity grid and is often confounded with landlord-to-tenant electricity (“Mieterstrom”) and joint self-supply (“gemeinsame Eigenversorgung”) which describe the energy use of a commonly owned renewable energy plant by consumers with a joint grid connection (Bündnis Bürgerenergie e.V. 2021).
Bündnis Bürgerenergie e.V. (2021). Konzeptpapier Energy Sharing: Partizipation vor Ort stärken & Flexibilität aktivieren. https://www.buendnis-buergerenergie.de/fileadmin/user_upload/BBEn_Konzeptpapier_Energy_Sharing_Stand_vom_07.10.21.pdf.
 So far, there is no legal framework for energy sharing or landlord-to-tenant electricity in Germany. It is even further complicated as, according to the interviews, grid connection, especially in apartment blocks, is very difficult as many actors are involved and regulations are not easily comprehensible. Overall, this poses significant boundaries and insecurities to the members’ possibilities to benefit from the electricity generated by the community.
Furthermore, the amendment of the renewable energy sources act (EEG) in 2014 reduced the support measures for renewable energies. As part of this reform the fixed feed-in remuneration was replaced by a tendering procedure for electricity generation capacities (Frick et al, 2022).
Frick, V., Fülling, J, Anger, K., Knörzer, U., Tornow, M., Schnee, H. (2022). Mit Suffizienz zur Energiewende. Schriftenreihe des IÖW, 224/22.
 Since then, the national Renewable Energy Sources Act includes the preservation of actor diversity as a requirement of tendering to ensure that energy communities can participate in tendering (Hauser et al 2015).
The diversity of players in electricity generation from renewable energies is to be preserved in the changeover to tenders („Bei der Umstellung auf Ausschreibungen soll die Akteursvielfalt bei der Stromerzeugung aus erneuerbaren Energien erhalten bleiben“)“ in Hauser et al., 2015.
 Nevertheless, energy communities often face difficulties to win larger projects or relevant areas for the development of renewable energy projects. Economically relevant projects and interesting locations are often won by professional actors and larger companies, not by energy communities. The acquisition of projects is particularly difficult in cities. On the other hand, there are often not enough applications fortenders, owing to risk and insecurity and low prices/remuneration (Agentur für Erneuerbare Energien, 2022).
 This is a major problem for the expansion of renewable energy sources in Germany. When the new EEG regulation enters into force in 2023, energy communities will be exempt from tenders, a decision which is supported by citizen energy associations.
 Some of the experts expressed their concerns regarding current plans to extend renewable energy sources without special conditions for smaller suppliers (and hence energy communities). According to the interviewees, there should be conditions to prevent new barriers for energy communities.
While digital technologies have a high potential to improve the processes of energy communities, the lack of digital infrastructure in Germany is one of the main barriers for renewable energy communities (Deutsche Energie-Agentur, 2022).
Deutsche Energie-Agentur (Hrsg.) (2022). Energy Communities: Beschleuniger der dezentralen Energiewende. https://www.dena.de/newsroom/publikationsdetailansicht/pub/dena-analyse-energy-communities-beschleuniger-der-dezentralen-energiewende/.
 According to the interviewees, the slow rollout of smart meters in particular hinders the implementation of energy communities. The current German government seems to be aware of this problem and is drafting a new regulation to facilitate the digitisation of the renewable energy sector and in particular the rollout of smart meters (Tagesspiegel, 2022).
Tagesspiegel Background, 08.12.2022.
 Furthermore, grid operators do not always provide the necessary infrastructure, such as bidirectional meters. The shortage of specialists, who are able to install renewable energy systems is a further barrier for energy communities (Kahla et al, 2017).
Kahla, F., Holstenkamp, L., Müller J.R. & Degenhart, H. (2017). Development and State of Community Energy Companies and Energy Cooperatives in Germany. MPRA, Working Paper Series in Business and Law, 27, 81261.
According to the interviews, financial barriers are not the main challenge of energy communities in Germany. The membership fees at least in cooperatives are often not very high and some forms of cooperatives, such as “regionalwerke” even offer free membership for the citizens of the involved municipalities. The capital required for participation in larger wind projects and limited liability companies are often higher and thus more exclusive. Overall, the financial risk of energy communities is not as high or are well mitigated by the legal form (for instance, in limited liability companies (GmbHs) the members are not liable with private assets). For municipal energy communities there is no high financial risk, but they sometimes face problems to convince local citizens or officials thereof.

Drivers and Benefits 

According to the interviews, energy communities need political support, special conditions and regulations that facilitate their establishment and operation. As they are often of smaller scale, they cannot compete with larger companies and/or energy suppliers. These specific characteristics and conditions of energy communities are partially recognised in Germany, e.g., small energy communities do not have to participate in tendering, which leads to less uncertainties and bureaucracy for the communities. Furthermore, political incentives, such as low barriers to market access or guaranteed feed-in tariffs make energy communities more profitable and plannable.
Moreover, clear regulations and legislations encourage the establishment of energy communities. For instance, the well-established law on cooperatives (“Genossenschaftsgesetz”) in Germany facilitates founding energy communities and reduces uncertainties.
Other drivers of energy communities are associations between small energy cooperatives or cooperation with energy suppliers. Several renewable energy suppliers cooperate with citizen energy communities, for example Naturstrom, Green planet energy and Elektrizitätswerke Schönau (EWS), the latter being the oldest citizen energy community in Germany. The renewable energy suppliers organise the marketing of the generated energy and provide customer support. An alternative to organise the distribution of the electricity produced by energy communities is represented by Bürgerwerke, the largest association of energy cooperatives in Germany. Bürgerwerke organises the marketing and accounting of the energy produced by its members and is a not-for-profit cooperative owned by energy cooperatives.
The main socio-economic benefits of energy communities in Germany are based on the participation of citizens in the energy transformation enabled by the communities. This holds true in particular if they are organised in cooperatives. According to the interviewees, energy communities contribute to the democratisation of the energy system and a more equal distribution. Furthermore, due to the regional focus of energy communities in Germany, the positive impacts benefit local citizens and municipalities. Energy communities can contribute to local job and value creation and lower the electricity prices in the community. Alsor, energy communities often provide the required know-how and thus security (e.g., for new business models, regulations, legislations, which is more difficult to acquire as individual person.
  • The opportunity to participate financially and to contribute to shaping the local energy system also increases the acceptance of renewable energy systems. Members of renewable energy communities often participate for non-financial, idealistic reasons. Being directly involved in the projects and having voting rights is assumed to increase the acceptance, even though there is no quantitative evidence that more (financial or non-material) participation leads to a higher acceptance. Acceptance of renewable energies is crucial for the expansion of these technologies as it prevents conflicts and legal suits which have a high potential to hinder the expansion of renewable energies. On the contrary: Energy communities provide incentives for citizens and municipalities to support the expansion and establishment of renewable energies systems. This allows mobilising private capital and reduces the need for public funding and subsidies for the development of renewable energy projects. 
Moreover, energy communities in Germany yield benefits for the energy system. By supporting local production and distribution of renewable energy, energy communities promote the establishment of a decentralised energy system. A decentralised structure of the energy system is less vulnerable (e.g., to cyber-attacks) and more reliable. Furthermore, the rollout of renewable energy contributes to increasing the independency of fossil fuels and the associated export nations. Hence, energy communities can be seen as beneficial regarding energy security.
For a completely renewable electricity market, it is necessary to adapt energy usage/demand to energy supply. Energy communities can contribute to balance energy supply and demand. To use the possible benefits of energy communities to the electricity market, the implementation of energy sharing is crucial. However, as explained above, Germany has not yet implemented the EU guidelines regarding energy sharing. Energy sharing provides incentives to adapt energy consumption to energy production, i.e., consume energy when it is produced. Energy sharing could be implemented by introducing two separate tariffs/ electricity prices for the electricity produced by the energy community and a market price. It has the potential to reduce the burden of the electricity grid, especially when future electricity demand increases due to the increasing dissemination of electric cars and heat pumps.

Examples of real-life Energy Communities in Germany

In the following some real-life examples of energy communities in Germany are presented:
  • Example 1, the “Elektrizitätswerke Schönau”, represents a pioneer of energy communities and is active in various sectors. 
  • Example 2, BürgerEnergie Berlin”, is a typical cooperative energy community focusing of diverse aspects, not only energy production.
  • Example 3, “Bioenergiedorf Jühnde”, is active as heat grid operator.
  • Example 4, “regionalwerke”, is a visionary approach towards municipal energy communities.
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EXAMPLE 1: REC PIONEER “ELEKTRIZIÄTSWERKE SCHÖNAU (EWS)”
Elektrizitätswerke Schönau (EWS) is a pioneer in the field of renewable energy cooperatives in Germany and active in various sectors. It was founded in 1994 in reaction to the Chernobyl disaster. Since 1996 EWS is the grid operator and electricity provider in Schönau in South Germany. Since 1998 EWS provide electricity from renewable energy sources nationwide. Furthermore, EWS offers biogas from renewable sources, engages in electric mobility by providing charging cards for electric cars and is operating heat grids in several parts of Germany. It was the first renewable energy cooperative in Germany and acts as a partner and mentor for many younger and smaller energy cooperatives in Germany. The cooperation between EWS and other REC can be organised in different ways. However, in all cases EWS provides customer support, and the REC receives financial benefits for every recruited customer. This ensures the development of local renewable energy projects.
The complex organisational structure of EWS reflects the variety of the cooperative’s engagements: The cooperative Elektrizitätswerke Schönau eG owns several subsidiary companies and holdings of other companies. The subsidiary companies are responsible for the grid operation and electricity distribution, as well as the development of new renewable energy projects. Two wind parks are operated by subsidiary companies of EWS. All subsidiary companies are organised in the legal form of limited liability companies (GmbH or GmbH & Co. KG).
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EXAMPLE 2: RENEWABLE ENERGY COOPERATIVE “BÜRGERENERGIE BERLIN”
BürgerEnergie Berlin eG was founded in 2011 to re-municipalize the electricity grid in Berlin. After several years of legal dispute, the federal state of Berlin acquired the electricity grid from the energy corporation Vattenfall. Now, BürgerEnergie Berlin campaigns for direct citizen participation to facilitate financial benefits for citizens as well as the democratisation of the electricity grid.

BürgerEnergie Berlin eG engages in the development of citizen energy projects in Berlin and Brandenburg. They support several landlord-to-tenant electricity projects in Berlin. In these projects BürgerEnergie Berlin finances the construction of the photovoltaic system and sells the generated electricity at low prices to the tenants living in the building. To ensure the electricity supply for the tenants when the PV system does not generate energy, BürgerEnergie Berlin cooperates with Elektrizitätswerke Schönau (EWS), an established energy cooperative and energy supplier. Via this cooperation, BürgerEnergie Berlin provides electricity from renewable energy sources and collects financial means to support the expansion of renewable energy systems in Berlin.

BürgerEnergie furthermore engages in renewable energy projects in Brandenburg: In cooperation with other renewable energy cooperatives, BürgerEnergie Berlin built photovoltaic systems in Brandenburg.
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EXAMPLE 3: BIO-ENERGY VILLAGES “BIOENERGIEDORF JÜHNDE”
Bioenergy villages are able to cover at least 50% of the local energy demand (heat and electricity) using regionally generated bioenergy. Jühnde, a village in the south of Lower Saxony, was the first bioenergy village in Germany. Since 2005 the energy demand of the village has been entirely covered by the renewable energy produced in the local biogas plant and distributed via the local electricity and heat grids. The local energy generation has positive effects for the local agriculture which produces the biomass and manure as well as wood chips for the biogas plant. Until 2019, Bioenergiedorf Jühnde was organised as a cooperative. Due to financial reasons, in 2019 the cooperative sold the local heat network and its biogas system to EAM, a limited liability company owned by 12 counties and several municipalities.
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EXAMPLE 4: VIRTUAL (ENERGY) COMMUNITIES OF “REGIONALWERKE”
irtual (energy) communities are developed, implemented developed by the Bavarian company “regionalwerke”. It is based on the idea that several municipalities found a public agency (“Anstalt des öffenltichen Rechts”) to jointly conduct economic activities in diverse fields, including the supply and operation of energy and electricity grids amongst others. For each of these fields, the municipalities, as joint public agency, found a subsidiary (GmbH & Co. KG). Hence, electricity production and energy distribution are each organised as subsidiaries.
The benefits of this form of energy communities are that all citizens can be included (independently of investments). Further, citizens of municipalities make local and democratic decisions with regards to energy supply and distribution in the region. This increases the acceptance of renewable energies and offers a possibility that citizens benefit financially from the profits of the energy system. On the level of municipalities, they benefit as they can work together, share bureaucratic and administrative burdens and transfer knowledge. It also allows determining electricity prices on the municipal level.
“Regionalwerke” is currently being implemented in Landshut, Bavaria. 35 municipalities are working on creating a blueprint for the above-described idea of virtual (energy) communities. Motivating factors for founding such a community are the possibility to be independent of energy supply and grid operating companies and to increase local value creation. According to the interview, there is an increasing demand and interest of other municipalities to establish virtual (energy) communities (Regionalwerke, 2022).
Regionalwerke,(2022). Our home town Our Responsibility. Available at: https://regionalwerke.com/.
Nordic Energy Research I www.norden.org/publications I pub@norden.org