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Background Information

The implementation of energy communities (EC) is in its infancy in Norway. Citizen Energy Communities (CEC) and Renewable Energy Communities (REC) have not yet been implemented as concepts in national law or in practice according to the definitions specified in the EU Electricity Market Directive (EMD) (2019/944)
EU directive 2019/944. EU directive on common rules for the internal market for electricity. Available at: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32019L0944&from=EN.
and Renewable Energy Directive (REDII) (2018/2001)
EU directive 2018/2001. Renewable Energy Directive (RED II). Available at: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32018L2001&from=EN.
. Due to relatively low energy prices historically and a robust energy system based on hydropower, the public and political interest in exploring new energy solutions such as energy communities have not been particularly strong. Additionally, as Norway is not an EU member state, the implementation of CECs or RECs is pending. There are, however, active energy communities in Norway today, mostly organised as pilot projects, and the general interest in energy communities or other alternative solutions to produce renewable energy locally has intensified over the past few years, mostly due to climate change and increased energy prices.
There is no existing database on initiatives. However, a previously conducted study
THEMA Consulting Group (2018). Descriptive study of Local Energy Communities. Available at:  https://thema.no/wp-content/uploads/THEMA-Reort-2018-20-Local-Energy-Communities-Report-Final.pdf.
identified 30 active energy community initiatives, of which only five had been implemented and the rest were at early stages. The majority of energy community initiatives were initiated by property developers and real estate companies, developing energy-efficient residential buildings that produce and store renewable energy. Another common form of energy community initiative was conducted by DSOs, aiming at developing different models of microgrids in identified areas to limit the load on the main grid, and thereby decrease future investment costs related to maintenance (Thema Consulting group, 2018).
The implementation of energy communities in Norway is regulated by national legislation. As Norway is not a member of the EU, the implementation of CEC and REC does not automatically apply to the national legislation (MchElhinney et al, 2022). The central actors within the Norwegian energy system, and consequently the most important actors for the implementation of energy communities, are The Norwegian Water Resources and Energy Directorate (NVE), The Norwegian Energy Regulatory Authority (NVE-RME), The Norwegian TSO – Statnett, the Norwegian DSOs, municipalities, communities of citizens, and private companies.
The Norwegian power grid is structured as a monopoly and regulated by the state. NVE is a directorate under the Ministry of Petroleum and Energy, responsible for managing Norway’s water and energy resources. NVE regulates the energy system and grants licences for the transmission and production of renewable energy. NVE is responsible for maintaining national power supplies and is also an important factor in energy-related research and development (R&D), being part of a substantial number of projects, including energy community initiatives (NVE, n.d).
NVE. About NVE (n.d). https://www.nve.no/about-nve/.  
NVE-RME is the national regulator for the Norwegian electricity and gas markets. Its main responsibility is to supervise the Norwegian electricity and gas markets and to enforce the provisions of the national legislation. NVE-RME is part of multiple innovative energy-related projects, of which several are aiming at implementing energy communities (e.g., Smart Senja and Lohøgda Borettslag). Statnett is the state-owned TSO in Norway, responsible for the national transmission grid. Statnett’s main objective is to facilitate the national power supply according to Norway’s climate objectives. Furthermore, Statnett invests in innovation and technology projects and currently has a portfolio of around 60 projects, including energy community initiatives.
There are around 130 DSOs in Norway, responsible for operating the regional and distribution grids. The DSOs control the distribution market as monopolies, owning concession licenses which give them exclusive rights to operate distribution grids within designated areas (NVE, 2018).
NVE. (2018) The Norwegian power system - Grid connection and licensing. https://www.statkraft.com/globalassets/9-statkraft-datacentres/documents/faktaark-energi-nve.pdf
As noted above, DSOs in Norway have shown interest in developing models for energy communities and several are currently part of projects today, mainly to limit the load on their grids and decrease future investment needs (see example 1). Lastly, several energy community initiatives in Norway are driven by cooperatives of citizens together with municipalities, private investment companies and other types of actors. These actors are primarily driven by economic and environmental incentives or a wish to establish a more stable energy supply in rural communities.
The energy system in Norway is unique, having the highest share of electricity produced from renewable sources in Europe and the lowest emissions from the power sector. Almost all of Norwegian electricity production is based on hydropower, while wind power and thermal power constitute a minor part. Norway is currently investing extensively in the production of renewable energy, with wind power dominating the investments, potentially improving the prospects to implement energy communities in the future (Energy facts Norway, 2021).
Energy Facts Norway (2021). Electricity production. https://energifaktanorge.no/en/norsk-energiforsyning/kraftproduksjon/

Models for Energy Communities & National Legal Framework

Present Models for Energy Communities

As previously noted, energy communities conforming to the definitions of CECs and RECs in accordance with the EU directives have not yet been implemented in Norway. Interviewees state that actors in Norway do not relate to these definitions of energy communities. There are, however, currently multiple active energy community initiatives in Norway with various scopes. The main factor differentiating these initiatives is their organisational structure and model for energy production. Our combined data indicate that the present models forenergy communities in Norway mainly consist of DSOs investing in local flexible markets, energy production and storage, development of microgrids on remote coastal islands to stabilise energy supply, and various actors investing in renewable energy in residential housing associations (borettslag) (McElhinney et al, 2022).
As indicated by interviewees, various models for energy community initiatives in Norway are driven by DSOs to reduce future investment costs on distribution grids. These projects are mainly initiated to add flexibility to the system and to lessen the strain on the main grid during peak demand by installing locally flexible loads systems and investing in local production (typically solar power) and storage of energy. The initiatives are almost exclusively driven by economic incentives from the DSOs but could lead to other effects, such as decreased future costs for consumers, and additional renewable energy and flexibility within the system.  
Another currently present model for energy community initiatives in Norway is property developers, real estate companies, residential housing associations (boretsslag), and other actors, investing in the production of renewable energy on residential buildings for internal consumption. The most common example of these projects is property developers investing in solar panels on the roofs of housing associations to produce energy for the building. There are, however, legislative constraints related to these projects, as pointed out by interviewees. According to the Energy Act, only one person can be a solar power customer, effectively limiting the possibility for multiple consumers to share the energy produced within a residential building. To overcome this constraint, consumers could form a power production company and act as shareholders.

This would, however, effectively make it an investment and not a non-profit community, producing renewable energy. In interviews, representatives of NVE-RME emphasise that they have been assigned by the government to develop new legislation to improve the conditions for housing associations to produce and share renewable energy, thereby improving the capacity for “prosumers” (pluskunder) (NVE (2022).
Finally, another example of present energy community initiatives in Norway is the development of microgrids in remote areas that can produce, store and share energy. One example of these types of projects, described by multiple interviewees, is the development of microgrids on islands off Norway’s Atlantic coast (see examples 1 and 3) (McElhinney el al, 2022). Due to harsh weather conditions and outdated grids, many remote islands experience an unstable power supply with frequent power failures. This is a substantial problem for the residents and not least for the nationally important fishing industry, often present on these islands. Due to these problems, several projects are developing complementary internal energy systems and implementing various solutions for renewable energy production, energy storage, and smart distribution, to strengthen stability and flexibility. Multiple actors are involved in these projects, including DSOs, citizens, local companies, tech companies, municipalities, and universities. Interviewees further state that NVE and NVE-RME are closely monitoring these projects and their results.                

National Legal Framework

The framework encompassing the energy system, and thus the implementation of energy communities, is regulated by national legislation. The main national legislative frameworks are the Energy Act (Energiloven), Energy Regulations (Energilovforskriften), Grid regulation and the Energy Market Regulation (Nettregulering og Energimarkedet-forskriften – NEM). As Norway is not a member of the EU, EU directives do not automatically apply national legislation. However, through the EEA agreement, the directives can be implemented in Norway if the EEA and EFTA agree that the directive is relevant to the EEA agreement (Government of Norway, n.d).
The Energy Act (1990:50) was implemented in 1990 to ensure that all produced energy in Norway is used in a societally rational manner. The framework regulates the production, transformation, sale, distribution and use of energy in Norway. As stated previously, the Energy Act provides the legal basis for regulating the DSOs that are responsible for developing and maintaining the distribution grid. The act further imposes that the production, conversion, transmission and distribution of electricity cannot be operated without an area license. By owning area licenses, DSOs do not need to apply for licenses for each separate installation within their designated areas. Other actors, such as energy communities, need to apply for a license to produce, store, share and sell electricity. NVE’s praxis, however, is not to permit licenses for other actors to develop distribution grids than to those who own area licenses (i.e., DSOs), which significantly limits the possibilities to form larger energy communities that can produce and share energy (NVE n.d).
Another important legislative framework is Energilovsforskriften (Energy regulations). The framework was implemented in 1990 under the Energy Act (1990:50) and regulates the production, conversion, transmission, turnover, distribution, and use of energy in Norway. The framework shall ensure that all operations within the Norwegian energy system should be rational from a societal perspective and further should consider private and public interests. Energy regulations constitute a more comprehensive and detailed framework of the conditions to be granted licenses to develop and maintain regional and local distribution grids.
Act 1990:50. The Energy Act, Energy regulations.https://lovdata.no/dokument/SF/forskrift/1990-12-07-959
Forskrift om nettregulering og energimarkedet (NEM) was implemented in 2019 to regulate the Norwegian energy market. NEM is intended to facilitate an efficient energy market, where the operations within the market are conducted in a socially rational manner and to ensure effective market surveillance. NEM furthermore constitute a detailed framework of the Norwegian energy market's legislative conditions. NVE-REM is responsible for monitoring the energy market to ensure that NEM is enforced (FOR-2019-10-24-1413).
Regulations on development of grids and the energy market. https://lovdata.no/dokument/SF/forskrift/2019-10-24-1413
Lastly, there are several legislative frameworks in Norway ensuring that energy production is conducted in an environmentally sustainable manner. In 2011, The Electricity Certificate Act (No. 39 2011) was implemented to promote the production of energy from renewable sources by establishing an electricity certificate market in Norway. The act constitutes a market-based scheme, shared with Sweden, where producers of renewable electricity receive one certificate per MWh of electricity produced for a period of up to 15 years. The National Climate Plan
The Government of Norway (2021). Norway’s Climate Action Plan for 2021–2030. Available at: https://www.regjeringen.no/contentassets/a78ecf5ad2344fa5ae4a394412ef8975/en-gb/pdfs/stm202020210013000engpdfs.pdf
and Climate Change Act are furthermore the most significant sustainability-related frameworks regulating the energy system. The Climate Plan defines Norway’s prioritised measures to reduce emissions while the overall objective of the Climate Change act is to reduce GHC emissions by 2050. All actors need to consider these overarching environmental frameworks when operating within the Norwegian energy system (Government of Norway, 2021), (McElhinney et al, 2022).

Drivers and Benefits

Our combined data indicate that there are several drivers and potential benefits of implementing energy communities, on multiple levels. The interviewees emphasise financial and environmental incentives as driving factors for citizens to engage in energy communities, while public actors in Norway engage in energy community initiatives as measures within the green transition. Additionally, securing a stable energy supply is stated as an important driver for citizens and organisations situated in rural communities. Lower costs, additional flexibility and stability, reduced load on grids, and increased knowledge and consumer power are a few of the highlighted potential benefits of implementing energy communities on a greater scale in Norway.
There is a consensus among interviewees that financial incentives are an important driver for citizens and organisations in Norway to engage in energy community initiatives or other innovative measures to produce renewable energy. Due to recently increasing energy prices, citizens and organisations in Norway are exploring new and alternative solutions to produce energy. One of these solutions is to invest in locally produced energy within an energy community. Interviewees state that many citizens in Norway are starting to show an increased interest in energy communities with the expectation to decrease future costs. Further, housing developers have started to invest in solar panels on residential buildings due to the consumer demand for being able to lower their energy costs and live in sustainable apartments. Financial incentives are also an important driver for DSOs investing in microgrids or other models for energy communities. By investing in new solutions to produce renewable energy locally and smart steering capacity, the companies are expected to reduce the load on grids, thereby limiting future investment costs.
Also noted as an equally important driver is environmental-related motives. Citizens and organisations in Norway see investments in energy communities or other innovative solutions as a measure to facilitate the green transition, thereby contributing to reach Norway’s climate goals. As noted, governmental actors are financing and monitoring research projects aimed at implementing various innovative solutions to produce, store, and share renewable energy, such as energy communities. The objective is to gain knowledge and to determine if the solutions are scalable and societally rational, as part of Norway’s future climate measures.  
Despite Norway having a generally robust and flexible energy system, rural communities regularly experience power shortages which affect citizens’ daily life and the conditions for the industry in these communities. Hence, interviewees present the need to secure a more stable energy supply as an important driver for these relevant communities to engage in energy communities (McElhinney et al, 2022).
As noted above, there are multiple potential benefits of implementing energy communities on a greater scale in Norway. Firstly, interviewees state that investing in energy communities potentially could lead to financial gains, both for society and for individual citizens. By producing, sharing and selling renewable energy, communities of citizens could decrease their future costs and become prosumers. Moreover, by introducing microgrids or other models of complementary local energy systems, the state and the DSOs would also potentially decrease their investment costs related to the maintenance of grids. By developing complementary microgrids with the ability to store and share energy effectively, the main grid could be relieved from some of the load, especially during demand peaks, and consequentially expand its life span. However, interviewees representing authorities in our study note that it is not established whether investments in developing energy communities are economically rational from a societal perspective and that this is currently being investigated in several research projects.
Additionally, several interviewees note that investing in energy communities that can produce and store energy would further strengthen the flexibility of the Norwegian energy system by adding complementary energy sources. By installing applications for smart distribution of energy within microgrids, energy communities could lessen the strain on the main grid, consequently further stabilise the supply of electricity, which is particularly relevant for remote communities in Norway.
Interviewees also discuss several social benefits, on multiple levels, of introducing energy communities. Firstly, by engaging in energy communities, members will likely increase their knowledge regarding energy consumption and their awareness of them as actors within the energy system, potentially leading to more effective energy consumption. Secondly, by increasing knowledge and awareness, citizens would presumably strengthen their sense of agency as consumers and demand new types of services from DSOs and energy suppliers, that could facilitate their operations as energy communities. Lastly, in a longer perspective, the implementation of energy communities on a greater scale could also potentially lead to a shift towards increased consumer influence and democratisation of the Norwegian energy market. Through the organisation of consumers within energy communities, a new type of actor would be introduced that potentially would affect the energy market and force actors to develop new services that facilitate energy communities’ operations.    

Legal and Practical Barriers

There are several legislative and practical barriers constraining the implementation of energy communities in Norway. The Energy Act and its secondary regulations limit the current possibilities for communities to produce, share and store energy within and among residential buildings. Additionally, a well-functioning energy system and relatively low energy prices in the past have led to a generally low level of public knowledge of alternative solutions to produce energy, consequently impairing the conditions to implement energy communities. The investment costs to install applications required to facilitate energy communities furthermore constitute a constraint for its implementation, both for individual citizens and various organisations. 
The interviewees emphasise that the current national legislation constitutes a main barrier to implementing energy communities on a greater scale. As stated earlier, the Electricity Act stipulates that operating grid assets requires a specific area license, owned by the DSOs, and NVE does not generally grant licenses toother actors than the DSOs. In the Interviews, the difficulties navigating within the legislative framework as an alternative actor in the Norwegian energy market are highlighted. One example of these constraints, described by an interviewee, is for residential housing associations (borettslag) that are installing solar panels to produce electricity for the consumption of the whole building. The current legislation prohibits more than one person to be a solar energy customer, consequently hindering cooperatives to produce and share energy together. Another example, described by an interviewee, is the regulations on batterie that are needed to store energy. The legislation is currently restricting the size of batteries that are permitted to be used, thereby limiting the capacity to store and share energy within larger energy communities.          
Interviewees, however, note that the current national framework is being adjusted to create better conditions to implement energy communities and other forms of local energy production. In 2022, RME proposed that producers of renewable power should be able to share their energy with other consumers in the same property. Customers who together invest in renewable power production within a common property will thus be able to utilise production to reduce their own consumption in the grid, which typically applies to customers in multi-family homes or apartment buildings (NVE, n.d). Being only one of the relevant examples, it indicates that the Norwegian government is presenting an interest in energy communities and are trying to adjust the legislative frameworks to facilitate their implementation.
Another hindering factor is the relatively low public knowledge related to the energy system and awareness of available solutions. Due to a well-functioning energy system and low energy prices in the past, the incentives for citizens have not been strong to strengthen their knowledge and engage in public debate regarding energy consumption, production, and the framework surrounding the energy market. Without the knowledge and awareness of alternative solutions, the conditions have not been present for individual citizens and organisations to engage and invest in alternative solutions to produce and share energy, such as energy communities. However, due to the current energy crisis and subsequent increasing energy prices, one interviewee stated that the public interest in energy communities probably will increase in the near future.   
Lastly, the interviewees underline the investment costs, for individuals and organisations, related to forming an energy community as a limiting factor. Although many applications to produce and share energy are getting cheaper, it is still a considerable investment for individual members of a community. Interviewees point out that it is not established wheter it is financially beneficial for citizens to join an energy community under the current conditions. Furthermore, the current legislative framework limits the financial incentives for individuals to form energy communities. Additionally, to facilitate energy communities on a greater scale, private and public investments in digitalisation are needed. One interviewee emphasises that these investments are investigated to determine whether they are societally rational or whether further investments on the main grid would be a more effective measure.    

Examples of Real-life Communities

In the following, examples of energy community initiatives in Norway are presented:
  • Example 1, Smart Senja, is an innovative project aiming at developing a local energy system on the remote island of Senja to supply the growing fishing industry’s increasing demand for electricity.         
  • Example 2, Lohøgda, is an example of a housing cooperative, acting as an energy community by investing in local renewable energy production and sharing.
  • Example 3, Utsira Island, is a community acting as a testbed for smart renewable energy generation, distribution, management and control in weak grids.
The project Smart Senja was initiated in 2019 with the overarching objective of supplying the Norwegian island Senja’s growing fishing industry’s increasing demand for electricity. The project gathers actors from multiple sectors of society, and in close cooperation with the island’s residents, to develop innovative solutions as measures to supply the island’s demand for consistent power. One of the solutions being developed is the installation of smart power management systems in businesses and households to facilitate an even distribution of electrical load between day and night. Further, large lithium batteries have been installed in two locations to balance out fluctuations in consumption. At present, these batteries are the largest existing in Norway. The project will explore whether locally produced renewable energy and smart distribution systems will contribute to solving the problems related to the energy supply, often experienced on coastal islands in Norway situated on the end of the electrical grid. Smart Senja is owned by the energy distributor Arva AS and is financially supported by the governmental agency ENOVA. The project is set to run until 2025 (Smart Senja 2020).
Smart Senja (2020) The project. Available at: https://smartsenja.no/en/prosjektet/
Lohøgda borettslag is one of the largest housing associations in Norway, containing 777 apartments. The housing association is placed in the district of Tveita in Oslo and has developed a form of an energy community by investing in the production and storage of renewable energy to be shared and used by all apartments within the community. The initiative started as a pilot project in 2016 and afterwards progressed on a full scale. The first measure was implemented in 2017 when the cooperative decided to install common water heater systems in the basement of their buildings, which previously were individual heaters, placed in the bathrooms of all apartments. The measure led to a reduction of the resident’s energy costs by 50%. In 2019, solar panels were installed and tested on a roof which lead to further significant financial gains for the association and the residents. In 2021, the residents decided to continue and install more solar panels. The association is now considering implementing energy storage through hydrogen, which would further increase the storage capacity. Lohøgda Borettslag is now waiting for national regulations to change so they will be permitted to install solar panels on all their residential buildings. The association is also exploring the possibility to be exempted from the obligation to share their produced electricity with the grid, thereby directly transferring their produced electricity to residents by joint measurement. The community is currently not entirely energy self-sufficient, but it has significantly reduced the resident’s costs and the strain on the grid, as a result of the investments (Aarsbog n.d).
Aarsbog, P. (n.d) Between houses - stories from OBOS. Available at: https://www.obos.no/mellom-husene/hjemme/lohogda-borettslag-satser-pa-miljoet (Accessed: 23 May 2023). 
Utsira is an island located 20 km from the city of Haugesund in Norway. The community has around 200 inhabitants and is connected to the mainland by ferry. The island is connected to the main grid by an ageing underwater cable with limited capacity. Due to the limited capacity and frequent power failures, the municipality of Utsira has invested in local production and storage of renewable energy together with the development of a microgrid, to deliver a stable supply of electricity. Currently the island has two wind turbines that can cover the entire island’s energy needs when fully operating. Batteries are also utilised, together with a smart management and control system, to complement the wind turbines when the weather conditions are not favourable. In the future, the goal is to integrate further renewable sources to add flexibility to the grid. The community is currently a test bed within several projects aiming at developing new solutions that can contribute to a stable and predictable energy supply that can meet the power needs of islands and other remote communities in the future. One of the projects is led by the DSO Haugaland Kraft together with partners from multiple sectors to develop solutions for smart energy management, microgrids and a flexibility market at Utsira. The project started in 2020 and is financially supported by the governmental agency Enova until 2024 (Haugaland Kraft n.d).
Haugaland Kraft (n.d). An island self-sufficient on renewable energy. Available at: https://hkraft.no/fou/