Community energy: What’s new from the EU?

By Alix Bolle on 12 October 2017

About a year ago now, the European Commission tabled its proposal to reform the EU’s electricity market and better promote the use of renewable energy sources.

As part of the revision of these two legislative proposals, the EU’s executive body formally acknowledged the reality of the new, multipolar energy market, by providing for the first time a legal recognition for smaller players, ie the citizen cooperatives and other local entities that develop the so-called “community energy” projects.

So what happened in practice? Two separate units of the Directorate General for Energy started working on two different definitions, and we ended up with a proposed renewable directive setting criteria for “renewable energy communities” and an electricity one defining “local energy communities”.

The core principles

Both attempts at defining community energy, whatever the final choice of wording, should aim at reserving a fair space for such undertakings in the energy market, making sure the projects are as much as possible locally-anchored and driven by community benefits rather than profit-making.

What’s at risk?

In Germany, the 2017 Renewable Energy Act sought to make it easier for “citizens energy companies” to be successful when bidding in renewable energy tenders, by establishing a special set of criteria. Now that the first two rounds of tenders have been completed, analysis from the EU association of renewable energy cooperatives, REScoop, shows that close to zero real energy cooperative was actually successful in the two auctions. With two key directives in the making, the EU should thus draw lessons from the German case and include strong safeguards to avoid corporate groups using legal tricks to qualify as local energy communities.

And the status now?

Thousands of amendments to both proposals have been tabled by European Members of Parliament (MEPs). On the electricity directive, while the rapporteur himself is very hostile to the idea of creating special rights for smaller entities, several MEPs have suggested ambitious changes to the legislation, including exempting community energy projects from participating in tender schemes or from assuming certain obligations that they don’t have the scale or resources to meet.

On the EU Council side, several provisions have been watered down in the compromise text from the Estonian presidency on the electricity directive, including the requirement to seek local value creation instead of profit. However, on a more positive note, the Council amendments to the European Commission text now include a specific reference to local authorities as potential shareholders of community projects.

The European Parliament is expected to hold committee votes on both texts by end of December. To be continued!

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