Community-based generation will have simplifi ed regulation and will open to all


city:one 2017-11-16 12:45 Petra Giňová, Frank Bold Energy

The proposal draws up a number of changes for energy stakeholders and introduces brand new stakeholders who are going to participate on the market, especially in decentralised renewable generation. One of these new entities proposed by the winter package is renewable energy community.

: What are renewable energy communities?

Community energy is a way for all consumers to contribute directly on generation, consumption or mutual sharing of energy in a specific geographical area. The emphasis is placed on low-priced energy. The main diff erence from traditional providers is that the primary aim of the communities is not the profit.

Renewable energy community can be small and medium enterprises but also a non-for-profi t organisation, the shareholders or members of which cooperate in the generation, distribution, storage or supply of energy from renewable sources. In addition, the have to fulfi l at least four of the following criteria:

1. Nature of shareholders or members :

They can be natural persons, local authorities (including municipalities) or small and medium enterprises operating in the fi eld of renewable energy (there are no further criteria for the shareholders if the small and medium enterprises).

2. Voting majority in hands of natural persons :

At least 51 % of shareholders or members with voting rights within the entity are natural persons.

3. Shares refl ect local interests :

At least 51 % of the shares or participation rights of the entity are owned by local members. Local members are representatives of local public and local private socio-economic interests or citizen having a direct interest in the community activity and its impacts. Although this defi nition of local members is rather vague, it is apparent
it underlines the existing link to the locality, and that will be essential to determine the local members.

4. Priority of local interests in managing bodies :

At least 51 % of the seats in the board of directors or managing bodies is reserved to local members.

5. Community capacity :

The installed capacity of renewable energy for electricity, heating and cooling and transport is no more than 18 MW as a yearly average in the previous 5 years.

As it is not obligatory to fulfi l all 5 criteria, the form of individual communities can vary greatly. It can be a non-for-profi t organisation founded by the municipality for the purpose or providing electricity for its citizens. It could be a non-for-profi t founded by local citizens. At the same time, renewable energy community can be a mid-sized
business whose shareholders are (small) businesses operating in the area, and also local citizens. If criteria 1-4 are met, the community can even have higher capacity than 18 MW with no upper limit and cover needs of more consumers. Each community is therefore going to be able to the specifi c needs of its members.

It is important to note that participating on renewable energy community should be strictly voluntary and participants should not lose any rights as end consumers (e.g. leave the community and use energy supplies from a diff erent provider, the right for quick provider change, rights relating to billing information etc.).

: Role and specifics of the communities

Emergence of renewable energy communities follows the trend of enhancing the consumers’ position on the energy market and at the same time the trend of gradual decentralisation of energy generation. Renewable energy communities are considered to be a tool for effi cient local energy management due to the fact that the community consumes directly the energy it produces itself. This arrangement can be functional both if the community is connected to the distribution network and if it is not, i.e. it works in the island regime. Renewable energy communities are entitled to generate,
consume, store and sell energy from (their own) renewable sources. In addition, the communities should not be subjected to disproportionate charges or conditions for participating on the market – the proposal demands that when the member states draw up the specific regulation for these new subjects, the member states consider
the nature of renewable energy communities which is very diff erent from the traditional stakeholders. The major diff erences are limited size and installed capacity of the renewable energy communities, ownership structure and the number of projects which the communities manage, and also the very purpose of the communities which
is securing and providing aff ordable energy supplies for a specific area. Renewable energy communities are also supposed to be non-for profi t stakeholders.

It is most likely that the renewable energy communities will have special regulation focused on non-discriminatory criteria for their participation on the market. That may include regulation of state support of the communities and administrative process of their establishment and management.

: The key to success will be the right definition of the communities

While the legislative proposals are being discussed on the EU level, the important question is the very defi nition of these entities. There are two directive proposals in the winter package which defi ne the communities and even name them diff erently. The type of community discussed above is pursuant to the recast directive on the promotion of the use of energy from renewable sources. The definition in this directive
covers only those communities who generate renewable energy while the recast directive on common rules for the internal market in electricity defi nes so called local energy communities. Local energy communities can produce energy also from other sources than the renewables and take on a wider range of legal forms.

The question is whether the renewable energy communities are a subtype of local energy community and if therefore the explicit ban on discriminating against them in terms of their activities and securing their rights and obligations as end consumers.
Considering the way both directives are set up, it would be against their objective to not provide the renewable energy communities with the same level of protection as to the local energy communities. Especially so when unlike the local energy communities, they are strictly non-for-profi t entities. There is still some room for improvement and clarifi cation of the proposals. It is the clear wording of European legislation enables accurate transposition of the regulation by each Member State. It will also help minimize potential abuse of this new institute by big corporate stakeholders.

: Conclusion

Renewable energy communities can be a very benefi cial and fl exible tool for municipalities who are interested in renewable energy generation for aff ordable prices and at the same time take responsibility and control over energy supplies in their area. The winter package proposals can still be altered and edited and the final wording
will be known only after the European Parliament has approved of the fi nal proposals. The question is in what way will the new legislation transposed into Czech national legislation.

Časopis city:one

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