In response to the current energy crisis and looming climate emergency, many citizens and communities across Europe are looking towards establishing their own energy community or energy cooperative as a viable solution to these crises. However, for Central Eastern Europe, the uptake of these local energy initiatives has been quite slow as there can be many hurdles that project members must overcome. Nevertheless, some communities and groups in the CEE region have overcome these barriers and want to share their stories on how they did it and what governments can do to help grow the community energy movement in their countries.
Many of the issues that Europe is contending with can be attributed to our over reliance on fossil fuels. Energy shortages, skyrocketing energy costs, inflation and a looming climate crisis are the ramifications for our fossil fuel dependency. Unfortunately, it is the people and households who bear most of the brunt when these threats become a reality.
Countries in Central Eastern Europe are now living in this reality. Russia’s invasion of Ukraine has brought new challenges to the region. As Ukraine’s neighbours deal with the security risk that Russia now poses, homes and communities look to house refugees fleeing the conflict. Moreover, weaning of Russian fossil gas is leading to energy shortages which in turn is leading to higher energy prices, making it harder for households to afford the energy needed to power and heat their homes.
While governments may have been slow to react, some citizens and communities within the CEE region have been proactive in their quest for energy autonomy and self-governance over their own energy production and consumption. With the goal of decentralising energy systems and putting power in the hands of people, there has been a slow emergence of energy communities and energy cooperatives across the CEE region. The first energy community in Bulgaria, Izgrei Bg, was founded with this goal in mind. Mihail Georgiev, a member of Izgrei BG, believes that, “Energy communities will be a democratic solution to our energy, poverty and social problems for the coming decades. For us, it was important to start as the energy market in Bulgaria is centralised and just a handful of people control vital resources”.
Community energy projects are citizen-led and can be owned and managed by private consumers, municipalities and/or small and medium-sized enterprises (SMEs). Their primary purpose is to provide environmental, economic and/or social community benefits to its members or shareholders, or to the local areas where it operates rather than to generate financial profits. One of the first energy cooperatives in Poland, Sunny Serock (Słoneczny Serock), was founded by citizens whose main motivation was to reduce their energy bills in the face of continued price increases, but equally important, they also sought to achieve energy independence and self-sufficiency by producing energy from solar PV. The cooperative currently brings together a group of 30 residents interested in producing renewable energy for their individual use in their homes and businesses.
In line with their democratic principles, energy communities are open and allow for voluntary participation from different consumers and stakeholders. Moreover, the ownership and control of the project belongs to the citizens, municipalities and SMEs who are involved and have invested in the project. Cooperativa de Energie in Romania had this goal in mind when they launched in 2019. Their aim was to offer Romanian consumers a way to engage in the energy market;’ “We believe democracy is key to the renewable energy market, and decentralisation gives everyone the chance to pitch in and contribute to a more sustainable world” says Adrian Munteanu, a member of the cooperative. The decision-making in an energy community/cooperative is internal and reserved for all participants within the project who should all have similar governance rights. For example, an individual or small group cannot make decisions for the collective group, underpinning the democratic values of energy communities.
Why are energy communities urgently needed?
At a time where democracy is under threat, there is an urgent need for an accelerated and just energy transition across Europe, and energy communities are a key component of the solution. As Europe looks to reduce its dependence on Russian fossil gas, governments are left scrambling for alternative energy sources while households are left to pay soaring energy bills. This exposes more low-income and vulnerable households to energy poverty as powering and heating homes becomes harder to afford.
The Union of Community Energy (Unie Komunitní Energetiky) in the Czech Republic was founded on the basis of addressing these issues; “Our goal is to transform the Czech energy sector into a state where local sources of renewable energy are an important part of the energy mix and citizens are not dependent on external supplies of fossil fuels”, says David Blažek, Policy and Advocacy Officer at the Frank Bold Society. For Sunny Serock in Poland, the main benefit of the energy cooperative is access to free energy, as all the electricity produced is owned by the cooperative. Right now, the cooperative consists of 30 residents but there is hope that in the future the community will expand to include municipal buildings and local businesses.
As these projects are not for profit, revenue generated from the renewable energy produced can go back into the community and help address local social-economic issues. This could involve helping to alleviate the most energy poor and vulnerable households within the community through providing free renewable energy or help renovate their homes and make them more energy efficient. For example, The Community Energy Service Company (CESCO) in Hungary uses revenue generated from their solar PV installations to provide energy efficiency advisory services, and they have created a community energy efficiency fund. This fund will allow tenants within the energy community to reduce the heating costs for local buildings.
Of course, there is also the significant environmental benefit that energy communities can bring. Buildings are one of the largest emitters of greenhouse gas emissions as they account for around 40% of all energy consumed in Europe. Powering and heating homes and businesses through the use of renewable energy, while funding programmes that look to improve energy savings in the community, can have a large impact on mitigating the climate crises. Moreover, as homeowners and communities become aware of the benefits that renewable energy can have and public acceptance for renewable projects grows.
So why isn’t there more?
The amount of energy communities within Europe is growing but at a slow rate due to political, economic and social barriers. Limited access to finance and a lack of recognition and strategy from national governments in supporting energy communities make it much more difficult for these projects to get off the ground. Rather than being incentivised through financial support in the form of schemes, grants and tax exemptions, energy communities starting out must instead face overburdensome and restrictive regulation in the form of strict licensing requirements, connection rules and tariffs. This can be incredibly discouraging to citizens and communities looking to start their own local energy projects.
Moreover, many individuals, communities and municipalities don’t have the experience or knowledge to establish an energy community. There is a major need for expert knowledge on how to implement, operate and maintain these types of projects. On top of this, a lack of public awareness, education and information around what energy communities are and their benefits can result in citizens not being empowered to take on local energy initiatives.
Since its formation, Izgrei BG has encountered many of these challenges. They have self-financed their first project, but are now struggling to find an installer and developer to help them with the installation as it is only 4kW. Moreover, they do not have the sufficient funds within the energy community for a potential next project so the financing will be difficult for the next stage. “Currently, there is no definition in the country of what an energy community is and there is little consideration when it comes to commercial financing through banks. Lastly, the general population in Bulgaria is not familiar with energy communities, the Green Deal, policies on EU level and their rights when it comes to being able to play more of an active role in the coming decades within the energy market on the continent”, says Mihail Georgiev.
For the Sunny Serock energy cooperative, besides facing the same issues, they must also contend with legal and regulatory barriers. According to Polish law, a minimum of 70% of the electricity produced must be consumed by its members and the cooperative isn’t allowed to trade its energy. Instead, the excess energy produced must be fed back into the national grid. The disorderly regulations and the lack of expert authorities makes discussions with distribution system operators (DSOs) difficult. Moreover, difficulties with grid connection for cooperative installations are a strong barrier in growing new organisations in Poland.
Powering up energy communities
Moving forward, more support is needed from governments and national authorities to mobilise funds for investment and change laws and regulation to be more favourable to citizens and communities looking to form energy communities and energy cooperatives. Member States need to work on transposing the definitions of energy communities set out in the Renewable Energy Directive (RED) and the Internal Electricity Market Directive (IEMD) in order to update national policy frameworks that assist in the establishment and introduction of energy communities into the energy market.
The CESCO in Hungary has had some initial success with the support of the Hungarian government. Grants provided by the government have been used for the establishment and operation of energy communities. CESCO not only organises the implementation of these grants, but also provides the financing of renewable energy investments through community involvement. Bence Kovács, Energy Campaigner at Friends of the Earth Hungary, says, “The EU’s Renewable Energy Directive and the Hungarian government’s support for tenders have enabled us to move from theory to practice. Transposed definitions and grants dedicated to establish pilot energy communities is a good starting point, but unpredictable regulations make planning business model very difficult.”
Improvements in national grids to increase the capacity and flexibility for renewable energy production is needed. Moreover, clear rules for relations between energy communities and DSOs are crucial to ensure adequate access to the grid and the related services. In parallel, more technical expertise and knowledge around the establishment and operation of energy communities in the form of technical assistance programmes like the European Commission’s Rural Energy Community Advisory Hub (RECAH) and Renewable Energy Repository are needed. National support schemes and one-stop-shops for energy communities can provide guidance and necessary resources for citizens and communities and should be adapted and supported in the CEE region. For the Union for Community Energy in the Czech Republic, establishing close cooperation with partners that understand all aspects of energy transformation and combining know-how from the fields of law, environmental protection, technology and economics was crucial for their success.
As the number of energy communities grows, there will be high demand for technical expertise and knowledge, resulting in job opportunities. Specific training programmes and apprenticeships should be created to ensure that the technical expertise is there to fill these positions. Public awareness campaigns should be launched to disseminate the benefits that energy communities can bring to the CEE countries and make available information on how individuals and communities can begin in setting up their energy cooperative or energy community. The EU Solar Energy Strategy has set the target of having at least one renewables-based energy community in every municipality with a population higher than 10,000 by 2025.
The challenges outlined above are just some of the key priority areas that have to be addressed in order for this target to be achieved. For an energy transition to be successful, involvement from citizens and communities is crucial. Energy communities and energy cooperatives tick all the boxes, allowing countries to reduce their dependence on fossil fuels while providing citizens with autonomy over their energy and access to cheaper electricity and community services, all the while, helping to mitigate climate change.
For CEE countries especially, increasing local and community-owned energy generation will help reduce their dependence on fossil fuels. Not having to rely on undemocratic states for their energy supply and instead, investing and supporting local energy initiatives can be a major step in creating a safer future for the people of the CEE region and Europe as a whole.
Written By Seda Orhan, Renewable Energy Campaign Coordinator at CAN Europe. Contributions from Mihail Georgiev on behalf of Izgrei BG, David Blažek on behalf of Unie Komunitní Energetiky, Bence Kovács on behalf of the Community Energy Service Company Hungary, Adrian Munteanu on behalf of Cooperativa de Energie, and Bartłomiej Smenda on behalf of Słoneczny Serock.