Starting an Energy Community: a step-by-step guide
Energy Communities are legal entities allowing your community to produce, manage, and consume energy. This can include citizens, small businesses, and local authorities. Creating an Energy Community is a transformative process based on the cooperation of its members and the community. One of the most essential pillars is the community aspect, as are the values of transparency, openness, and diversity. Navigating through the labyrinth of the regulations and rules of founding an Energy Community can be challenging, so we prepared a step-by-step guide to help you through this journey.
Community Dimension
When you’re planning on starting an Energy Community you have two options: join a pre-existing group of people already interested in the transition, or create your own by finding like-minded people and raising awareness about the energy transition. Throughout the transition, you should decide who can participate, define their roles, and outline the model for the Energy Community. The participatory and democratic construction of the community is essential for its future success. The driving group, or core team, is responsible for raising awareness, disseminating information, and involving new participants. This group plays a crucial role in the early stages, guiding the design and development of the community.
1. Phase: Research
As a first step, it’s important to understand how energy communities function, what objectives they pursue, and how they can be implemented in your community. During this phase, you should collect information and necessary documents including paying attention to the legal regulations in your country. During your research, you’ll more likely find gray areas regarding the legal regulations of Energy Communities in the European Union. It’s safe to say, the technology is way ahead and because of the quick transition, the regulations of these communities in most EU countries are not entirely decided yet. Ideally, you can search for existing communities and success stories in similar circumstances which you can use as a reference during the process. This also helps you understand the key critical elements such as the role of the key participants, the legal frameworks and governance, the most used energy services, the necessary resources and the founding options, and the common challenges you might face during this process. Overall this phase is all about exploring your options and defining the objective.
2. Phase: Identification
As we mentioned previously the diverse participation of individuals and organizations are essential elements of successful Energy Communities. During the process, you’ll need to design, implement, and ensure the driving group's smooth cooperation, for this you can involve citizens, public administrations, companies, and social entities. There are two ways of participating: as a consumer partner (contributes by sharing the energy services in exchange for contributing an economic fee) or as a collaborating partner (contributes with capital or other resources). Citizens play a key role by participating in the design, development, and governance of the community, ensuring the democratic and autonomous operation. However, in some cases, the role of the citizens is only to participate without any deeper involvement or effort regarding organizing the community and its development. Public administrations, in most cases the local government contributes by providing the infrastructure for the installation of energy generators, by providing the funding, and in most cases by measuring the impact of the community. The involvement of the companies and social entities depends on the context and available resources, they can also play a pivotal role by providing the infrastructure, strategic alliances, and offering resources. Both public administrations and companies can be users of energy services. In this phase, you should identify the participants, their involvement, time commitment, and motivation.
3. Phase: Choosing the Legal Model
When choosing the legal form of your future community, it’s important to note this will determine the governance model of the Energy Community. You can choose any legal form that is based on voluntary participation and responds to the values of democratic governance. You can choose from creating an Association (a non-profit entity with voluntary individuals contributing to one purpose), or creating Cooperatives (Consumer and User Cooperatives or Service Cooperatives). The main difference is the number of members and while associations can strictly use their income for their purpose, cooperatives are designed to engage in economic activities based on the member's interest. Once you choose the right legal formula you have to go through the registry process.
4. Phase: Defining the Shared Energy Services
The Energy Community aims to transition into a 100% renewable energy model which can be reached by sharing the production and consumption of energy within the community. At this phase, you have to figure out which energy services can be shared within the community.
Possible Shared Energy Services:
- Production of renewable electrical energy
- Thermal Energy production
- Shared electric mobility
- Other Services
Energy Communities can also offer services to improve energy efficiency, reduce consumption, and raise awareness about energy consumption. These services can include advice on energy efficiency or demand management and training. As a crucial step, you have to choose the possible shared services and offerings with the future members.
5. Phase: Planning the social, energy, and economic impact
To launch a power generation project within an Energy Community, a thorough technical and economic feasibility study is crucial. This study evaluates the territory's characteristics, defines participating agents, and assesses their energy needs to ensure the sustainability of the Energy Community. Energy Communities can significantly reduce energy poverty, boost local economies, foster social cohesion, and reduce CO2 emissions.
6. Phase: Choosing the financing model
Financing is a key element of the project, and you have to explore the options and develop a financing plan. You can choose from external financing (public financing, private bank financing, or collaborative private financing and donations) or internal financing (contributions from members). Choosing the right financing model is a crucial part when starting your community, you have to be prepared for different scenarios and explore the resources.