In an article for Romanian portal ΙnfoClima, Ioanna Theodosiou – The Green Tank’s policy associate – examines the pivotal role of energy communities in ensuring a just transition to a renewable energy system in Europe, with a focus on Greece’s experience.
She explains what exactly energy communities are, the activities they can undertake and why they are important, while also giving a brief rundown of key European policies for community energy in the context of the energy transition.
Energy cooperatives are growing across Europe, with about 9,000 in operation. Meanwhile, the Just Transition Mechanism supports regions most affected by the transition, particularly coal regions, to mitigate socio-economic impacts.
As far as Greece is concerned, the article describes their evolution and the challenges they face. Today, Greece counts 1.689 energy communities, though most projects are commercially driven rather than for self-production. However, there has been a recent surge in self-production projects, while energy communities are particularly active in Greece’s lignite regions. But funding remains restricted and grid saturation is the main bottleneck for their further development.
Lastly, Ioanna concludes with policy recommendations on 5 key sectors in order to further promote energy democracy and a just, inclusive green transition.
The article was published on Wednesday 12 June and can be found in Romanian here. An English translation is provided below.
You can watch a relevant video here. The video is in both Romanian and English, with English subtitles available.
Energy Democracy in the epicenter of Just Transition – The experience from Greece
By Ioanna Theodosiou, Policy Associate at Τhe Green Tank
Intro
We are going through a long period of structural transformations in our energy system – from a centrally controlled, fossil fuel-based energy system, to a decentralized and renewable one. The idea that a local community can own a share of the energy market or that it can decide on the source of the energy it will use still seems to many people as a very distant prospect. However, the experience across the EU in the last decades, as the citizens’ energy movement keeps growing, shows that people have the power to be an integral part of the energy system transformation.
As the range of stakeholders in the energy system broadens, the question arises as to who controls the means of energy production and consumption, the democratic control of energy and ultimately democracy itself during the green transition.
With this as a point of departure, this contribution first examines the role of energy communities in Just Transition and presents the key European policies that enforce energy democracy. It then looks at the challenges of energy communities in Greece towards a democratic energy model and concludes with policy recommendations to strengthen energy democracy in regions in transition.
Why are energy communities important for a Just Transition?
Citizens’ participation is an essential component of the energy transition to make it just and inclusive, to ensure its success and to help local communities take ownership of it. Participation in energy communities contributes to redirect the benefits of the energy transition towards citizens, and, finally, helps address the magnitude of the huge decarbonization challenge.
Energy communities are usually cooperatives that are active in the energy sector, with a particular interest in Renewable Energy Sources (RES). Through them, citizens collectively produce clean energy, implement climate policies on the ground and become active players in energy transformation. Their primary purpose is to provide environmental, economic and social benefit, at the local level, to the members or areas where the community operates, rather than financial gain.
Apart from electricity production for the energy needs of their members, energy communities can also be active in distribution and supply, consumption, aggregation, storage, energy efficiency services, electromobility, and provide other energy services to its members. For example, they can invest in energy-saving renovation projects, as well as heat pumps and storage facilities. Community projects can also address the energy needs of local enterprises and meet local transportation needs for both citizens and tourists.
Energy communities can also participate in the large energy projects being developed in the rural areas, through project share ownership. They could also claim the management of the local energy network so that they can contribute to reduce energy costs for their members, develop local energy production and consumption and ensure their energy autonomy.
Moreover, farmers, foresters and agricultural and forestry enterprises can use energy communities to sustainably manage the biomass supply chain, manage their waste (manure, curd etc) and produce fertilizers, or produce electricity to meet the needs of a greenhouse. In addition, the key issue of heating, which is crucial for coal regions, could be addressed through RES and cooperation of local authorities and residents.
EU policy for Just Transition and energy communities
The EU energy strategy and regulations broadly accept that the energy transition cannot be successful without the involvement of society. This is the main rationale behind the introduction of energy democracy into European energy policy. The EU’s “Clean Energy For All Europeans” package agreed in 2017, the Renewable Energy Directive, RED II (2018 / 2001) and the Internal Electricity Market Directive, IEMD (2019/944) that followed urge the European citizens to participate in the energy sector and become producers of the clean energy they consume. The two Directives define two categories of energy communities: Renewable Energy Communities (RECs) and Citizen Energy Communities (CECs). Member States are therefore called upon to safeguard the rights of energy communities, to establish a framework for their operation and to support their promotion and development.
Adding to these, in 2019 the EU announced the European Green Deal, recognizing the existential threat posed by the climate crisis and together a set of policies to transform the EU to a resilient and climate-proof economy. This transformation demanded, among other measures, the coal phase-out across the EU. Το alleviate the socio-economic impact of the transition the Just Transition Mechanism was established as a key tool to ensure support for the most affected regions in Europe, such as coal mining regions.
In May 2022 came the REPowerEU plan as a response to the war in Ukraine, and all Member States were called upon to join forces to face energy shortages, diversify energy supplies and accelerate the transition to clean energy. As part of it, the European Solar Energy Strategy, emphasized citizen participation and the use of Renewable Energy Sources (RES), either individually or collectively, to achieve European objectives with the establishment of at least one Renewable Energy Community in each municipality with a population of at least 10,000 inhabitants by 2025. Beyond these, the European Commission set up two initiatives in 2022, the Energy Communities Repository and the Rural Energy Community Advisory Hub aiming to contribute to the dissemination of best practices and provide technical assistance for the development of energy community initiatives across the EU.
Energy cooperatives in Europe keep growing and today it is estimated that 9000 energy communities are currently in operation across the EU. Many Member States have adopted enabling frameworks for community energy and have transposed the two EU Directives in their national legislative framework. However, there is still much to do according to a research by CE Delft, that demonstrates that half of all EU citizens could be producing their own electricity by 2050, and meeting 45% of the EU’s energy demand.
Meanwhile, the Just Transition process in coal and carbon intensive regions is well underway and the absorption of the European funding for the period 2021 -2027 has already began in many European regions with Territorial Just Transition Plans.
The Greek paradigm
Greece used to be the third lignite producer country in the EU and one of the first among the big lignite producers (Polland, Czechia, Germany) who committed to lignite phase out before 2030. Setting a specific lignite phase-out date (2026), proved to be valuable for the local communities in order to realize that there is no turning back and organize their future. In this direction, both the use of the Just Transition Mechanism and the national law on energy communities, in force since 2018, provided valuable tools and resources for the local communities.
Today Greece counts 1,689 energy communities nationwide with an overall electrified capacity of commercial and self-production projects exceeding the 1GW milestone (1,178 MW, 1624 projects), as shown in the recent analysis by the Green Tank.
However, the electrified capacity of community self-production projects is much smaller than that of community commercial projects – just 14 MW. This shows that to date, energy communities in Greece have developed faster as a business activity and more slowly as a tool for meeting their own energy needs. However, it is worth noting that since the energy crisis began in 2021 until today, there has been a rapid increase in self-production by energy communities, households and other stakeholders (from 217 MW in 2022 to 421 MW in 2023). In particular, self-production projects by energy communities alone show great momentum. Their installed capacity has more than tripled in a year while 377 new requests for such projects were submitted during 2023; in contrast, just 4 new requests were submitted for commercial projects.
Specifically, in the lignite regions of the country, which are the first to face the huge challenge of energy transition, citizens dynamically claim their participation in energy communities. Today, Western Macedonia has 294 energy communities, keeping the region in second place nationwide, with 128 projects of 80.5 MW in operation. In Arcadia, community energy self-production projects were electrified for the first time (9 projects of 0.5 MW), while there was a surge in applications for new self- production projects by energy communities in the period 2022 -2023 (from 3 to 43 of 8.7 MW).
Greece enacted its first legislation on energy communities in 2018, just before the two Directives (RED II and IEMD) were finalized, but it incorporated the spirit of both. It was an enabling framework that led to the development of energy communities, as described above. The legislation on energy communities changed in March 2023, with the transposition of the two Directives. The new law repealed the founding law of 2018 and introduced two new definitions about energy communities – REC and CEC according to the Directives, and new provisions on the participation, activities and locality for each type of energy communities. The new legislation has also tried to address existing problems, such as the “hijacking” of the institution for profit-making, the saturation of the grid and the faster connection of commercial projects versus self-production projects. To this end, it promotes self-production by reserving 2 GW of scarce electricity space for such projects as well as public funds to support their development.
Also, in September 2023 the resources provided for energy communities by the Just Transition Development Program 2021 – 2027 were activated through the relevant call for proposals. This call aims to strengthen energy communities in the implementation of net-metering and/or virtual net-metering projects and promote RES projects intended for self-production. A total of €41.795 million is available to energy communities in all regions under the Just Transition Fund; of these resources, €26.845 million are earmarked for energy communities in the coal regions (Kozani, Florina and Arcadia). The maximum subsidy rate is 80% of eligible costs and the minimum acceptable capacity of self-production PV installations has been set at 300 KW, while the installation costs for batteries associated with the PV systems to reduce the required electrical space by the project, are also eligible for funding. Projects should serve the energy needs of public benefit enterprises, municipal water and sewage companies, schools at all levels, health centers and hospitals, municipal and public sports centers, local authority buildings, consumers living below the poverty line and households affected by energy poverty. Despite the delayed activation of the available resources, the above action constitutes a step in the right direction. Nonetheless, there is still room for improvement to include support for community projects set up by citizens and/or local businesses in corresponding programs.
Apart from the EU funding for Just Transition, Greece has adopted another innovative – compared to EU standards –policy framework: the National Just Transition Fund. It was introduced in 2018 and foresees that part of the public revenues from greenhouse gas emission allowances auctions generated by the operation of the EU Emissions Trading System are channelled to projects and actions that will enhance the Just Transition of Greek lignite areas. Since 2018 these national resources amount to €144.16 million and are a necessary complement to the EU funds already available. To date, only programs for the use of the 2018-2019 resources (€62 million) have been activated. However, a very low absorption rate is noted, as well as a long delay to their activation, and a lack of complementarity across projects and actions. Energy communities in the coal regions receive only 5% (€3mn) from this fund, but there is still scope for further funding.
Policy recommendations to strengthen energy democracy in regions in transition
Looking back at the last 5 years and the developments in Europe and Greece regarding both Just Transition and energy communities, we can gain a lot of experience, identify bottlenecks, and propose policy recommendations to overcome them.
In any case, what is indisputable is that collaboration between government bodies, local communities, social partners and NGOs constitute an integral part of a just energy transition. But, to support local participation and encourage energy democracy in the energy transition, the following are needed:
- Political priority: Set specific quantitative targets for energy communities in the National Energy and Climate Plans (NECP) currently under revision across the EU.
- Institutional framework: Create clear, stable, and enabling legal framework for citizens’ participation in the energy transition. Provide clear definitions of what an energy community could be, the activities it can undertake, the members and the process of establishment. Also, a stable framework for self-production is important.
- Funding: Use every available fund, national and European, to support local community energy projects. Specifically:
- Provide subsidies to meet the cost of installation of photovoltaic and storage systems for energy communities that aim at covering the energy needs of their members by implementing the virtual net-metering scheme or similar.
- Entities that have proven difficulties in accessing bank loans or other financial resources (such as energy communities set up by citizens; small and medium-sized enterprises; farmers; and local authorities) should be given priority in obtaining funding through EU funds for the current and next programming period, Recovery and Resilience Program, National Development Program etc.
- A development fund (or an intermediary body) should be set up specifically for energy communities, to facilitate access to loans, provide guarantees, cover the costs of participating in competitive procedures, and subsidize the costs of projects’ preliminary phases.
- Grids: The grid should be upgraded and expanded to allow the development of energy community projects. Specifically, in the former coal regions both sufficient grid space, and suitable -in terms of size- land area should be reserved for the installation of self-production projects by energy communities – especially those set up by citizens, local small businesses and local authorities.
- Collaboration between citizens and large energy companies: This could be achieved by instituting shared ownership and reserving part of the shares in large-scale RES projects by large companies to be purchased by locally established energy communities.
The green transition is the only sustainable path to preserve existence on our planet, at least as we know it today. The question is whether this transition will rely on justice, social cohesion, and democracy with the people and for the people. To this end, community energy policies for carbon-intensive regions acting as the cornerstone of energy democracy should be an integral part for a successful green transition towards a sustainable, clean, inclusive, and ultimately democratic future.
