— The 7 principles of cooperative —
Energy Communities are governed by the values of solidarity, justice, equality, democracy, self-reliance and self-responsibility. The 7 cooperative principles, which have emerged through the long and international experience of the cooperative movement safeguard this institution.
The cooperative principles strengthen the social role of Energy Communities, especially those that aim at public benefit. They become the core of a collective and mutually supportive Just Transition, centered on local communities.
Energy Communities were introduced in Greek legislation by Law no. 4513/2018. They are currently regulated under Law no. 5037 / 2023 on the transposition of the European Directives 2018/2001 and 2019/944.
The legislation provides for three (3) types of Energy Communities:
- Renewable Energy Communities (RECs)
- Citizen Energy Communities (CECs)
- Energy Communities under Law no. 4513/2018 (established until 01/04/2023)
All three types of Energy Communities are established as civil cooperatives under Law 1667/1986 and are based on open and voluntary participation; their primary purpose is to provide environmental, economic and social benefit, at community level, to the members or areas where the community operates, rather than financial gain.
RENEWABLE ENERGY COMMUNITY (REC)
Eligibility for participation:
- Natural persons with full legal capacity, including civil servants.
- Local and regional authorities, associations of local and regional authorities, as well as enterprises that are fully (100%) owned by local and regional authorities.
- Small- and medium-sized enterprises (SMEs).
- Agricultural cooperatives and civil cooperatives under Law 1667/1987.
- Non – for- profit legal entities under public or private law.
Locality criterion:
- At least fifty percent (50%) plus one (1) of the members must have proximity to the area where the REC operates and the RES Project is being developed.
A REC must have a minimum of thirty (30) members, or:
- Twenty (20) members, if the REC is established in an island municipality with a population of less than three thousand one hundred (3,100) residents, according to the last census.
- Fifteen (15) members, if at least fifteen (15) participants are SMEs.
- Three (3) members, if one of them is local/ regional authority and the other two members are either enterprises that is fully (100%) owned by a local or regional authority or local / regional authority.
Note: A member of a given REC cannot be a member of another REC that carries out the same activities and operates within the same region, except in the case of legal entities under public law; local and regional authorities and enterprises fully owned by local and regional authorities; and agricultural cooperatives.
CITIZEN ENERGY COMMUNITY (CEC)
Eligibility for participation:
- Natural persons with full legal capacity, including civil servants.
- Local and regional authorities, associations of local and regional authorities, as well as enterprises that are fully (100%) owned by local and regional authorities.
- Legal entities under public or private law
- Agricultural cooperatives and civil cooperatives under Law 1667/1987.
Locality criterion:
- At least fifty-one percent (51%) of CEC members must have proximity to the RES project or to the CEC’s area of operation.
A CEC must have a minimum of thirty (30) members, or:
- Twenty (20) members, if the REC is established in an island municipality with a population of less than three thousand one hundred (3,100) residents, according to the last census.
- Fifteen (15) members, if at least fifteen (15) members are legal entities under public or private law.
- Three (3) members, if all three are local or regional authorities; or if one of them is local or regional authority and the other two members are either enterprises that is fully (100%) owned by a local or regional authority or local / regional authority.
Note: A member of a given CEC cannot be a member of another CEC that operates within the same region, except in the case of legal entities under public law; local and regional authorities and enterprises fully owned by local and regional authorities; and agricultural cooperatives.
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Proximity to the RES project or the REC/CEC’s area of operation shall be established:
(a) for natural persons, if either the permanent residence or full or partial ownership or usufruct of real estate located in an area where the REC/CEC operates or the RES project is being developed;
(b) for legal entities, if the company seat is located in a region where the REC/CEC operates or the RES project is being developed.
RENEWABLE ENERGY COMMUNITY (REC)
Renewable Energy Communities (RECs) operate within one region and carry out at least one of the following activities: production, consumption, storage and sale of energy from renewable sources.
In the context of its activity, each REC:
(a) may share -within the Community- energy from Renewable Energy Sources that has been produced and stored, respectively, in REC-owned production and storage plants;
(b) has access to all energy markets, both directly and through cumulative representation, in a non-discriminatory manner.
In addition, RECs may engage in the following:
- implementation of virtual net-metering through RES and RES plants with storage owned by the REC in order to meet the energy needs of their members or consumers living below the poverty line;
- management, such as collection, transport, treatment, storage or disposal of raw materials for the production of electricity or thermal or cooling energy from biomass or bioliquids or biomethane or through the energy recovery of the biodegradable fraction of municipal waste;
- installation and operation of water desalination plants using RES;
- raising capital in order to invest in the development of RES or CHP or to implement energy efficiency improvement measures;
- drawing up studies for the development of RES or providing relevant technical support;
- management or participation in projects financed by national or European Union resources;
- advising on the management or participation of its members in programs financed by national or European Union resources and related to its objectives;
- providing information and education, as well as raising awareness on energy sustainability issues at local and regional level;
- support vulnerable consumers and address the energy poverty of citizens living below the poverty line within the region where the EnCom is seated -whether or not they are members of the EnCom- such as net-metering, supplying energy to these individuals and performing residential energy upgrades or other actions to reduce energy consumption in their homes;
- network development, management and operation of alternative fuel infrastructure or management of sustainable transport means, provision of energy services;
- forming cumulative representation bodies;
- activities to promote electromobility, including the operation of electric vehicle charging infrastructure;
- public benefit activities related to the sufficiency and supply of raw materials, energy, fuels and water.
CITIZEN ENERGY COMMUNITY (CEC)
Citizen Energy Communities (CECs) are active within one or more regions and are required to carry out at least one of the following activities: production, self-consumption or sale of electricity from renewable sources, storage, distribution and supply of electricity, cumulative representation, provision of flexibility and balancing, as well as provision of energy efficiency, electric vehicle charging and other energy services to its members.
A CEC may also carry out the following:
- manage or participate in projects financed by national or European Union to serve its objectives;
- advise on the management or participation of its members in programs financed by national or European Union funds or resources relevant to its objectives;
- provide information and education, as well as raise awareness on energy sustainability issues;
- actions to support vulnerable consumers and address the energy poverty of citizens living below the poverty line -whether or not they are members of the CEC- and particularly net-metering, supplying energy to these individuals and performing residential energy upgrades or other actions to reduce energy consumption in their homes.
CECs may additionally engage in all REC-specified activities and benefit from the financial incentives and support measures provided for RECs provided that the provisions on the proximity of members apply.
In all types of Energy Communities, at least ten percent (10%) of each year’s surplus shall be retained to create the regular reserve. The retention is not obligatory when the amount of the reserve matches or exceeds that of the cooperative capital of EnComs under Law 4513/2018, RECs and CECs. Beyond this restriction, financial surplus management differs per type of Energy Community.
RENEWABLE ENERGY COMMUNITY (REC)
At least seventy percent (70%) of each financial year’ surplus is retained by RECs as extraordinary or special reserves and is allocated, by decision of the general assembly, in accordance to the activities and as provided by the statutes.
RECs may distribute financial surpluses to members, after deduction of previous reserves, if a provision to this effect is made in the statutes.
CITIZEN ENERGY COMMUNITY (CEC)
At least seventy percent (70%) of each financial year’ surplus is retained by CECs as extraordinary or special reserves and is allocated, by decision of the general assembly, in accordance to the activities and as provided by the statutes.
CECs may distribute financial surpluses to members, after deduction of previous reserves, if a provision to this effect is made in the statutes.
Energy Communities are launched so as to empower citizens’ participation in the energy transition and to meet the energy needs of their members through the use of RES. This is achieved by employing the tool of virtual net-metering and virtual net-billing. To date, photovoltaic systems constitute the most popular technology for meeting own energy needs.
- Virtual Net-Metering:
Virtual net metering is the off-setting of the electricity produced by RES or CHP plants with the electricity consumed in self-producers installations, provided that at least one of which is either not located in the same or adjacent area as the plants or, or operates using a different power supply. The production plants are located in any region irrespective of the location of the self-consumer’s installations.
- In particular, the installation of RES plants and storage systems to meet own needs by applying virtual net-metering is allowed for:
(a) local and regional authorities;
(b) those registered in the Register of Farmers and Agricultural Holdings for installations of agricultural holdings and agricultural uses;
(c) Renewable Energy Communities, Citizen Energy Communities and Energy Communities under Law no. 4513/2018, so as to meet the energy needs of members who are exclusively domestic consumers or farmers registered in the Register of Farmers and Agricultural Holdings, the energy needs of citizens living below the poverty line and households affected by energy poverty, as well as to meet the energy needs of local and regional authorities.
Virtual net-metering for RECs, CECs or Energy Communities under Law no. 4513/2018 refers to the offsetting of the electricity produced by RES or CHP plants of CECs, RECs or EnComs under Law no. 4513/2018 with the electricity consumed in installations of the aforementioned Communities’ members; consumers living below the poverty line; and households affected by energy poverty. In order to apply virtual net-metering (and subject to the regulations with regard to the proximity of members), these Energy Communities may install production plants in any Region, regardless of where the consumption installation or the seat of the community is located, and the latter are not all required to be in the same Region.
Especially in cases where fifty percent (50%) plus one of the members have proximity to the region of Attica, the production plant may be located in an adjacent region of Attica.
From 1 November 2023, no new requests may be submitted to the Operator for self-consumption projects with the application of virtual net metering by Energy Communities under Law 4513/2018.
Requests for self-consuming projects with the application of net metering and virtual net metering submitted to the Operator from 1 July 2023 are regulated by the new provisions under Law 5037/ 2023.
- To implement virtual net-metering, production plants may be connected to the grid either at High, Medium or Low Voltage.
- For CECs, RECs, as well as Energy Communities under Law No. 4513/2018 to implement virtual net-metering, the supply of production plants and any corresponding consumption supply to be offset may be connected to different power suppliers.
In order to connect RES projects to the grid, Energy Communities are required to obtain a license from the Network Operator (HEDNO) and the System Operator (IPTO), depending on the category of the project. The licensing process follows a priority system for granting Final Connection Offers to RES plants and storage plants by the respective Operator; this system is determined by a Ministerial Decision of the Minister of Environment and Energy. Ministerial Decision ΥΠΕΝ/ΓΔΕ/84014/7123 (Government Gazette 4333/B/12.08.2022) is currently in force.
Based on this decision, Energy Community self-production (net-metering) RES projects are classified in HEDNO’s Priority Group B, while all other EnCom RES projects (commercial projects) fall under Priority Group C.
The self-consumption implementation procedure is presented in the Guide of the Hellenic Association of Photovoltaic Companies (HELAPCO) published in November 2023 (in Greek).
Similar guidelines have been published by the HEDNO in 2019 (in Greek).
- Self-producer virtual net-billing:
This refers to a self-producer whose consumption facilities are not located on the same site as the RES and/or CHP production plant and the electricity generated and introduced into the Grid or the System is synchronously offset by the corresponding energy absorbed by the Grid or the System and consumed at its facilities, meaning that only the energy produced and consumed in real time is offset. The remainder of the energy is sold to the grid and compensated in one of the ways provided for by law (usually a wholesale price, new provisions are expected). For virtual timed offsetting projects, there is no maximum power limit and the production plants shall be installed in any region irrespective of the location of the consumption’s facilities. In particular, with regard to RECs, CECs or Energy Communities under Law 4513/2018 (and subject to the regulations with regard to members’ proximity), production plants may be installed in any Region, regardless of where the consumption installation or the seat of the community is located, and the latter are not all required to be in the same Region.
Especially in cases where fifty percent (50%) plus one of the members have proximity to the region of Attica, the production plant may be located in an adjacent region of Attica.
The possibility to sell surplus electricity, so far, had not been foreseen by the relevant framework. Until now, the electricity that was not self-consumed was “stored” in the grid for three years; beyond that period of time, surplus electricity was not compensated.
Virtual net-billing is foreseen for all self-production projects, with a particular focus on company projects (either individually or through energy communities) in lieu of virtual net metering. We should underline that this new regulation on virtual net-billing enables -for the first time- individual citizens to implement self-production projects without any capacity limitation and irrespective of the location of consumption installations. Until recently, individual households or enterprises could only self-produce using net-metering, under the condition that the production and consumption of electricity be based at the same or adjacent location.
- Guaranteed prices outside competitive procedures
Energy Communities have the opportunity to participate in the RES market with guaranteed prices and without entering competitive procedures, exclusively with 2 PV projects of up to 500 kW each and until 30 September 2024. This deadline does not apply to Energy Communities that include local and regional authorities as members or to those that have more than 60 members, of which at least fifty (50) are natural persons. These categories of EnComs can enter into feed-in-tariff contracts without prior participation in competitive procedures up until 30/09/2024.
As of 1 January 2025, Energy Community RES projects will have to participate in competitive procedures in order to enter the RES market.
Energy Communities in the lignite region of Western Macedonia can enter into feed-in-tariff contracts for photovoltaic plants until 01 October 2024.
- Connection Priority
In order to connect RES projects to the grid, Energy Communities are required to obtain a license from the Network Operator (HEDNO) and the System Operator (IPTO), depending on the category of the project. The licensing process follows a priority system for granting Final Connection Offers to RES plants and storage plants by the respective Operator; this system is determined by a Ministerial Decision of the Minister of Environment and Energy.
Ministerial Decision ΥΠΕΝ/ΓΔΕ/84014/7123 (Government Gazette 4333/B/12.08.2022) is currently in force.
Based on this decision, Energy Community self-production (net-metering) RES projects are classified in HEDNO’s Priority Group B, while all other EnCom projects in low-medium voltage fall under HEDNO’s Priority Group C.
With regard to the priority framework of the IPTO, Energy Community projects are classified into Group C, which is divided into subgroups including, inter alia, the exempted plants exclusively of EnComs with the participation of local and regional authorities, exempted plants to be installed exclusively within the Regional Units of Kozani and Florina, and wind power plants that have been exempted or have a production license or a Producer’s Certificate for a maximum capacity of up to 6 MW; for wind power plants, IPTO shall grant connection offers with a maximum capacity limit of 90 MW of maximum production capacity, with a maximum limit of 6 MW per EnCom.
- Transfers of administrative licenses
The transfer of Production Licenses, Production Certificates or Special Project Certificates and other licenses and authorizations of power plants belonging to a Citizens’ Energy Community (CEC) is not permitted.
Furthermore, Law no. 5043/2023 (Article 121) provides for the possibility of converting energy community commercial projects (with a production license or producer certificate or exempted stations that have received or are receiving a final connection offer) into self-production projects (virtual net-metering projects) by the same or new energy communities.
2018: Law no. 4513/2018: Energy Communities founding law
2023: Law no. 5037/2023: Transposition of Directive 2018/2001 on the promotion of the use of energy from renewable sources and Directive 2019/944 on common rules for the internal market for electricity, and introducing an institutional framework for RECs and CECs.
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PREVIOUS PROVISIONS ON ENERGY COMMUNITIES UNDER LAW NO. 4513/2018
Eligible Participants:
- Natural persons.
- Legal entities under public law, except for local and regional authorities.
- Legal entities under private law.
- Local authorities (within the same Region) and regional authorities.
Locality criterion:
- At least 51 % of members must be related to the area where the seat of the Energy Community is established.
Minimum number of members for the establishment of a non-profit Energy Community:
- Five (5), if the members are legal entities under public law (other than local/regional authorities) or natural persons. In this case, each member holds 20% of the cooperative capital.
- Three (3), if the members are legal entities under public or private law or natural persons, of which at least two (2) are local/regional authorities. In this case, local/regional authorities may hold up to 40% of the cooperative capital.
- Two (2), if both members are local/regional authorities on an island (with a population of less than 3,100 inhabitants). In this case, each shall hold half of the cooperative capital.
Minimum number of members for the establishment of a for-profit Energy Community:
- Fifteen (15), if the members are legal entities under public law -other than local authorities- or legal/regional entities under private law or natural persons.
- Ten (10), if the community is seated in an island municipality.
- If 50% plus one of the members are natural persons, profit sharing is allowed.
Members participating in Energy Communities under Law 4513/2018 are eligible to participate in RECs and CECs provided that the proximity requirement is met.
An EnCom is required to engage in at least one of the following activities:
- production, storage, own consumption or sale of electricity or thermal or cooling energy from RES or CHP plants or Hybrid Plants installed within the Region where the seat of the Community is established -or within an adjacent Region, for EnComs seated within the Region of Attica;
- management, such as collection, transport, treatment, storage or disposal of raw materials for the production of electricity or thermal or cooling energy from biomass or bioliquids or biogas or through the energy recovery of the biodegradable fraction of municipal waste;
- supplying its members with energy products, appliances and installations aimed at improving energy efficiency and at reducing energy consumption and the use of conventional fuels;
- supplying its members with electric vehicles, whether hybrid or non-hybrid, and alternative-fuel vehicles in general;
- distribution of electricity within the Region where the EnCom is seated;
- supplying electricity or fossil gas to final customers within the Region where the EnCom is seated;
- production, distribution and supply of thermal or cooling energy within the Region where the EnCom is seated;
- demand management to reduce electricity end-use and representation of producers and consumers on the electricity market;
- network development, management and operation of alternative fuel infrastructure or management of sustainable transport means within the Region where the EnCom is seated;
- installation and operation of water desalination plants using RES within the Region where the EnCom is seated;
- provision of energy services.
An EnCom may carry out one of the following activities:
- raising capital in order to invest in the development of RES or CHP or to implement energy efficiency improvement measures within the Region where the EnCom is seated;
- drawing up studies for the development of RES or CHP or the implementation of energy efficiency improvement measures or providing relevant technical support to its members;
- managing or participating in projects financed by national or European Union funds and related to its objectives;
- advising on management or participation of its members in programs financed by national or European Union resources and related to its objectives;
- providing information and education, as well as raising awareness on energy sustainability issues at local and regional level;
- carrying out actions to support vulnerable consumers and address the energy poverty of citizens living below the poverty line within the region where the EnCom is seated -whether or not they are members of the EnCom- such as net-metering, supplying energy to these individuals and performing residential energy upgrades or other actions to reduce energy consumption in their homes.
Financial Surplus
Energy Communities under Law 4513/2018 can either distribute or not distribute financial surpluses to their members (for-profit vs. non-profit). Whether an EnCom is for-profit or non-profit is dependent on the composition of its founding members and shall be specified in its statutes.
The European energy transition policy aims to shift the energy model towards clean forms of energy and, at the same time, recognizes that the energy transition cannot happen without a strong social engagement. The EU’s “Clean Energy For All Europeans” package -agreed in 2017- and the Renewable Energy Directive that followed urge European citizens to become producers of the clean energy they consume, acknowledging the important role they can and should play in the transformation of the energy system. Energy Communities were conceived precisely on this basis and the European institutional framework provides incentives for their development.
Directive 2018/2001 on the promotion of the use of energy from renewable sources and Directive 2019/944 on common rules for the internal market for electricity 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 EnComs, to establish a framework for their operation and to support their promotion and development. This obligation finds Greece in an advantageous position, as the existing Law on Energy Communities (Law no. 4315/2018) already provides a broad framework of definition along with tools for EnCom development. The aforementioned Directives were integrated into the existing legislation in March 2023.
The European Commission’s new guidelines on state aid with regard to the climate, environmental protection and energy sectors have been implemented as of 01/01/2022. They set rules for state aid in order to support the objectives of the European Green Deal, while ensuring competition and minimizing market distortions. These rules positively recognize Energy Communities’ role in the successful implementation of the European objectives and provide for the conditions under which they shall be exempted from competitive procedures and enjoy guaranteed prices for their projects; furthermore, Member States are encouraged to show flexibility in the design of RES tenders so as to strengthen EnCom participation.
The European Solar Energy Strategy adopted in May 2022 -as part of the REPowerEU plan- emphasizes citizen participation and the use of RES, either individually or collectively, to achieve European objectives. This strategy aims to install more than 320 GW of large and small-scale solar photovoltaics by 2025 (more than doubling 2020 levels) and nearly 600 GW by 2030. This installation rate could lead to the substitution of 9 bcm of fossil gas consumption per year by 2027. In order to address the challenges in the short term, four initiatives have been proposed: (a) harnessing rooftop solar energy; (b) simplifying procedures; (c) establishing a skills partnership for onshore renewable energy sources and (d) instituting a European Alliance for the solar PV sector.
Specifically, measures include the mandatory installation of photovoltaics in new buildings and the establishment of at least one Renewable Energy Community in each municipality with a population of at least 10,000 inhabitants by 2025.
The “Fit for 55” package of measures and initiatives prompted the revision of the Renewable Energy Directive (RED II) in September 2023. The revised Directive reaffirms the role of citizens in the energy transition, as well as their contribution to achieving European climate targets. In particular, as an all-encompassing principle, this Directive upholds that Member States should ensure the development of decentralized electricity production and storage systems and their participation in the energy market; moreover, it recommends that Member States encourage self-producers and energy communities to actively participate in the energy market, by providing flexibility services through demand-response and storage systems. Furthermore, RED II recognizes that self-production -including energy communities- contributes to reducing fossil gas demand and increases system resilience, thus bolstering the European renewable energy targets. Finally, it stipulates that energy communities have the potential to participate in offshore wind farms and decarbonize the building sector, as well as contribute to the promotion of renewable-based district heating (and cooling) systems.