An Energy Community is essentially a team effort where people join forces for various energy projects, encouraging regular folks to actively engage in decisions about the energy system. As we witness a shift towards decentralized energy generation and an increasing demand for electricity due to electrification, there’s a growing eagerness among households, businesses, public authorities, cities, and municipalities to actively contribute to the energy transition. Recognizing this trend, the Clean Energy Package highlights the crucial role of consumers and citizens in shaping this transition, reflected in legislative proposals like the Electricity Directive and the Renewable Energy Directive. These proposals have given rise to a new player in the field called the “Prosumer,” blending the roles of producer and consumer.
In an ideal Energy Community (EC), consumers, prosumers, and generation units collaborate and trade energy directly within the community through a process known as peer-to-peer trading. Key roles within the EC include physical balancing, financial balancing, and the EC-operator, with entities like the Distribution System Operator (DSO) handling physical aspects and grid operations.
Now, let’s explore the different types of Local Energy Communities specified in EU regulation, focusing on the Renewable Energy Community (REC) and the Citizen Energy Community (CEC).
A Renewable Energy Community (REC) is a legal entity centered around shared energy usage, often involving privately installed renewable energy systems. Non-professional prosumers, residing in proximity to production, are granted control, and the directive emphasizes that energy production within a REC should be 100% from renewable sources.
On the other hand, a Citizen Energy Community (CEC) operates similarly but focuses solely on electricity, excluding other energy sources. Open to everyone, control remains in the hands of non-professional actors, with decision-making powers limited to members not engaged in large-scale commercial activity.
Moving beyond these communities, traditional power supply involves consumers purchasing electricity through fixed tariffs. In contrast, peer-to-peer (P2P) trading facilitates direct buying and selling of electricity between entities connected to a power grid. This can occur through monetary or non-monetary means, such as barter or local exchange trading systems. Peer-to-peer (P2P) energy trading is like a digital marketplace where people in a community can buy and sell electricity directly. If you have solar panels and produce more energy than you need, you can sell the excess to your neighbours. It’s a way for individuals to become small-scale energy producers and contribute to a more sustainable energy system. Technology like blockchain and smart contracts ensures secure and direct transactions without the need for a middleman. P2P energy trading empowers communities, promotes renewable energy, and makes the entire energy system more efficient and environmentally friendly.
P2P electricity trading unfolds on an interconnected platform, enabling consumers and producers to directly trade energy. This flexible model operates on various scales, from neighbors within a community to broader interactions among communities in a region. Demonstrated by over ten projects across Europe, P2P energy trading shows promise in enhancing flexibility within the energy landscape.
Energy Communities epitomize a collaborative and inclusive approach to energy management, propelled by a growing eagerness among diverse communities to actively contribute to the ongoing energy transition. The emergence of the “Prosumer” and the innovative dynamics of peer-to-peer trading, demonstrated by over ten projects across Europe, underscore the potential for a flexible, community-driven energy landscape.
We hope that we have been able to give you a better understanding of how the topic.
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