Background
Green transition in the energy sector is an urgent need to effectively tackle current climate and energy crises. Energy generation from traditional fossil fuels is responsible for almost two thirds of global greenhouse gas emissions which are recognized to play a major role in climate change (Manabe, 2019). At the same time, the rise in share of renewable and locally generated energy in the whole energy mix that a community relies on would guarantee a higher level of energy security, increasing the overall resilience of the same community [from the energy security report of the International Energy Agency].
In this global panorama, the European Union (EU) decided to play a primary role setting ambitious targets for its Member States (MS) in order to become a climate-neutral continent by 2050. The European Green Deal aims at turning challenges into opportunities by decoupling economic growth from resource use and boosting the renewable energy production. In this view, the EU rose the target for greenhouse gas emission reduction up to 55% by 2030 in the Fit-to-55 package. Under the same framework and in response to the energy market disruption due to Russia’s invasion of Ukraine, the European Commission presented the REPowerEU Plan supporting energy savings interventions and clean energy production. All the proposed actions should pave the way forward for the green transition but to achieve the proposed targets technical innovation is not enough (Kropp et al., 2021) (Schönwälder, 2021). Individuals and local communities need to play an active role in the process: citizens must be aware of the impact of their actions and behaviours (Caramizaru & Uihlein, 2020).
Renewable Energy Communities (RECs) have been recognized in the Clean Energy Package which provides the enabling legislative framework at the European level (EU Directive 2018/2001). RECs consist of autonomous legal entities, based on open and voluntary participation, that are effectively controlled by their members located in the proximity of a renewable energy power plant owned by the same community. Members of a REC could be common citizens, small and medium-sized enterprises (SMEs) or local authorities, and the primary purpose of a REC is to provide environmental, economic, or social benefits to its members. The sprawl of RECs in the EU territory would allow RECs to directly engage citizens and empower consumers by disclosing the figure of the prosumer (electricity consumers also producing electricity from their own power plant, connected to the distribution network) thus boosting clean energy production thanks to a wider public acceptance of new plants and installations and the mobilisation of private capital (Wolsink, 2020). Furthermore, RECs represent a chance to optimize the usage of local and affordable energy (fighting energy poverty) through the provision of energy efficiency services to their members (Biswas et al., 2022). Those services rely on digital infrastructures for a real-time balance between electricity production from local renewables and member consumptions while having the potential to reduce the overall energy consumption of the community and to prevent electric grid imbalance (Duch-Brown & Rossetti, 2020).
The diffusion of RECs and, therefore, renewables, is generating a shift in the whole energy sector pushing for a progressive change from a centralized to a decentralized system (Urishev, 2019). The new structure that is emerging is also reflected in the energy market change towards decentralized payment mechanisms such as the peer-to-peer (P2P), defined as the exchange of energy for monetary value between peers of a community (Soto et al., 2021). Indeed, P2P makes the role of prosumers more attractive since it gives suppliers the possibility to independently choose the energy trading parameters, e.g., the price per unit per energy or who to share the energy with (Tushar et al., 2021). Moreover, P2P is a trading mechanism convenient also for consumers of the community that can purchase low-cost electricity from their neighbour.
Despite the benefits related to both RECs structure and P2P trading mechanism, these are still not extensively implemented in Europe, even if with distinctions among EU MSs (Tarpani et al., 2022), due to lack in both technological and social innovation also supported by a proper regulatory framework. NRG2PEERS is a Horizon 2020 project (Grant agreement ID: 890345) that aims at supporting the uptake of the next generation of European peer-to-peer Energy Communities. The project fosters the achievement of this goal by (i) moving from experiences of existing communities to frame a Readiness Level Framework and related indicators on multiple dimensions (Institutional, Market, Technological, Social); thus (ii) providing demand-response mechanisms to ensure energy optimization within the community accounting for multiple objectives, i.e., financial savings for the REC members, CO2 emissions reduction, and community energy resiliency; and finally (iii) adopting community-based nudging mechanisms that were recognized to be effective at incentivizing renewable production, consumption and behavioural change (Xu et al., 2014). Furthermore, the project accounts for nine pilots distributed in four European countries that are characterised by different socio-economic backgrounds and regulatory frameworks. The involved countries also represent different levels of RECs implementation, namely: the Netherlands (innovators or early adopters), Spain (early majority), Slovenia (late majority), and Italy (laggard).
The following section presents the main barriers for a wide implementation of RECs in Europe that were recognized in the NRG2PEERS project mainly focusing on the outcomes of the ethnography-based qualitative studies conducted, i.e., interviews and focus groups with different stakeholders in the four national ecosystems. Finally, solutions coming from the NRG2PEERS proposal on how to tackle those issues are presented, including roadmaps at regulatory level and an advisory app.
REC and P2P, main barriers at the EU level
An effective and extensive implementation of Energy Communities in Europe would require a comprehensive and holistic approach to the phenomenon accounting for the following dimensions:
- Institutional, the regulatory framework that rules ECs at national level, as transposition of the RED II (EU Directive 2018/2001). The transposition process needs to account for country-specific peculiarities to be effective and let energy communities (ECs) easily become part of the national ecosystem. Legal aspects mainly concern EC definition (legal entity forms, proximity or geographical limitations, required authorization and EC registration procedures, renewable power plants options, etc.), rights and obligations of the same EC, subsides availability and rules for accessing those subsides, but also the regulation of data ownership would be of primary importance to boost EC.
- Market, which includes the electricity market (how it is ruled, definition of different stakeholders’ roles -including the prosumer- and regulation of the P2P) but also those sectors that impact the economic investment to be faced to set up and operate an EC (e.g., technology).
- Technological and infrastructural, comprehending both physical and Information and Communication Technologies (ICTs) components to enable on-site energy generation, energy storage, energy distribution, and P2P energy trading. Monitoring, managing, and steering assets further belong to this dimension which supports the optimization of energy and cash flows among peers. Here, a great challenge consisting of ensuring inter-operability among systems to realize the aspired openness of ECs.
- Social, the capability of the community to understand and organise an EC. This could be further specified in two distinct dimensions related to the EC structure and the single member/user acceptance, respectively:
◦ Organisational, dimension related to the stakeholders’ ecosystem and human resources internally available for setting up an EC, accounting for knowledge and needed time resources, alignment of ambitions and expectations for the short, medium and longer term. This dimension further accounts for the coordination among relevant stakeholders and the agreement about EC scopes and members engagement.
◦ User, individuals’ understanding and acceptance of collective actions in ECs. The aspects influencing this dimension are related to user-friendliness with technological solutions or trust between members and companies providing services to the EC.
These four dimensions provide an overview of the complex framework that must be set to pave the way for an effective implementation of the EC model at national level. Difficulties in handling this complexity are reflected in the limited diffusion of ECs and P2P trading mechanism.
In laggard countries, such as Italy, there is still too much uncertainty on subsides and market regulation to provide a solid business model and engage private stakeholders (citizens, SMEs, etc.), so most of the existing communities are led by public authorities. Moreover, the design, implementation, and operation of an EC requires multiple technical skills and small Energy Service Companies (ESCOs) do not feel qualified to handle this new business. Also from a bureaucratic standpoint, required procedures for getting formal recognition of the EC (which is an undeniable condition to access EC related incentives) are generally considered too complex and time consuming such as those required for getting the authorization for the renewable energy plants installation. This complexity limits the promotion of EC initiatives.
The development of a sustainable and innovative business model is also limited in other ecosystems since uncertainties are not only regulatory-related, but account also for the technological dimension. Reliable ICT infrastructures o are fundamental in pursuing the foreseen decentralized energy system. Platforms for EC operation handle relevant flows of data associated to P2P trading or, more generally, to EC members consumption profiles. There is an urgent need of defining data ownership and clarifying the governance of the digital infrastructure. The whole electricity market design needs to be effectively revised to guarantee the applicability of the P2P mechanism while accounting for possible negative consequences of a free electricity market.
Finally, a legal definition of ECs and their internal regulation must be carefully evaluated. As social entities, EC are limited in their capacity of accessing bank guarantees so that a subsidy model is the preferred way for MSs to support ECs. Nevertheless, ECs openness, their fundamental characteristic of being open to anyone, means also that members have the right to step out and switch supplier at any time which may compromise the EC business plan. In a subsidy model, duties for members are also needed.
Regulatory roadmaps and the advisory app: tools for P2P EC uptake in Europe
NRG2PEERS supports the uptake of P2P EC in Europe by handling the complex framework depicted in the previous section thanks to both national regulatory roadmaps and the release of an Advisory App. The two tools approach the common purpose, i.e., to support P2P EC uptake, through multiple perspectives since their envisioned final users are different.
The roadmap discusses, for each participant country, what is needed to provide a supportive environment for P2P EC moving from current conditions and taking into account all the dimensions related to EC implementation, i.e., institutional, market, technological, and social. Final users of the roadmap are envisioned as local and regional policy actors interested in supporting P2P ECs, e.g., municipalities, housing associations, distribution system operators, as well as national policy actors and energy sector actors. Therefore, each roadmap concludes with suggestions on possible interventions (policy, legislative, or less formal) that could pave the way towards a more citizen-centred energy future that facilitates P2P EC. Here, the perspective towards the uptake of P2P EC is top-down.
On the other hand, the NRG2PEERS Advisory App is addressed to current or possible future members of an EC and thus it supports the P2P EC uptake with a bottom-up approach. The App aims at empowering citizens by sharing experiences from already established EC, including good practices or solutions to recurrent problems that a new-born community should be aware of. In this view, the Advisory App —under development at the time of writing— will consist of a static content, providing basic information and requirements on EC and P2P, and an interactive section, the forum, where everyone could provide its contribution or ask for suggestions from other users, on how to realize an EC or how to minimize the environmental impact of the EC. Furthermore, through the Advisory App users can access the Readiness Level Indicator Tool, built upon the recognized dimensions describing the context for the implementation of an EC, getting tailored recommendations on each dimension based on best practices.
The release of both national regulatory roadmaps and the Advisory App is expected within the NRG2PEERS project lifespan (prior to the end of August 2023). The impact of these solutions will strongly depend on their diffusion in NRG2PEERS involved countries and beyond, in the whole European territory. Actions are already planned in the project framework including the organization of Road Shows in all four participating countries where main stakeholders will be invited to participate, sharing the project’s outcomes. Pilots’ leaders will shed the light on required steps at policy level, as highlighted in the national roadmaps, during public events and dedicated meetings with local and national authorities. At the same time, the Advisory App will be used and populated, first of all, by members of the project pilots and thus will be promoted among the existing energy communities.
Ethics and consent
Ethical approval and consent were not required.
Data availability
No data are associated with this article.
Author contributions
Conceptualization, all; Methodology, all; Writing – Original Draft Preparation, Ilaria Pigliautile; Writing – Review and Editing, all.
Faculty Opinions recommendedReferences
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