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RELP

April 2019 (republication forthcoming in July 2020)

Investing in a Renewable Future – Renewable Energy Communities, Consumer (Co-)Ownership and Energy Sharing in the Clean Energy Package (PDF, 475 kB)

Prof. Dr iur. Jens Lowitzsch

Consumer (co-)ownership in renewable energy (RE) is one essential cornerstone to the overall success of Energy Transition. When consumers acquire ownership in RE they can become prosumers generating a part of the energy they consume such reducing their overall expenditure for energy while at the same time having a second source of income from the sale of excess production. In June 2018, the European Union agreed on a corresponding legal framework as part of a recast of the Renewable Energy Directive (RED II) which entered into force in December 2018:

  • Consumers, as prosumers, will have the right to consume, store or sell RE generated on their premises, (i) individually, that is, households and non-energy small and medium sized enterprises (SMEs) and collectively, for example in tenant electricity projects (Art. 21 RED II), or (ii) as part of Renewable Energy Communities (RECs) organised as independent legal entities (Art. 22 RED II).
  •  Transposing the RED II into national Law until June 2021 Member States – amongst others – have to adopt an enabling framework for prosumership and in particular for RECs. Defining citizen’s rights and duties the directive links prosumership to such different topics as fighting energy poverty, increasing acceptance, fostering local development and incentivising demand-flexibility.

The RED II is part of the Clean Energy Package of the European Union and its rules are embedded in those of the 2019 Internal Electricity Market Directive (IEMD) and Regulation (IEMR). The transposition of these comprehensive rules – in particular those on energy communities – requires developing, implementing and rolling out business models that broaden the capital participation of consumers in all 28 Member States. The challenge is to include municipalities and/or commercial investors like SMEs and advance to economies of scale while retaining the benefits of individual consumer participation.

This article gives an overview of the most important new rules on (Renewable) Energy Communities in the context of the RED II and the IEMD/R. Against the background of the relevance for financing RE prevalent business models for RE-investments across the EU are looked upon to analyse how they fit the new framework. A specific focus lies on “energy/electricity sharing” within RECs and the underlying (digital) technologies. It also presents a financing concept for consumer (co-)ownership compatible with the requirements for (Renewable) Energy Communities, that is, the Consumer Stock Ownership Plan (CSOP).

PROSEU, Community Power Coalition, The Renewables Networking Platform (RNP), EREF and SCORE

June 2020

Transposition Guidance for citizen energy policies – recommendations to strengthen prosumers and energy communities when transposing the Clean Energy Package (RED II, EMD) (PDF, 496 kB)

PROSEU, Community Power Coalition, The Renewables Networking Platform (RNP), EREF and SCORE

This paper aims to inform and facilitate the transposition and the implementation of the Renewable Energy Directive (RED II, 2018/2001) and the Electricity Market Directive (EMD, 2019/944) in combination with the Governance Regulation (GR, 2018/1999). It focuses specifically on the provisions regarding the newly established rights of citizens like self-consumption and energy communities. It provides recommendations to be applied when drafting national legislation and regulation; it addresses both policy makers and civil society advocacy groups. The transposition of the RED and the EMD into national laws will provide opportunities to influence national policies towards a prosumer-centred Energy Union and strengthen citizens’ rights. Most important is, however, that it needs to be ensured that national legislations match the Paris Agreement in its ambition, and that they are rigorously implemented and enforced over the next years. For both, implementation and enforcement, citizen engagement will be a crucial.

 

Energies

April 2020

Mainstreaming Energy Communities in the Transition to a Low-Carbon Future: A Methodological Approach

Sara Torabi Moghadam, Maria Valentina Di Nicoli, Santiago Manzo, Patrizia Lombardi

Innovations in technical, financial, and social areas are crucial prerequisites for an effective and sustainable energy transition. In this context, the construction of a new energy structure and the motivation of the consumer towards a change in their consumption behaviours to balance demand with a volatile energy supply are important issues. At the same time, Consumer Stock Ownership Plans (CSOPs) in renewable energies sources (RESs) have proven to be an essential cornerstone in the overall success of energy transition. Indeed, when consumers acquire ownership in RES, they become prosumers, participating in the phase of production and distribution of energy. Prosumers provide benefits by (1) generating a part of the energy they consume, (2) reducing their overall expenditure for energy, and (3) receiving a second source of income from the sale of excess production. Supporting Consumer Co-Ownership in Renewable Energies (SCORE) is an ongoing Horizon 2020 project with the aim of overcoming the usage of energy from fossil sources in favour of RES, promoting the creation of energy communities (EC) and facilitating co-ownership of renewable energies (RE) for consumers. SCORE hereby particularly emphasises the inclusion of women, low-income households, and vulnerable groups affected by fuel poverty that are as a rule excluded from RE investments. In this framework, the main goal of the present study is to illustrate the general procedure and process of EC creation. In particular, this paper focuses on the description of the methodological approach in implementing the CSOP model which consists of three main phases: the identification and description of selected buildings (preparation phase), the preliminary and feasibility analysis phase, and finally the phase of target group involvement. SCORE first started in three pilot regions in Italy, Czech Republic, and Poland, and later, with the aim of extending the methodology, in various other cities across Europe. In this study, Italian pilot study sites were chosen as a case study to develop and test the methodology.

Energies

January 2020

Consumer Stock Ownership Plans (CSOPs)—The Prototype Business Model for Renewable Energy Communities

Prof. Dr iur. Jens Lowitzsch

The 2018 recast of the Renewable Energy Directive (RED II) defines “renewable energy communities” (RECs), introducing a new governance model and the possibility of energy sharing for them. It has to be transposed into national law by all European Union Member States until June 2021. This article introduces consumer stock ownership plans (CSOPs) as the prototype business model for RECs. Based on the analysis of a dataset of 67 best-practice cases of consumer (co-) ownership from 18 countries it demonstrates the importance of flexibility of business models to include heterogeneous co-investors for meeting the requirements of the RED II and that of RE clusters. It is shown that CSOPs—designed to facilitate scalable investments in utilities—facilitate co-investments by municipalities, SMEs, plant engineers or energy suppliers. A low-threshold financing method, they enable individuals, in particular low-income households, to invest in renewable projects. Employing one bank loan instead of many micro loans, CSOPs reduce transaction costs and enable consumers to acquire productive capital, providing them with an additional source of income. Stressing the importance of a holistic approach including the governance and the technical side for the acceptance of RECs on energy markets recommendations for the transposition are formulated.

Energies

January 2020

Empowering Vulnerable Consumers to Join Renewable Energy Communities—Towards an Inclusive Design of the Clean Energy Package

Florian Hanke, Prof. Dr iur. Jens Lowitzsch

The unequal distribution of costs and benefits of the energy transition is a challenge for energy justice and energy policy. Although the empowerment of consumers to participate in renewable energy communities (RECs) has great potential for a just energy transition, vulnerable consumers remain underrepresented in RE projects. The recast of the European renewable energy directive obliges the European Member States to facilitate the participation of vulnerable consumers and support their inclusion in its “enabling framework” for prosumership. However, the type and specific design of corresponding measures remains unclear. Against this background this article investigates consumer empowerment in a vulnerability context. In particular we stress the need to understand how vulnerability affects participation in RECs to inform both policy makers and practitioners on its specificities and restrictions for the “enabling framework”. To prevent the inclusion of vulnerable consumers in RECs from remaining an idea on paper lawmakers need to be made aware of the implications for a consistent “enabling framework”. We argue that both individual vulnerable consumers as well as RECs need incentives and support to boost RECs’ capacity to include groups that until now remain underrepresented.

Renewable and Sustainable Energy Reviews

January 2020

Renewable energy communities under the 2019 European Clean Energy Package – Governance model for the energy clusters of the future?

Prof. Dr iur. Jens Lowitzsch, Assoc. Prof. Christina E. Hoicka, Felicia van Tulder

The recast of the European Union Renewable Energy Directive (RED II) entered into force in December 2018, followed by the Internal Electricity Market Directive (IEMD) and Regulation (IEMR) as part of the Clean Energy for all Europeans Package. The RED II, that the 28 Member States have until June 2021 to transpose into national law, defines “Renewable Energy Communities” (RECs), introduces a governance model for them and the possibility of energy sharing within the REC. It also provides an “enabling framework” to put RECs on equal footing with other market players and to promote and facilitate their development. This article defines “renewable energy clusters” that are comprised of complementarity of different energy sources, flexibility, interconnectivity of different actors and bi-directionality of energy flows. We argue that RECs and RE clusters are socio-technical mirrors of the same concept, necessary in a renewable energy transition. To test how these new rules will fare in practice, drawing on a secondary dataset of 67 best-practice cases of consumer (co-)ownership from 18 countries, each project is assessed using the criteria of cluster potential, and for the extent that they meet the RED II governance requirements of heterogeneity of members and of ownership structure. Nine cases were identified as having cluster potential all of which were in rural areas. Of these, five projects were found to be both RECs and RE clusters. The absence of the governance and heterogeneity criteria is observed in projects that fall short of the cluster elements of flexibility, bi-directionality and interconnectivity, while cluster elements occur where the governance and heterogeneity criteria are met. When transposing the new rules into national law we recommend careful attention to encourage complementarity of renewables, RECs in urban contexts and “regulatory sandboxes” for experimentation to find the range of optimal preferential conditions of the “enabling framework”.

IOP Science

June 2019

Financing Renewables while Implementing Energy Efficiency Measures through Consumer Stock Ownership Plans (CSOPs) - The H2020 Project SCORE

Prof. Dr iur. Jens Lowitzsch

Consumer (co-)ownership in renewable energy (RE) has proved successful in engaging consumers in financing RE, thus becoming "prosumers" which in turn induced positive behavioural changes in energy consumption. Providing a collective low threshold financing mechanism for RE the Horizon 2020 project SCORE implements "Consumer Stock Ownership Plans" (CSOPs) in three pilot projects in the Czech Republic (City of Litoměřice), Poland (City of Słupsk) and Italy (Susa Valley). Additionally SCORE seeks to respond to the European Buildings Initiative (part of COM(2016) 860 final "Clean Energy For All Europeans") and in particular to the challenge to develop flexible energy efficiency (EE) and RE financing platforms at national or regional level targeting grants towards vulnerable consumers as laid out in its annex. In this context EE projects for blocks of flats can be a lever for consumer owned RE projects where the installation costs partly overlap with EE measures as for example insulation of rooftops and installation of rooftop PV systems. These EE projects typically qualify for subsidies to financing EE improvement of flats and municipal buildings and thus can cross subsidize also the investment in micro RE installations. This paper demonstrates synergies between EE measures and RE investments via CSOP-financing in blocks of flats in Poland and the Czech Republic. Empirical evidence from Germany backs these effects of consumer co-ownership. Preferential conditions for Renewable Energy Communities under the 2018 recast of the Renewable Energy Directive (RED II) will support such schemes in the future.

 

Palgrave Macmillan

January 2019

Energy Transition: Financing Consumer Co-Ownership in Renewables—18 Country Studies and a Comparative Analysis

Prof. Dr iur. Jens Lowitzsch (ed.)

Consumer (co-)ownership in renewable energy (RE) is essential to the overall success of Energy Transition. In June 2018, the European Union agreed on a corresponding enabling framework as part of a recast of the Renewable Energy Directive (RED II). The transposition of these comprehensive rules – in particular those on local RE communities – requires developing, implementing and rolling out business models that broaden the capital participation of consumers. The challenge is to include municipalities and/or commercial investors like SMEs and advance to economies of scale while retaining the benefits of individual consumer participation. This book is addressed to energy consumers in local communities, their municipalities and to the policy makers who represent them. Additionally, non-EU countries, in particular those where rural areas have limited access to energy, e.g. in Asia, Africa and Latin America, may be interested in the benefits of consumer ownership. While demand for energy in developing countries is growing, access to energy is crucial for improving the quality of life. The editor of this book presents a new model of consumer ownership in RE for both the EU and countries worldwide. Part One describes the rationale for consumer ownership in RE with regard to social, organizational, legal and financial conditions. Part Two discusses the issue of financing RE and introduces a new financing technique, the Consumer Stock Ownership Plan (CSOP), comparing it to traditional models. Part Three provides 18 country studies from Europe, North America, South America and Asia, organized so as to enable a cross-country comparison of policy approaches and feasibility. Policy recommendations are based on the results of this survey. Part Four summarizes, compares the best practice cases, presents a cost-benefit analysis of “prosumage” and against this background evaluates the impact on future policy.

Energy Research & Social Science

July 2018

Does (Co-)ownership in renewables matter for an electricity consumer’s demand flexibility? Empirical evidence from Germany

Lucas Roth, Prof. Dr iur. Jens Lowitzsch, Dr Özgür Yildiz, Alban Hashani

Motivating consumers to adjust their electricity demand with a volatile electricity supply is an important aspect of the energy sector’s transition from fossil to renewable energy sources. (Co-)ownership in renewable energy production facilities turned out to be successful in engaging citizens to finance infrastructures and research indicates that it can also induce behavioural changes in energy consumption. Based on the results of a survey comprising of a sample of 2143 completed questionnaires collected through an online survey and analysed with propensity score matching, this paper looks at the relationship of (co-)ownership in renewable energy production facilities and demand side flexibility. Our results show a statistically significant effect of (co-)ownership of renewable energy production facilities on the willingness of citizens to adjust their consumption behaviour to match their electricity demand to production levels. However, this relation is complex: Only when consumer (co-)owners have the choice between self-consumption and sale of the surplus electricity production to the grid, a statistically significant difference is observed. Furthermore, positive effects on flexible consumption were only found for the usage of household appliances.