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Energy community
European Union Electricity Market Glossary

 

The legislative framework for “energy communities” has been introduced into European legislation by the Clean Energy Package (known also as “the Winter Energy Package”).

 

In this regard the term: “an energy community” is used in the context of:

 

- “citizen energy community” (CEC) in the Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal market in electricity (recast) and

 

- “renewable energy community” (REC) in the Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on the promotion of the use of energy from renewable sources (recast), known as “the RED II”.

 

Despite important differences, both types of energy communities share some similarities, for example:

- they are are entities that are set up as a legal person,
- they must be effectively controlled by their shareholders or members, and
- their primary objective is to provide environmental, economic and social community benefits rather than financial profits.

 

According to Article 2(11) of the recast electricity market Directive “citizens energy community” means a legal entity that:

(a) is based on voluntary and open participation and is effectively controlled by members or shareholders that are natural persons, local authorities, including municipalities, or small enterprises;

(b) has for its primary purpose to provide environmental, economic or social community benefits to its members or shareholders or to the local areas where it operates rather than to generate financial profits; and

(c) may engage in generation, including from renewable sources, distribution, supply, consumption, aggregation, energy storage, energy efficiency services or charging services for electric vehicles or provide other energy services to its members or shareholders.

 

According to Article 2(16) of the RED II “renewable energy community” means a legal entity:

(a) which, in accordance with the applicable national law, is based on open and voluntary participation, is autonomous, and is effectively controlled by shareholders or members that are located in the proximity of the renewable energy projects that are owned and developed by that legal entity;

(b) the shareholders or members of which are natural persons, SMEs or local authorities, including municipalities;

(c) the primary purpose of which is to provide environmental, economic or social community benefits for its shareholders or members or for the local areas where it operates, rather than financial profits.

 

However, as observed by the EU energy market regulators (Regulatory Aspects of Self-Consumption and Energy Communities, CEER Report, Customers and Retail Markets and Distribution Systems Working Groups, 25 June 2019, Ref: C18-CRM9_DS7-05-0, p. 14). energy sharing, be it directly or within energy communities, in some respects “defies the classical supplier-customer relationship”.

 

The regulators’ concern is involved with the fact that energy communities may act as a supplier, as a service provider (e.g. providing aggregation services) or, if allowed by the relevant Member State, as a grid operator (i.e. activities that are regulated in the energy market legislation).

 

The CEER Report of 25 June 2019 refers to the fact that some EU Member States, such as France and Austria, have developed a framework for collective self-consumption, where energy can be shared within a group of customers, without requiring the direct involvement of a supplier.

 

The regulators’ observation is that with the new provisions from the Clean Energy Package “this kind of direct sharing of electricity will become a right, without necessarily requiring active involvement from the supplier of the remaining electricity” (p. 17).

 

In this regard Article 16(3)(e) of the recast Electricity Directive states that citizens energy communities “are entitled to arrange within the citizen energy community the sharing of electricity that is produced by the production units owned by the community”, subject to other requirements laid down in Article 16 of the Directive and “subject to the community members retaining their rights and obligations as final customers”.


Where electricity is shared, this must be “without prejudice to applicable network charges, tariffs and levies, in accordance with a transparent cost-benefit analysis of distributed energy resources developed by the competent national authority”.

 

 

 

Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal market in electricity (recast)

 

Article 16 Citizen energy communities

 

1.Member States shall provide an enabling regulatory framework for citizen energy communities ensuring that:

(a) participation in a citizen energy community is open and voluntary;

(b) members or shareholders of a citizen energy community are entitled to leave the community, in which case Article 12 applies;

(c) members or shareholders of a citizen energy community do not lose their rights and obligations as household customers or active customers;

(d) subject to fair compensation as assessed by the regulatory authority, relevant distribution system operators cooperate with citizen energy communities to facilitate electricity transfers within citizen energy communities;

(e) citizen energy communities are subject to non-discriminatory, fair, proportionate and transparent procedures and charges, including with respect to registration and licensing, and to transparent, non-discriminatory and cost-reflective network charges in accordance with Article 18 of Regulation (EU) 2019/943, ensuring that they contribute in an adequate and balanced way to the overall cost sharing of the system.

 

2.Member States may provide in the enabling regulatory framework that citizen energy communities:

(a) are open to cross-border participation;

(b) are entitled to own, establish, purchase or lease distribution networks and to autonomously manage them subject to conditions set out in paragraph 4 of this Article;

(c) are subject to the exemptions provided for in Article 38(2).

 

3.Member States shall ensure that citizen energy communities:

(a) are able to access all electricity markets, either directly or through aggregation, in a non-discriminatory manner;

(b) are treated in a non-discriminatory and proportionate manner with regard to their activities, rights and obligations as final customers, producers, suppliers, distribution system operators or market participants engaged in aggregation;

(c) are financially responsible for the imbalances they cause in the electricity system; to that extent they shall be balance responsible parties or shall delegate their balancing responsibility in accordance with Article 5 of Regulation (EU) 2019/943;

(d) with regard to consumption of self-generated electricity, citizen energy communities are treated like active customers in accordance with point (e) of Article 15(2);

(e) are entitled to arrange within the citizen energy community the sharing of electricity that is produced by the production units owned by the community, subject to other requirements laid down in this Article and subject to the community members retaining their rights and obligations as final customers.

 

For the purposes of point (e) of the first subparagraph, where electricity is shared, this shall be without prejudice to applicable network charges, tariffs and levies, in accordance with a transparent cost-benefit analysis of distributed energy resources developed by the competent national authority.

 

4.Member States may decide to grant citizen energy communities the right to manage distribution networks in their area of operation and establish the relevant procedures, without prejudice to Chapter IV or to other rules and regulations applying to distribution system operators. If such a right is granted, Member States shall ensure that citizen energy communities:

(a) are entitled to conclude an agreement on the operation of their network with the relevant distribution system operator or transmission system operator to which their network is connected;

(b) are subject to appropriate network charges at the connection points between their network and the distribution network outside the citizen energy community and that such network charges account separately for the electricity fed into the distribution network and the electricity consumed from the distribution network outside the citizen energy community in accordance with Article 59(7);

(c) do not discriminate or harm customers who remain connected to the distribution system.

 

 

 

 

 

chronicle

Energy community - regulatory chronicle

  

 

 

 

25 June 2019

 

Regulatory Aspects of Self-Consumption and Energy Communities, CEER Report, Customers and Retail Markets and Distribution Systems Working Groups, Ref: C18-CRM9_DS7-05-03

 

 

 

 

IMG 0744

    Documentation    

 

 




Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal market in electricity (recast), Article 2(11), Article 16

 

Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on the promotion of the use of energy from renewable sources (recast), Article 2(16) 



 

 

 

 

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Last Updated on Friday, 19 July 2019 12:41
 

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