The objective of this research was to identify the role of energy communities in the functioning of EU electricity system in times of energy transition and to deliver an analysis of the legal status of energy communities under the CEP as well as to identify those legal provisions which are the most challenging for the implementation into the national legislation of Member States. This task was approached with the use of doctrinal method of legal analysis. Identification, description and interpretation of the relevant legal provisions that govern the legal status of energy communities was followed by the critical analysis and identification of legal challenges for further implemen-tation of the relevant EU legal provisions by Member States. At the outset three main research questions have been stated.
I. What is an energy community and what is the relevance of an energy community in the context of EU electricity system in times of energy transition?
In brief, community energy projects can be defined as formal or informal citizen-led initiatives which propose collaborative solutions on a local basis to facilitate the development of sustaina-ble energy technologies and practices, and to produce local benefits.435 The analysis conducted in terms of this research revealed that energy communities play very important role in the EU ener-gy transition. Enerener-gy transition requires the significant increase of the renewable enerener-gy sources to be integrated into EU electricity market. Due to the variability of such RES as wind and solar, as well as their low level of flexibility, in addition to demand-driven fluctuations caused by con-sumer behavior the growing amount of variable RES leads to generation-driven fluctuations.436 Thus, accommodation of the increasing share of renewable energy in the electricity grid requires electricity market to become more flexible.437 In particular, market flexibility is needed in order to keep the balance between supply and demand at all times.438 Energy communities can provide the markets with more flexibility specifically through demand response, self-consumption and storage.439 Energy communities also increasingly play a role in improving both the flexibility of
435 Bauwens – Devine-Wright Energy Policy 2018, p. 614.
436 Welsch 2017, p. 155.
437 COM(2016) 864 final/2, p. 3.
438 Huhta, Oil, Gas & Energy Law Intelligence (OGEL) 2019a, p. 19.
439 Huhta Oil, Gas & Energy Law Intelligence (OGEL) 2019a, p. 4.
demand and the flexibility of the energy supply.440 They can not only adjust their demand in re-sponse to price signals, but also actively offer their services on the electricity market.
II. How is the legal status of energy communities regulated under the Clean Energy for All Europeans Legislative Package?
To sum up, the Clean Energy for All Europeans Package for the first time formally recognized the concept of energy communities in the EU legislation. The Package emphasizes the central role of consumers in the energy transition.441 The idea is that consumer activation has a signifi-cant potential to provide the market with more flexibility, which is needed to adapt the electricity system to increasing intermittent renewable energy generation.442 The intention of the Package is to enable energy communities to fully participate in the market on equal footing with other mar-ket participants.443 The most relevant legal instruments under the CEP are RED, IEMD and IEMR. New legislation provides energy communities, who produce their own renewable energy, with the rights to consume, to store and to sell self-generated electricity to the market. Energy communities are also entitled to take part in flexibility and energy efficiency schemes. This re-search provided detailed analysis of such specific issues as the right of energy communities to manage distribution networks, the right to electricity sharing and the right to have access to elec-tricity markets. The research found that it will be optional for Member States whether to grant energy communities with the right to own, establish, purchase or lease distribution network and to autonomously manage distribution networks.444 Once an energy community is granted the status of a distribution system operator, it should be treated as, and be subject to the same obliga-tions as distribution system operator.445 Regarding the right to electricity sharing, this right con-stitutes one of the most interesting and important communities-related novelties in the European regulatory framework.446 The right to arrange within the energy community the sharing of elec-tricity that is produced by the production units owned by the community is provided by both
440 Schuitema – Ryan – Aravena IEEE power & energy magazine 2017, p. 54.
441 COM(2016) 860 final, p. 10.
442 Recital 10 of IEMD.
443 Recital 7 of IEMR.
444 Article 16 (2) (b), Article 16 (4) of IEMD.
445 Recital 47 of IEMD
446 Jasiak European Energy Journal 2018, p.35; Jasiak European Energy & Climate Journal 2020, p. 52.
IEMD447 and RED448. Community member’s rights and obligations as customers should be re-tained.449 Moreover, electricity sharing should be organised without prejudice to applicable charges, tariffs and levies, in line with a transparent cost-benefit analysis of distributed energy resources.450 While many technical and practical details will need to be worked out at the nation-al level, there is no doubt that energy sharing provides numerous opportunities for citizens to innovate with renewables and other flexible clean energy technologies and to take advantage of these technologies.451 The research also found that RED and IEMD also contain obligations which follow from these rights, such as, the obligation to pay network charges or the responsibil-ity for the imbalances they cause in the electricresponsibil-ity system.452 Energy communities are provided with a right to access all potential energy markets on the basis of non-discrimination and equal treatment.453 At the same time, energy communities are expected to contribute in an adequate, fair and balanced way to the overall cost sharing of the system in line with a transparent cost-benefit analysis of distributed energy sources by the competent national authorities.454 Thus, the question that would arise during the implementation of these provisions is how to design the grid access rules so that they would make investments in energy communities resilient and cost-effective in the long run.455 At the same time, RED and IEMD also contain obligations for ener-gy communities which follow from these rights, such as, the obligation to pay network charges or the responsibility for the imbalances they cause in the electricity system.456 In contrast to CECs, RECs are provided with quite significant economic incentives, such as remuneration for the self-generated renewable electricity they feed into the grid and obligation of Member States to take RECs into account while designing renewables support schemes.457
III. Which legal provisions of the EU legal framework on energy communities are challeng-ing for the implementation into the national legislation of EU Member States?
447 Article 16 (3) (e) of IEMD
448 Article 22 (2) (b) of RED.
449 Article 16 (3) (e) IEMD.
450 Article 16 (3) (e) IEMD.
451 European federation for renewable energy cooperatives (REScoop) 2019, Europe’s new energy market design.
452 Article 15 (2) (f), Article 16 (3) (c) of IEMD.
453 Article 16 (3) (a) of IEMD; Article 22 (2) (c) of RED; Roberts European Energy Journal 2019, p.19.
454 Article 16(3) (e) of IEMD; Article 22 (4) (d) of RED.
455 Ibid., p. 503.
456 Article 15 (2) (f), Article 16 (3) (c) of IEMD.
457 Article 22 (7) of RED.
The research revealed that national legislators are going to face quite many legal challenges in terms of implementation of the EU legal provisions concerning energy communities. One legal challenge for national legislators would be to provide a clear distinction between energy com-munities and other initiatives as well as coherent differentiation between citizen energy nities and renewable energy communities. Then, regulation of the functioning of energy commu-nity as an electricity supplier together with the status of the individual participant of the energy community as a customer supplied by the community would also be challenging as there is no sufficient clarity on that matters in EU legal framework. The same can be said about the regula-tion of the role of energy community as a grid operator. The legal regulation of cost-benefit analysis as a prerequisite to developing network charges is also identifies as a challenge for na-tional legislator. Moreover, the role of distribution system operator as a market facilitator would be difficult to regulate as it has changed a lot with the new electricity market design and it is of crucial importance for the viability of the new system in which energy communities are expected to provide plenty of services to the electricity market. Changing role of distribution system oper-ator definitely calls for further legal research.
Finally, it would be true to say that adoption of the EU legal framework for energy communities constitutes a very interesting step in regulating the status of energy communities and the use of sharing economy in the energy sector458. However, the journey towards recognition and support of energy communities in the energy market is now only in the beginning.
458Jasiak European Energy & Climate Journal 2020, p. 55.