III. ENERGY COMMUNITIES IN THE CLEAN ENERGY FOR ALL EUROPEANS
3.1. Legal Definitions in the CEP: Consumer, Customer, Prosumer, Active Customer,
General term ‘consumer’ is not defined in the EU energy law. However, Article 2 (1) of the Di-rective 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on con-sumer rights238 provides for a legal definition of this term in a very broad manner. The consumer there is described as any natural person who is acting for purposes which are outside the scope of an economic activity (trade, business, craft or profession).Under EU law, the notion of con-sumer does not extend to legal persons, even if they have a business character (e.g. non-profit associations). The term 'consumer' must be interpreted as referring solely to natural per-sons.239
As follows from IEMD, customers are divided into wholesale and final customers.240 Final cus-tomer is a cuscus-tomer who purchases electricity for own use.241 Wholesale customer is a customer who purchases electricity for the purpose of resale.242 The term ‘customer’ can be further divided into household and non-household customers. According to Article 2 (4) of the IEMD, a house-hold customer is a customer who purchases electricity for his own househouse-hold consumption, ex-cluding commercial or professional activities. A non-household customer is, on the contrary, a commercial or industrial customer, as well as wholesale customer. Thus, in contrast with the term ‘consumer’ which refers solely to natural persons acting outside the scope of economic ac-tivity, the term ‘customer’ is much wider and covers both commercial and non-commercial natu-ral and legal persons, including both consumers and energy communities as separate legal enti-ties.
Even though it is a well-known and frequently used243, the term ‘prosumer’ is not legally defined in the EU law. The definition of the term ‘prosumer’ which can be found in the literature has already been discussed above in the section 2.4. of this research. IEMD introduces the separate category of customers - ‘active customer’, which means a final customer, or a group of jointly acting final customers, who consumes or stores electricity generated within its premises, or who sells self-generated electricity, provided that those activities do not constitute its primary com-mercial or professional activity.244 RED respectively introduces terms ‘renewable self-consumer’245 and ‘jointly acting renewables self-consumers’246 with similar meanings. Thus, the legal terms ‘active customer’ as well as’ renewable self-consumer’ have similar meaning with the well-known term ‘prosumer’.
The CEP recognizes, for the first time under EU law, the rights of energy communities as market participants in the energy sector.247 It formally acknowledges and sets out legal frameworks for certain categories of community energy initiatives as ‘energy communities’. Energy communi-ties are defined in two separate laws in the CEP. The RED sets the framework for ‘renewable energy communities’ covering renewable energy. The IEMD introduces new roles and responsi-bilities for ‘citizen energy communities’ in the energy system covering all types of electricity.
The directives describe energy communities as a possible type of organising collective citizen actions in the energy system.248 According to the IEMD, ‘the provisions on citizen energy com-munities do not preclude the existence of other citizen initiatives such as those stemming from private law agreements’.249 Both directives allow for different organisational forms of energy communities (association, cooperative and others) through a legal entity.250
243The term ‘prosumer’ is used by the authors of the following sources: Jacobs Ecology Law Quarterly 2016, p.
519-580; Leal-Arcas – Lasniewska – Proedrou Netherlands Yearbook of International Law 2017, p.140-169;
Сouncil of European Energy Regulators (CEER) 2019. Regulatory Aspects of Self-Consumption and Energy Com-munities.
The initial proposal of the European Commission and the European Parliament’s proposal of the IEMD didn’t contain the term “citizen energy community”. It contained the term “local energy community” instead.251 Then, the General Approach, adopted by the Council, dropped the adjec-tive “local” in the definition and did not require any kind of geographical proximity between community members or between the members and the generation units.252 Thus, the General Approach of the IEMD envisaged energy communities that are oriented around common values, rather than around the same geographical location.253The final version of the IEMD contained the term ‘citizen energy community’254. The term ‘citizen energy community’ should be treated as a compromise between the co-legislators.255 Moreover, the final term, with the word ‘citizen’
in the beginning, sends a clear signal that energy community is a format dedicated primarily to private individuals and their organizations and is not envisaged to be used by utilities to benefit from a more favorable regulatory regime.256
3.2. Legal status of energy communities: legal form, membership, relationship between CECs and RECs.
3.2.1. Legal form and purpose
The official recognition of energy communities as distinct market actors in order to provide them with an enabling framework, fair treatment, a level playing field and a well-defined catalogue of rights and obligations is at the heart of the CEP’s support for consumer participation in the ener-gy market.257 Energy community is a category of cooperation of citizens or local actors that are subject to protection under the EU law.258 Energy community offers an inclusive option for all consumers to have a direct stake in producing, consuming or sharing energy.259 Energy
251 Article 16 of the Proposal for a Directive of the European Parliament and of the Council on common rules for the
internal market in electricity (recast) COM/2016/0864 final/2 - 2016/0380 (COD)
252 Article 16 of the Proposal for a Directive of the European Parliament and of the Council on common rules for the
internal market in electricity (recast) - General approach7506/7/18 REV 7, 30 November 2018
253 Jasiak European Energy Journal 2018, p. 31.
254 Article 16 of IEMD
255 Jasiak European Energy & Climate Journal 2020, p. 49.
256 Ibid., p. 49.
257 Recital 43 of IEMD.
258 Recital 44 of IEMD.
259 Recital 43 of IEMD.
nity enables certain groups of household customers to participate in the electricity markets, who otherwise might not have been able to do so.260
Energy communities are divided in the Clean Energy Package on citizen energy communities (CECs)261, regulated under IEMD and renewable energy communities (RECs)262, regulated under RED. This raises the question of the relationship between these two types of energy communi-ties. Both the IEMD and the RED require that an energy community is a legal person, and, hence, is able to act in its own name, to exercise rights and to be subject to obligations.263 Energy communities can take any forms of legal entity, such as an association, a cooperative, a partner-ship, a non-profit organisation or small or medium-sized enterprise.264 Any citizen’s initiatives that are based on a contract between individuals or legal entities, but which do not constitute a separate legal entity, remain out of scope of both Directives and would not be able to benefit from the specific enabling provisions.265
With regard to the purpose of energy communities, RED and IEMD are identical as well. Both the CEC and REC definitions state that community’s primary purpose is to “to provide environ-mental, economic or social community benefits for its shareholders or members or for the local areas where it operates, rather than financial profits”266. This requirement seemingly expects community projects to have non-commercial purpose and to deliver more than just electricity and financial returns. Yet the Directive does not specify how such environmental, economic, or social benefits ought to be defined, measured or reported.267 National legislator will need to fur-ther specify aims that energy communities can pursue while implementing these provisions on the national level.
260 Recital 43 of IEMD.
261 Article 2(11), Article 16 of IEMD.
262 Article 22 of RED.
263 Article 2(11) of IEMD, Article 2(16) of RED.
264 Recital 44 of IEMD.
265 Lowitzsch Renewable Energy Law and Policy Review (RELP) 2019, p. 22, 24.
266 Art. 2 para. 16 (c) of RED; Art. 2 (11) (b) of IEMD;
267 Savaresi Journal of Environmental Law 2019, p. 504.
3.2.2. Membership structure and decision-making
As follows from the article 2(11) of IEMD, CEC is based on voluntary and open participation and is effectively controlled by members or shareholders that are natural persons, local authori-ties, including municipaliauthori-ties, or small enterprises. Since the IEMD does not provide any signifi-cant incentives or privileges to citizen energy communities, which would be further analysed, any entity can become a member of a community. However, the community can be effectively controlled only by an entity or entities that belong to certain categories: natural persons, local authorities or SMEs. Thus, the decision-making powers within the community are limited to those members that are not engaged in large-scale commercial activity and for which the energy sector does not constitute a primary area of economic activity.268
The RED is more restrictive regarding decision-making. The membership in the community is also limited to natural persons, local authorities and SMEs, while the effective control of a com-munity should be held by members that are located in proximity of the generation units.269 How-ever, the notion of effective control is not defined in either of the two legal acts. It will have to be interpreted upon implementation on the national level. It will have to be interpreted upon imple-mentation on the national level, and national legislators are expected to be inspired by national legislation on corporate law, tax law, contract law or other rules.270
Moreover, RED also emphasizes the autonomous character of RECs.271 Providing RECs with the autonomous character is aimed by the legislator to avoid abuse and to ensure broad participation in the RECs. The idea is to keep RECs capable of remaining autonomous from individual mem-bers and other traditional market actors that participate in the community as memmem-bers or share-holders, or who cooperate through other means such as investment.272
Neither of two Directives addresses the relationships that citizens may have with energy com-munities as an investor or shareholder. It will be up to Member States to set a framework for how members may leave the energy community. At the same time both IEMD and RED ensure that
268 Recital 44 of IEMD.
269 Article 2 (16) of RED.
270 Jasiak European Energy Journal 2018, p. 32.
271 Article 2(16) (a) of RED.
272 Recital 71 of RED.
energy community members maintain their rights and obligations as customers.273 This legal gap is likely to lead to a conflict of legal statuses of the individual participant of the energy commu-nity, who is at the same time both an investor or shareholder and a consumer supplied by the community.
In the context of decision-making, a fundamental distinction has to be drawn between intra-community relations, meaning between those involved in a project and extra-intra-community rela-tions, meaning between those taking part in a community project and other local residents and stakeholders who are not involved in a given project.274 As far as intra-community relations are concerned, the legal form of the community may determine some aspects of communities’ inter-nal organisation. For example, legislation on cooperatives may require specific decision-making processes. Other aspects, nevertheless, are likely to be left entirely to communities’ self-organisation.275 The matter of extra-community relations, conversely, is better regulated. Plan-ning law enables stakeholders to object to developments in the context of the planPlan-ning permis-sion process.276Furthermore, depending on their size, community energy projects are likely to be subjected to an environmental impact assessment (EIA) covered by the Directive 2011/92/EU on the assessment of the effects of certain public and private projects on the environment277.
3.2.3. Differences between citizen energy communities and renewable energy communities.
When analyzing differences between these two definitions, one needs to start with the differ-ences between these two Directives. While the purpose of IEMD is the completion of the internal electricity market, the purpose of RED is to specifically support the deployment of RECs for energy production including electricity and to foster acceptance for renewables among EU citi-zens.278 So, while the enabling framework under IEMD is primarily a “regulatory framework”279,
273 Art. 16 (1) (c) of IEMD; Art. 22 (2) (b) of RED.
274 Savaresi Journal of Environmental Law 2019, p. 505.
275 Ibid., p. 505.
276 Savaresi Journal of Environmental Law 2019, p. 505.
277 OJ L 26, 28.1.2012, p. 1–21
278 Lowitzsch Renewable Energy Law and Policy Review (RELP) 2019, p. 21.
279 Article 16(1) of IEMD.
that of the Renewables Directive has more specific aim “to promote and facilitate the develop-ment of RECs”280 including preferential conditions and economic incentives.
Thus, it is possible to identify several main differences between these definitions. Firstly, CECs do not have a technology-specific focus, while RECs engage specifically on activities related to renewables. Secondly, RED requires that the community members, in control of the community, are located in the proximity of renewable energy projects that are owned and developed by the community. It is based on the fact that one of the ways to achieve the increase in deployment of renewables is to increase public acceptance for renewable energy projects.281 Defining the prox-imity will have to be further interpreted by the Member States through land use, zoning or simi-lar legislation.282
Thirdly, RECs are more favored by the legislator and are provided with more benefits and incen-tives. Economic incentives provided to RECs will be discussed in the following sections of this research. However, as a consequence, they are generally stricter in terms of eligibility, require-ments for effective control and democratic governance. In conclusion, it can be stated that the relationship between the two definitions is quite clear - RECs represent a specific, more favored by the legislator, form of CECs. However, RECs also have an own area of operation not falling under the IEMD as far as other types of energy, not electricity, are concerned.283 Figure 2 shows the relationship between renewable and citizen energy communities.
280 Article 22(4) of RED.
281 Lowitzsch Renewable Energy Law and Policy Review (RELP) 2019, p. 24.
282 Jasiak European Energy Journal 2018, p. 32.
283 Lowitzsch Renewable Energy Law and Policy Review (RELP) 2019, p. 22; European federation for renewable
energy cooperatives (REScoop) 2019, Europe’s new energy market design.
Figure 6. Relation of the renewable energy community and citizen energy community.284
3.3. Legal regulation of the functioning of energy communities under IEMD and RED