I. INTRODUCTION
1.1. Research background
EU’s energy system is currently undergoing structural changes that are known as the energy transition.1 Energy transition includes three major processes. Firstly, move towards low-carbon energy system (decarbonization).2 Secondly, natural monopolies change into competitive mar-kets (liberalization).3 And thirdly, centralized system owned by very few is changing into more decentralized system, where consumers are activated due to the development of renewable ener-gy sources (decentralization).4
Electricity is expected to play a major role in the transition to a clean energy system.5 The elec-tricity share in the final global energy demand is projected to reach 45% of the total final energy consumption in 2050.6 In the EU the share of renewable electricity has risen to 29% of electricity generation and is expected to reach about half of the EU’s electricity generation mix, mainly from sources like wind and sun.7 Getting the electricity system ready for a substantial increase of renewables is one of the priorities for the European Union to foster energy transition.8 The elec-tricity market rules must be adapted to facilitate the increase of renewable energy sources, while maintaining security of electricity supply, which is understood as uninterrupted availability of affordable electricity9.10 The research is focused on the legal regulation of EU electricity market specifically. Terms “energy” and “electricity” are used for the purpose of the research as equiva-lents.
Until recently, energy law generally envisaged consumers as passive actors which only take elec-tricity from the grid but do not provide any goods or services in return.11 However, this vision is
1 Recital 3 of IEMR; Huhta 2019b, p. 1, 16-17.
2 Huhta 2019b, p. 1, 16-17; Cseres European Journal of Risk Regulation (EJRR) 2018, p. 231.
3 Huhta 2019b, p. 1, 16-17; Cseres European Journal of Risk Regulation (EJRR) 2018, p. 231.
4 Huhta 2019b, p. 1, 16-17.
5 COM(2016) 860 final, p. 8; Keramidas et al. Global Energy and Climate Outlook 2019, p. 27.
6Keramidas et al. Global Energy and Climate Outlook 2019, p.27. The information presented is for the 2°C-Medium scenario.
7 COM(2016) 860 final, p. 8.
8 Bruegel 2019, The European Union energy transition: key priorities for the next five years. Policy brief.
9 Huhta 2019b, p. 2.
10 COM(2016) 860 final, p. 8.
11 Recital 7 of IEMR; Jacobs Ecology Law Quarterly 2016, p. 533.
currently changing. Nowadays technological developments together with the decreasing costs of renewable energy generation facilities allow consumers to play active role in facilitating energy transition.12 Active consumers are now put in the centre of the EU energy transition.13 Activating consumer participation is seen as an absolute prerequisite for managing the energy transition successfully and in a cost-effective way.14 In the future, consumers need to be enabled to fully participate in the market on equal footing with other market participants and need to be empow-ered to manage their energy consumption.15 The Clean Energy for All Europeans Legislative Package (CEP) provides a legal basis for active consumer participation in the energy market.16 It does so through recognizing citizens and energy communities as distinct market actors at the EU level and providing them with the enabling framework, fair treatment, level playing field and a well-defined catalogue of rights and obligations.17 The most relevant legislative acts in the CEP concerning the consumers are the following: EU Regulation 2019/943 of 5 June 2019 on the in-ternal market for electricity (recast) (IEMR)18, EU Directive 2019/944 of the European Parlia-ment and of the Council of 5 June 2019 on common rules for the internal market for electricity and amending Directive 2012/27/EU (IEMD)19 and EU Directive 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 (RED)20. These legislative acts provide consumers and their communities, who produce their own energy, with the rights to consume, to store and to sell self-generated electricity to the market.21 They can also take part in flexibility and energy-efficiency schemes.22 Moreover, energy communities are entitled to arrange energy sharing, as well as to own, estab-lish, purchase or lease distribution networks and to autonomously manage them.23 At the same time, this legislation also contains responsibilities which follow from these rights, such as, for
12 Roberts European Energy Journal 2019, p. 13.
13 COM (2016) 860 final, p.10; Cseres European Journal of Risk Regulation (EJRR) 2018, p. 228.
14 COM(2016) 864 final/2, p. 5; Cseres European Journal of Risk Regulation (EJRR) 2018, p. 232.
15 Recital 7 of IEMR.
example, the obligation to pay network charges24 or the responsibility for the imbalances they cause in the electricity system.25
Legal framework provided by the CEP allows consumers to participate in the energy market both individually, being identified as ‘active customers’26 or ‘renewable self-consumers’27 and collec-tively through energy communities which are divided by the legislator on ‘citizen energy com-munities’ (CEC)28 or ‘renewable energy communities’ (REC)29. Energy communities provide an option for all consumers to have a direct stake in producing, consuming or sharing energy, even for those who otherwise would not be able to do so.30 Energy communities are usually formed at the local level and are connected to distribution electricity network.31
Energy communities are challenging traditional paradigms in energy law, which are based on the predominant generation technologies of the last decades, in particular centralized, large scale fossil fuel power plants with limited participation of consumers.32 Many authors come to a con-clusion that regulating this kind of innovative relationships is a big challenge for the government as this organizational shift in energy generation, supply and management contributes to increas-ing complexity of energy system.33 Moreover, the specificity of new actors, who can be non pro-fessionals and not well educated in energy field, adds difficulty to the situation.
This research aims to identify the role of energy communities in the functioning of EU electricity system in times of energy transition and deliver an analysis of legal regulation of energy com-munities under the CEP. The research is going to have a specific focus on energy comcom-munities, as a legal option for consumer’s collective action. This research is of legal relevance, because from the legal point of view energy communities are new actors in EU electricity market and
31 COM(2016) 860 final, p. 8; Lavrijssen European Energy and Environmental Law Review 2017, p. 176-177.
32 COM(2016) 864 final/2, p.4.
33Lowitzscha – Hoickab - van Tuldera, Renewable and Sustainable Energy Reviews 2020, p. 1; Jacobs Ecology Law Quarterly 2016, p. 522.
they have not been recognized under the EU law before the CEP. Moreover, the legal provisions that enable energy communities to participate in the electricity market are mainly included into EU Directives, such as IEMD and RED, and hence need to be further implemented into the na-tional legislation of EU Member States.34 Directives are often used by EU legislators in order to introduce a complex legislative change and require EU Member States to achieve a certain re-sult35, while the manner and form of implementation of directives are for each Member State to decide.36 So, this research could be useful for national legislators for the purpose of the imple-mentation of the respective legislation.