What are the benefits and challenges of becoming an energy community?

Energy

Written by Joachim Maladry

2 April 2021

An energy community has various benefits: they give your residents a sense of ownership, control, and a voice in future decision making

What are energy communities?

Over the past years, the European Union released the Clean energy for all Europeans package. This consists out of two major directives, firstly you have the ‘Directive of common rules for the internal electricity market’. Briefly explained, this directive gives consumers the opportunity to generate, consume, share, and even provide services like storage of electricity. Secondly, ‘the revised renewable energy directive’  is meant to increase the participation of these self-consumers and renewable energy communities even further. The goal of these decisions is to promote the energy transition from traditional fossil fuels to renewable energy sources, like solar energy, hydro power, and wind power.

An energy community is built around the concept of self-consumption, this is one of their biggest benefits. This means that they generate their own energy and participants are free to consume and store this energy based on their own wants and needs.

If you already have a solar power system or are planning on installing solar panels, you can easily increase your return on investment by starting an energy community. This way you can give your residents the choice to join the energy community and buy their share of solar energy your panels produce. The result being that your residents can also enjoy the perks of green energy, which will furthermore lower the electricity bill. This specific type of energy community has the legal term “co-operative society”.

Finally, if you set up an energy community, you can additionally exchange green energy. This energy can, for example be generated from your own solar panels or other energy sources. Lastly, you can distribute this energy between your different residents or assets.

 

Two types of energy communities

There are two types of energy communities. Firstly, you have the citizen energy communities and secondly there are also renewable energy communities. While both types of energy communities can generate, distribute, supply, and consume energy the two main differences are situated within the type of energy they are able to produce and the decision-making process.

Citizen energy communities

Citizen energy communities can generally use both fossil fuel and renewable energy sources. However the decision-making process is strictly decentralized. Meaning that individual members like SME’s or large enterprises cannot exercise any type of control.

Renewable energy communities 

Renewable energy communities are, given their name, based on renewable energy types. The decision-making process here is different compared to citizen energy communities, because large enterprises and SMEs can effectively control the energy project.

 

Possible challenges that you might encounter

The challenges for energy communities can be summarized within 4 different divisions.

  • Energy management: Knowing how much your renewable energy assets produce is important for a number of different reasons. For example, to generate a correct invoice, or in order to lower the energy cost for residents.
  • Meter management: Each resident will have different energy needs and their meter setup will likely be different from one another. It is crucial to collect correct, and validated submeter data so you can create the right invoice based on the correct numbers. In addition, each member of the energy community should have insights on their submeter data.
  • Invoice management: Creating invoices manually will increase the risk of errors. Not only is it a lot of work, but you will also need to allocate each individual share of renewable energy over your different residents.
  • Customer management: contract fulfillment and customer management are the biggest challenge for energy communities. This is due to the fact that each resident has control and ownership over their individual share.

Energy community benefits

What are the benefits of becoming an energy community? 

Setting up an energy community can be beneficial if you are a real estate, property, or facility owner. Due to the following reasons: 

  • Energy communities offer ownership, control, and give members and residents the opportunity to participate in decision making[3].
  • Creating an energy community is a great way to make the transition towards green, renewable energy more inclusive.
  • Generating energy locally will decrease the amount of intermediaries that are otherwise responsible for a higher energy cost.
  • By setting up an energy community you increase the return on investment from your solar power system.

 

Check out our cloud based byNeuron ENERGY platform

  • Generate insightful metrics on the production of your renewable energy assets
  • Plan energy consumption based on the amount of energy you get from your solar power system
  • Avoid future disputes by letting byNeuron automatically generate invoices based on real time, validated meter data
  • You can now ensure contract fulfillment by creating resident user accounts. In order to supervise your invoices and follow up on energy consumption

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