Energy Communities

Energy communities can be set up as legal entities 

To operate effectively, an energy community needs formal legal status – e.g. cooperative, association, foundation or non-profit company. This gives the community the power to own infrastructure, sign contracts, apply for funding and be recognised by public authorities. While the exact legal form may differ across countries, the organisation must be based on open and voluntary participation, run transparently and be governed democratically by its members.  

Energy communities are open to all and based on voluntary participation 

Membership must be open to everyone who meets basic eligibility criteria. Joining energy community is always voluntary and members are free to leave at any time. The structure is based on democratic participation - members or shareholders vote and steer the direction of the community, usually on a one-member, one-vote basis. It gives local community direct influence over how energy is produced and used in. their area.  

Energy communities must be autonomous 

Energy communities govern themselves, without being controlled by external entities like large commercial energy companies or investors. This autonomy protects the integrity of energy communities - making sure they stay rooted in local needs, local control and serves local interests rather than profit-driven goals.  

Bottom-up and local initiative   

While membership in energy community is broadly open, decision-making control must remain with non-commercial or smaller, locally embedded actors. This includes citizens (natural persons), public authorities and small and medium-sized enterprises (SMEs) whose main business is not energy-related activities. Crucially, large energy companies and big corporations are excluded from joining and controlling energy communities. This prevents commercial capture and ensures that energy communities are shaped in a way that serves energy solutions, which in turn support local needs. This grassroots model guarantees that decisions are made by those who live and work where the energy is produced. It builds trust, strengthens local economies, and puts people at the heart of the energy transition. 

Their primary purpose is to deliver environmental, economic or social community benefits 

The key goal of energy communities is to provide benefits for local communities. This could include reducing emissions, lowering energy bills, enhance common investments at the local level and tackling energy poverty. Any financial surplus generated by a given energy community is re-invested locally or used to directly benefit its members. The way it is used is determined by the energy community members.  

Energy communities can engage in wide range of energy-related activities  

Energy communities can produce energy through community-owned renewable installations. There is great flexibility in how this can be organised. It can be a single installation or several smaller ones, such as multiple micro-installations contributed by members as their share. Energy community can self-consume the energy and share it among members, as well as store and sell the energy surplus outside that energy community – both to be done directly on the energy market or through third parties. They may also offer energy services, such as efficiency services or local grid balancing (flexibility services), as long as these activities support their not-for-profit purpose. 

Energy communities are not just about renewable energy,they are about transforming the energy system to make it fairer, more resilient, and locally driven. 

The war in Ukraine and the resulting surge in energy prices have rendered the need to move away from fossil fuels ever more urgent. The transition to renewables is no longer just about climate;it is also about ensuring energy security, protecting households and businesses from global price shocks, and providing cheap, local renewable energy in the short term. 

This shift is also a chance to redistribute power and ownership. Today, European energy markets are dominated by a few large energy companies, many of which still depend on fossil fuels. But this is changing. By 2050, up to half of EU citizens could produce their own electricity, potentially meeting 45% of the EU’s energy demand. This would represent a fundamental shift towards a cleaner, citizen-led energy system. 

By strengthening local renewables generation, energy communities reduce dependence on external suppliers and enhance local resilience by ensuring a stable and secure energy supply. Moreover, these bottom-up initiatives promote energy self-sufficiency, reduce energy costs for their members, increase energy efficiency and support sustainable practices. They operate under democratic governance, ensuring autonomous and local control while fostering inclusive membership for all community members.  

Energy communities can play a significant role in enhancing energy transition, tackling energy poverty and providing wide range of benefits for local community. However, their development is highly dependent on the proper implementation of EU directives, which is essential to ensure a level playing field for bottom-up initiatives in an energy market which is highly dominated by large utilities. To enforce their rights under EU directives, energy communities can undertake legal actions fostering adoption of appropriate regulations and support schemes. They can also hold Member States accountable for failing to implement EU directives or violating their rights. 

The main purpose of an energy community is to create value for the local community - by delivering environmental, economic, and social benefits, rather than generating profit. It goes beyond simply using renewable energy. Energy communities are part of a wider transformation of the energy system - one that aims to make it fairer, more resilient, and locally controlled. 

Today, the transition to renewables is not just a climate issue. It is also about energy security: protecting households and businesses from global price shocks, and ensuring access to affordable, local renewable energy - especially in times of crisis. Energy communities offer a practical solution to these challenges by empowering citizens to take ownership of their energy future. 

Legal background:  

The concept of renewable self-consumers is defined in Article 2(14) of Directive (EU) 2018/2001 (RED II), while jointly acting renewable self-consumers are further addressed in Article 2(15) and Article 21(4) of REDII. The jointly acting renewable self-consumers refers to a group of consumers – two or more individuals or entities (e.g. neighbours in a residential building) - who can jointly produce, consume, store or sell renewable energy generated from a shared local installation like rooftop solar panels. 

Jointly acting renewable self-consumers focuses mainly on collective energy management, especially self-consumption and cost savings. Its goal is to empower citizens to participate actively in energy markets, primarily by reducing electricity bills through sharing rooftop solar energy. 

Unlike energy communities, jointly acting renewable self-consumers do not form a formal legal entity with a wider social mission. Their focus remains on shared energy use and cost savings, without the broader community governance or social benefits typical of energy communities.  

These directives oblige Member States to take systematic approach by establishing a regulatory framework and support schemes that create a fair and competitive environment for energy communities. This should include ensuring legal recognition of energy communities as well as legal framework that enables and support their creation and operation at the national level. By enforcing these obligations, energy communities can push for policies that guarantee their rights and promote their role in the energy transition.  

To date, most of the Member States have yet to fully implement REDII and IEMD, which is making it harder for  energy communities to develop. It  perpetuates systemic barriers such as unclear legal definitions, unjustified administrative burdens, ineffective support schemes and limited access to the grid network. By undertaking legal actions energy communities can hold governments accountable as well as remove legal and administrative barriers e.g. initiating administrative proceedings targeting excessive administrative requirements or unjustified fees. Strategic legal intervention can also draw public attention and initiate wide public discussion facilitating legislative process. Moreover, successful legal actions can establish important precedents bringing benefits to communities and stakeholders nationally and across Member States. 

Unlike large, professional energy utilities, energy communities often lack dedicated expert staff, technical infrastructure and financial resources. Instead, they rely on voluntary engagement, local partnerships and limited budgets to develop and manage their projects. 

At the same time, they operate in the energy sector, which is complex, highly regulated and dominated by large commercial energy companies with established market positions, technical capacity and access to large capital. This dynamic creates an uneven playing field. 

The RED II and IEMD directives not only require Member States to introduce clear definitions of energy communities but also to establish an "enabling framework". This framework aims to create a level playing field by removing unjustified regulatory and administrative barriers, ensuring non-discriminatory treatment and providing technical and financial support schemes.  

In particular: 

The purpose of these provisions is to empower community-led projects to participate fairly in the energy market and enhance citizen engagement in energy transition. Article 22(4) of the REDII clearly indicates key elements of enabling framework which are essential for energy communities to overcome the structural barriers they face.   

However, many Member States have failed to fully or correctly transpose these provisions, despite binding transposition deadlines. In some Member States, enabling frameworks are missing its key elements, or do not function in practice. This undermines the EU’s intention to create equal opportunities for citizens to take part in the energy transition. 

Without effective national implementation, energy communities cannot reach their full potential to support renewables deployment as well as the decentralisation and democratisation of energy markets, which are key elements of the EU Green Deal and energy resilience strategy. 

Energy communities can play a significant role in enhancing energy transition, tackling energy poverty and providing wide range of benefits for local community. However, their development is highly dependent on the correct implementation of EU directives. To enforce their rights under EU directives, energy communities can undertake legal actions fostering adoption of appropriate regulations and support schemes. They can also hold Member States accountable for failing to implement EU directives or violating their rights. 

Achieving a positive legal or administrative decision can drive long-term systemic change, influence public policy and ensure law enforcement. Strategic litigation goes beyond resolving individual cases but should be recognised as powerful tool for influencing broader social, political, and legal change. Effective use of legal tools requires however a solid strategic approach. For this purpose, energy communities need a clear understanding of their rights and the legal avenues to enforce them. They also need to combine litigation with advocacy actions and media engagement to raise awareness to consequently foster regulatory reforms. Non-governmental organizations (NGOs) and Ombudspersons can support energy communities by initiating public discussions, advocating for systemic change and most importantly - by supporting energy communities in filing strategic lawsuits. 

National courts and institutions are primarily responsible for ensuring the application of EU law. Also, national authorities possess a good understanding of the domestic regulatory and political landscape which enables them to address local barriers effectively. It makes the national level the paramount target for legal actions. Moreover, the subsidiarity principle of EU legal mechanisms imposes essential precondition for exhaustion of national legal remedies before escalating the issue to the EU level.  

Actions initiated before national institutions (e.g. administrative authorities, national regulators or national courts) can provide quicker and more direct impact contrary to prolonged and resource-intensive procedures before EU authorities. While national-level interventions can provide more impactful outcomes by considering specificities of the national legal system, the EU-level actions are essential for addressing broader systemic issues that affect multiple Member States and ensuring consistent interpretation of EU law across the EU.  

A comprehensive strategy to enforce energy communities' rights should consider a dual approach: initiating actions at the national level and, if necessary, escalating to the EU level. Taking action nationally first allows for a solid factual and legal foundation by highlighting compliance issues at the national level. This strategic progression increases the likelihood of effective enforcement and long-term impact. Worth to mention that it may be necessary to exhaust all available national remedies before escalating the case to EU institutions. This strategic, dual approach ensures effective enforcement of energy communities’ rights and can drive systemic changes.  

At the national level, citizens and energy communities have several remedies available in case of issues with the implementation of EU directives. The available legal tools include:  

At EU level, energy communities can initiate action against their Member States using two main channels: