The European Union introduced RECs in 2018 and asked member states to take note and encourage their creation by 2021. After 4 years, too much red tape and few standards continue to hold back their deployment, leaving room for startups and innovators to take initiative

Created to decentralize and democratize energy production, Renewable Energy Communities (RECs), also known as Citizen Energy Communities (CECs) are only now beginning to become a widespread and concrete reality. With 4 years to go before the deadline set by Europe for individual member countries to transpose its legislation on the subject, these realities are proposing that citizens produce renewables and manage their consumption. They invite them to take an active part in the great challenge of the green transition, to try to make it fair as well, offering them benefits that are not only economic and energy-related, indeed. What most motivates people to take part in this kind of initiative are environmental and social benefits.

One does not create a REC to save money or to make a profit. By starting to share the energy produced by the small shiny photovoltaic panel installed on one’s roof, one begins to appreciate the idea of feeling part of and having a community with the same values in a broader sense. This (re)beginning of the sharing economy could spur a widespread mindset change toward a new paradigm of consumption. Europe would need it and is hoping for it: RECs still struggle to take hold, in fact, but not only because of the reluctance of those invited to take part. The problem is bureaucracy.

Despite a spotty membership, with pronounced differences in approach, style, legal forms and business models on a microscale, uniting all of Europe’s RECs remains the problem of bureaucracy. Anyone anywhere who tries to set one up faces a steep uphill road. There is eagerness to share, the current 9-10 thousand existing renewable energy communities already sprung up here and there notwithstanding, but if the processes for setting up a community were streamlined, there could be so many in the future that they could revolutionize the world of renewables, and perhaps that does not please everyone.

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TAKEAWAYS

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RECs in Italy: looking for standards and identity

According to the Electricity Market Report conducted by Politecnico di Milano, as of May 2024, there were 168 initiatives in our territory to establish true renewable communities and collective self-consumption. Doubling from the previous year, but most are still in a planning stage, only 46 are actually active. So if we want to talk about an energy revolution, we are still in our infancy in Italy, but not because of a lack of citizen participation. The reason for the delay is regulatory on the one hand, and lack of standards on the other. The decree regulating these realities in a more stable and clear way came into force in January 2024 and the GSE portals for applying for incentives only in April: we have only just begun and citizens are gradually understanding the rules of the game.

Looking to the future, the problem to be solved instead is “the absence of a single model,” explains Matteo Zulianello, RSE’s Project Leader “The User at the Center of the Energy Transition” on self-consumption and CERs at GSE [RECs are “Comunità Energetiche Rinnovabili – CERs” in Italian language]. “To date, there is no standard path and we as a research center have to try to help build one and give clarity to people who want to approach this issue. The biggest difficulty is figuring out if you can participate and how, and what resources to share and what resources you can find.”  The variety of potentially feasible energy communities does not help to find common lines: “depending on whether the initiating entity has social, economic, or environmental policy purposes, the way in which the establishment of the energy community is triggered can change, which in turn is governed by a series of mechanisms and rules of relationships between community members and members,” Zulianello tells.

Each REC constitutes its own case, so standardizing is a challenge as is encouraging citizen participation as producers or consumers. “We need to find the balance to manage the operation well” Zulianello explains, “the CER.ca.MI model born in Milan from this point of view is an interesting model because it defines minimum and maximum values for the return on investment that is made and a guarantee is given to producers on the effective functioning of the mechanism.

CER.ca.MI found a model

Founded in 2024 as an association and now becoming a third-sector entity, CER.ca.MI stands out in the Italian landscape by trying to propose a precise model of REC (CER) and a pathway to implement one while minimizing bureaucracy. Joining forces with the City and the Polytechnic, this initiative offers focuses on renewable energy communities with high social impact in densely populated and urban settings. It starts in Milan and invites participants to reinvest 100 percent of the incentives earned through energy sharing into social and/or environmental initiatives directly related to and chosen by the community. Be it cultural events or training projects, donations to local NGOs, support for initiatives against the climate crisis or land recovery: each community can decide and is called upon to decide in an autonomous but socially engaged way

After a 3-year regulatory stall (the idea dates back to 2021), today Cercami is a platform that supports the creation of CERs in the Milan area, trying to ease the bureaucratic path for anyone who appreciates the proposed approach. According to Filippo Bovera, professor at the Milan Polytechnic and president of CER.ca.MI, there are two main challenges to be faced and they do not concern citizen membership but could discourage it.

One is typically urban and stems from the mismatch between the political perimeter of action (town halls) and the perimeter of energy sharing (primary substations). “You accrue the incentive on the second perimeter but it must then be redistributed respecting the first,” Bovera explains, “to solve this we have introduced management committees that allow the territories to express their will with respect to the use of the incentive. A trick that ensures that no one finds himself in a no man’s land that leaves him excluded.

The second challenge is the same one that awaits all energy communities in Italy, wherever they are located. “There is a risk of creating very high expectations and then not being able to keep them in terms of timing, due to administrative difficulties,” says Bovera. “It takes a couple of months to set up a photovoltaic system, but it takes another 5 or 6 months to connect because distributors still have few staff dedicated to this activity, and the other administrative paperwork itself takes so long. Submitted the paperwork to access the GSE portal, the response comes after 6 months on average. In essence, more than a year passes before a citizen can touch the benefits of his or her membership in a REC (CER). Whether it is CER.ca.MI or another one.”

Not being deterred by Italian delays, “this initiative is proposed as a ‘model for urban areas and, in the Milan area it is already applicable in any area,'” explains Giuliano Rancilio, a researcher at the Energy Department of the Politecnico di Milano, emphasizing the enabling role the platform plays, “not letting the complexity of the process of creating and managing a REC from scratch weigh everything down on individual entities or groups of citizens who want to try sharing their renewable energy.”

The hybrid community of Basis

Changing area and mindset but not country, the Vinschgau Valley is home to a renewable energy community that, instead of being embedded in one large municipality, includes 15 small ones. It is called EVi and was created to “promote local resilience and innovation through culture, participation, and sustainability,” explains Luca Daprà, project manager of BASIS, the entity that in 2022, submitted a high social impact REC project by applying for and obtaining PNRR funds to implement it.

As happened to CER.ca.MI, the EVi renewable energy community had to wait until 2024 and the definition for the implementation of RED II directives with related technical regulations to be officially born and operate locally. Now, finally free to develop it, the BASIS team is quivering to “grow it locally and make people understand its benefits.” In addition to those provided by renewable energy communities as such, EVi according to Daprà offers others that are specific and related to the unique geographic location of the valley in which it was born. “The area where we live is protected from the prevailing weather systems, precipitation levels are low and we enjoy about 300 days of sunshine a year,” he explains, “we are a perfect location for photovoltaic production and, thanks to the glaciers and reservoirs, we have great potential for small pumped-storage hydroelectric systems.

Buoyed by the favorable boundary conditions for the sharing model’s energy efficiency, with its EVi, BASIS does not want to limit its impact but rather “to become an example to inspire the emergence of many other energy-cultural hybrid communities, where cultural spaces not only consume but also produce and manage renewable energy, reinvesting the surplus in public value in the form of artistic, educational and social projects,” Daprà explains. With its entire dedicated team, BASIS is ready to take off: it is already supporting the development of a local virtual power plant to further encourage self-consumption and reduce overloading of the medium-power grid. It looks ahead confidently but looks worriedly at the bureaucratic challenges that await it to grow and that await all new communities that will want to try to be born. She speaks of “a still fragmented and bureaucratic implementation process,” “practical barriers-such as delays in grid access, insufficient support for small communities, and legal uncertainty-and hurdles on incentives,” which are not always adequately disbursed and encouraging for RECs.

Need to simplify. Room for Startups

The obvious complexity of the legislation makes it difficult for individuals to understand what tangible gains can be made. It can either scare them away or repel them, and there are those who try to turn this risk into an opportunity by offering innovative and agile services to bridge the gap between the beautiful idea of REC written on paper and the difficult task of implementing one on Italian soil. HexErgy is one of the Italian startups born embracing this unique mission and dedicating its entire technology solution to it. It has divided it into four parts, four acts of the same work of creating an REC where blockchain also finds its place, to ensure data security and maximize efficiency, revenue and environmental sustainability. Between design, creation, management and marketplace, the strength of the platform is certainly the creation part, “the one that solves the many bureaucratic problems still present when trying to establish a renewable energy community,” explains Alessandra Coco, marketing specialist at HexErgy. She says she is pleased with the reception so far from the market, but neither she nor her team is satisfied with this smiling response. “In the future, we also want to offer the possibility of energy exchange BETWEEN energy communities and not just each within itself,” she says, “and after Italy, we also want to reach Portugal, Spain and France in 2026.

Attending a few “startupper” events, they will probably meet Jane, but rather than stepping on each other’s toes, the two might even find a way to collaborate. Already incubated at X-UP (Polytechnique) and Leonard (VINCI), this French startup has chosen to focus on a platform that enables energy communities based solely on solar energy “because it is expected to become the world’s main source of electricity by 2050,” explains co-founder Nathan Bouldoires, “we want to make it accessible to everyone because the sun gives energy every day to the whole Planet and we believe it should be able to be used to power a more equitable and sustainable future. This is a significant, urgent and not just a business goal for us.”

Another reason Jane chose solar is the cost of accessing technologies to harness its energy, which is far lower than those associated with wind sources or hydroelectric plants.

Flexible and accessible to all, just like solar energy, Jane’s platform is aimed primarily at ordinary citizens, with a focus on rural areas and the specific category of farmers. “By supporting them in harnessing their potential for solar energy production, we enable them to generate additional income, earning a leading role in their communities, including as energy providers,” explains Bouldoires. “This can foster greater cohesion and be a motivation to engage with the land, beyond the cultivation of their individual plot of land. Fields aside, the benefits illustrated also apply to ordinary citizens who can move away from the risk of energy poverty by espousing a participatory model and gaining a new connection to their community of origin or residence. “We believe that energy sharing can build local solidarity and social ties,” says Bouldoires in fact, highlighting the same complexities in getting renewable energy communities off the ground that have already emerged for Italy: technical and administrative complexities.

Also in France, as in Italy, startups seem to be the ones most ready to leverage technology to simplify and democratize the opportunity proposed by Europe and clumsily translated by member states into a possibility that is not easy to embrace.

Creating Creative RECs

Indeed, France and Italy are not the only countries struggling to ground the sharing model proposed by energy communities. The European landscape is diverse, but restraining bureaucracy is a constant cross border and in each country imposes a distance between ideal models identified in the palaces of Brussels and concrete initiatives that can be implemented on the ground in Europe. The gulf that continues to separate decision makers, regulators and citizens becomes fertile ground for new business initiatives but also for equally innovative projects of a different slant.

A good example is the three-year Co-PED (Community-based cultural and social centers as incubators for Positive Energy Districts) initiative, which invites social and cultural centers to become key players in the energy transition in the community where they operate, creating models of management and financial governance to help them move from promises to action without stumbling over bureaucracy. Among Co-PED’s main goals emerges the urgent one of bridging the rural-urban divide, ensuring an inclusive but also widespread energy transition. Cultural and social centers in non-metropolitan areas can play a crucial role in this regard, turning into participatory laboratories of new consumption paradigms. The same goes for the need to increase citizen participation in initiatives that start from Europe and risk being perceived as distant and/or imposed from above.

A local cultural or social center, can become an excellent “mediator” by bringing people closer to European environmental sustainability policies, unveiling their strategic and inclusive value. In the activities planned by Co-PED, there are also ones dedicated to policymakers at both local and national and European levels. Those who wish to learn how to ground renewable energy communities by making them take root in their local area can count on this new ally to develop funding schemes, incentives and policies that facilitate their implementation. In the form of an international consortium, Co-PED brings together social and cultural centers, research institutes, civic networks and energy companies from various backgrounds but equally willing to share best practices and expertise. They will be able to do this even better in the eight Urban Living Labs that are springing up in various urban, peri-urban and rural contexts as test grounds for collaborative, adaptable and scalable solutions. The address of the Italian one coincides with that of BASIS and its energy community in Val Venosta, those of the other 7 are scattered across Sweden, France, Austria, Hungary and the Netherlands. On Co-PED‘s official website one can appreciate their artistic diversity full of contrasts but also of opportunities to be seized and offered to their territories, multiplied.

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This article was produced as part of the Thematic Networks of PULSE (by N-Ost | OBCT), a European initiative dedicated to fostering transnational journalistic collaborations. 

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