Climate Law 4B

What is the "3Ds" formula for the energy transition, and how do its components change the energy landscape?

• Decarbonize: Shifting investment into renewable energies like wind, solar, and green hydrogen.

• Decentralize: Moving energy production closer to the final end-use rather than relying on centralized power plants.

• Democratize: Facilitating collective decision-making regarding infrastructure and redistributing access to renewable energy among citizen

What are the defining legal characteristics of a Citizen Energy Community (CEC) under Directive 2019/944?

• A CEC is a legal entity based on voluntary and open participation, controlled by members (natural persons, local authorities, or small enterprises)

• Its primary purpose is to provide environmental, economic, or social benefits to members or the local area rather than generating financial profits

• It is limited to the electricity sector but can engage in activities like generation, distribution, supply, consumption, aggregation, and storage

How does Directive 2018/2001 define a Renewable Energy Community (REC)?

• An REC is an autonomous legal entity controlled by members located in the proximity of the renewable energy projects. Members must be natural persons, SMEs, or local authorities

• Like CECs, their primary goal is community benefits over profit

• Unlike CECs, they can cover any energy sector (e.g., heat) but must strictly use renewable technologies

In a scenario where a group wants to start a virtual community across different regions using gas and electricity, which framework applies?

• Neither would fit perfectly, but a CEC would be the only one to allow the virtual (non-proximity) aspect

• However, the community would be restricted to the electricity sector, as RECs are the ones that can cover other sectors (like heat/gas) but require physical proximity and strictly renewable sources

Who are the primary actors involved in an energy community, and what are their roles?

• Prosumers: Those who both produce and consume energy.

• Aggregators: Entities that combine small-scale producers/consumers to optimize market participation.

• System Operators (DSOs): Entities responsible for grid stability and cooperating with communities for energy transfers.

• Regulators: Government bodies that enforce policies and remove barriers

How does a Virtual Energy Community function without a shared physical location?

• These communities (often falling under CECs) link prosumers and consumers in different regions based on technical commonalities, such as shared hardware (e.g., home storage) or AI-based peer-to-peer (P2P) trading platforms

• They use tariff models and periodic accounting to bill members for generation and consumption

What is a microgrid, and what is its current legal status in the EU?

• A microgrid is a decentralized grid where members can disconnect from the main grid to manage their own balancing, known as grid islanding

• There is currently no specific legal basis for microgrids in EU law; they are typically implemented through special permits or as a specific form of energy community where islanding is allowed

What protections must Member States (MS) provide to individuals joining an energy community?

• MS must ensure that participation is voluntary and that members can leave the community

• Importantly, members must not lose their rights as household or active customers

• MS must also ensure that DSOs cooperate with these communities and that the regulatory framework is non-discriminatory and fair

What are the most common legal and regulatory hurdles facing new energy communities?

• Regulatory Uncertainty: Technology often evolves faster than the law.

• Unbundling Rules: Complexity in separating production from distribution.

• Licensing: Challenges in sharing energy without holding a traditional supply license.

• Grid Access: Difficulties meeting technical requirements or securing connections

Beyond environmental goals, what are the social and economic motivations for starting an energy community?

• Economic: Lowering energy bills and regenerating the local economy.

• Social: Tackling energy poverty, fostering social cohesion, and promoting social inclusion for youth, women, and the elderly.

• Security: Achieving self-sufficiency and a secure energy supply