How energy communities help transform the energy industry
By passing EAG (Renewable Energy Expansion Act), the Austrian government made a major contribution to the energy transition. Praised by the industry and environmentalists alike, the act regulates the country’s electricity system, set to be powered exclusively by renewable sources by 2030. One of its most far-reaching effects will be the legal framework for renewable energy communities (EEGs), the key pillar for achieving climate targets and expanding decentralized energy supply.
You’ve got the powerThe concept of energy communities was introduced in an EU legislative package in 2019 to enable citizens to integrate into the electricity system through active participation. As individuals or as members of energy communities, they can consume, generate, sell or share electricity, and have the opportunity to play a direct role in energy transition as prosumers. With EAG in force, individuals, municipalities, small and medium-size businesses or farmers can team up and help bring about the decentralization of the Austrian power system, while relieving the central grid by using regionally produced power. That way, not only do communities or regions become more autonomous, but both fees and supraregional electricity transport can be reduced – all of which goes a long way towards the optimization of the overall energy system.
Power plants of the future
A key advantage of EEGs is that they allow everyone – companies, municipalities, private households – to actively take part in the energy transition, enabling them to contribute enormously to the democratization of the power sector. Companies that generate and consume their own electricity have already been benefiting from being more independent from conventional energy markets, but the members of an EEG can also share electricity or sell the surplus amount the community produces on the market.
We should think of these energy communities as the power plants of the future, which offer benefits that their fossil fuel-based counterparts cannot. The most obvious of those is that, since they rely 100% on renewable energy, EEGs help with carbon reduction which could not be achieved otherwise. The fact that they are independent and can be separated from the grid provides a valuable service when it comes to power outages: their autonomy results in less strain on the power network, which reduces the risk of such incidents occurring in the first place.
Some of the most important characteristics all EEGs share are the following:
Increased renewable energy generation also means greater energy awareness as well as broader behavioral and societal changes that are essential for zero-carbon targets to be reached. Making use of the most recent innovations (e.g. smart grids) means a much more efficient use of energy, which in turn brings with it financial benefits: a decrease in electricity prices and the accumulation of profits guaranteed for the local community.
Additionally, given the flexibility regarding the legal forms EEGs can take, new business models may emerge, and those groups and individuals that are interested in establishing an energy community have much more choice, which is an added incentive as it makes the formation of an EEG easier. Moreover, whatever their legal form, EEGs support the regional economy. Since the installations are owned and operated locally, new jobs are created both through their operation/management and from local supply chains.
Powering ahead – Freistadt as the spearhead of progress
Whether EEGs will establish themselves in the long run depends mostly on barriers to entry, according to energy and climate law expert Florian Stangl. With a low threshold, opportunities would open up for the private sector to offer innovative services since the generation plant of a particular energy community doesn’t have to be owned by the community or its members. The lessor can also take over the maintenance and the operation of the facility for a certain fee. Similarly, network operators will play an important role: in addition to measuring the energy, they will function as the data interface between participants. Clearly, the potential is there for energy communities to become successful and widespread, and there are some very encouraging developments.
In the Upper Austrian town of Freistadt, the country’s largest decentralized energy system is being built on municipal roofs. The project will see various municipal buildings equipped with photovoltaic systems and corresponding storage and energy management systems. Both the operation and the financing of the necessary infrastructure were outsourced to an external partner, and we at neoom are proud to say that we won the tender, meeting the criteria that included cost-efficiency, sustainability, power outage management and regional value creation.
Projects like the one in Freistadt can ensure that renewable energy communities represent a new milestone in the Austrian energy transition.