The Director of Ideopsis Ltd took an active part in a dialogue organised by Friends of the Earth Cyprus, CSI and Strovolos Municipality on Energy Communities, highlighting their importance as a driver of sustainable development and social participation in the energy transition. As part of the discussion, she elaborated on the perspectives and challenges facing Energy Communities, highlighting the need to strengthen institutional support, access to financial instruments and empowerment of the local community. In her contribution, she offered valuable suggestions and shared her experience on the implementation of practices that promote energy autonomy and cooperation, laying the groundwork for further promotion of this concept.

What are energy communities and how do they relate to the broader concept of energy democracy? What is your experience with the forms of energy communities?

Relationship between Energy Communities and the Energy Democracy

Until the mid-1990s, the electricity sector was dominated by state-owned or state-controlled vertically integrated utilities with regional or national monopolies. Several packages of measures (4 to be precise) were adopted to remove the monopolies, the most recent being the European Green Deal, Fit for 55 and Repower EU.

The primary purpose of Energy Communities is not financial profit but, in the case of Renewable Energy Communities, the provision of environmental, economic and social benefits to their shareholders or members or to their local areas of operation and, in the case of SEs, the provision at community level of environmental, economic and social benefits to their members or partners or to their local areas of operation.

The objectives of the Energy Communities must be stated in the articles of incorporation and the way to achieve them is stated in their Statutes.

The concept of energy democracy describes the participation of citizens in decision-making and the management of energy resources, with the aim of achieving social justice and environmental sustainability. Energy communities are a key pillar of energy democracy as:

1. They empower citizens: They allow citizens to become “prosumers”, enhancing their autonomy.
2. Ensure participation: all decisions are taken democratically, with an emphasis on member participation and transparency.
3. They reduce dependence: They decentralise the energy system, reducing dependence on large energy providers.
4. They promote sustainability: They adopt environmentally friendly technologies, reducing their carbon footprint.

These concepts first appeared in EU officially in 2019 we have the adoption of the Clean Energy for All Europeans package and we have the formulation of two directives which introduced two different categories of Energy Communities.

1. Renewable Energy Community (REC)
2. Citizens’ Energy Community (CEC)

What is an energy community? Energy actions organised and implemented by groups of citizens. Energy Communities are defined as a kind of collective self-consumption system. Self-consumers are guaranteed in the EU the right to produce, consume, store, share and sell self-generated electricity.

This collective self-consumption system must be set up as a legal entity, which allows it to have a more formal existence with associated rights and obligations.

• Association
• Cooperative company
• Public or Private company
• limited liability company with shares.
• limited liability company with a guarantee and which has share capital.
• Private company
• limited liability company with a guarantee that has no share capital.

A Renewable Energy Community can produce, consume, store and sell energy (not only electricity) from renewable sources – including electricity generation, heating/cooling and transport, provided that it is in geographical proximity to renewable energy projects

A Citizens’ Energy Community can generate, distribute, supply, store and consume energy, provide electric vehicle charging and energy efficiency services. But there is no obligation to produce energy only from renewable sources.

Question 2

What are the first steps towards the creation of an energy community in Cyprus? Are there financial resources that energy communities can tap into and how can the sustainability of an energy community be ensured?

Conditions (According to Regulatory Decision 4/2024)

• Voluntary participation and open to new members
• Democratic control by members
• Financial participation of members
• Autonomy and independence
• Education, training and information for members
• Cooperation

Local authorities can also provide initial funding or be a facilitator for support programmes.

Steps/Stages

• Gathering and interest from Members (natural persons, local authorities, SMEs) 15 Members
• Analysis of regulations, required permits and their costs (Initial business plan)
• Statutory document
• Decision on legal form
• Establishment of a legal entity
• Financial commitment for the next stage
• General Assembly
• Commitment of members and stakeholders
• Application for registration in the RAEK Energy Communities Register (Certificate of Incorporation, Articles of Association, Shareholders’ Certificate)

Existing laws and regulations may require permits and impose restrictions that make it difficult to develop energy communities. For example, there will need to be a review of the market rules within 9 months, yet processes can be:

• Economic Barriers: The development and performance of energy communities requires investment in technology, facilities and infrastructure. Financial constraints can be a major barrier.
• Operational barriers: The type of services provided by an energy community.
• Network & Measurement: Absence of separate tariffs and grid connection procedure. No need for separate network connection and no separate network connection
• Social Acceptance: Acceptance by local residents is important. Sometimes, resistance from the local community can be an obstacle.
• Technological Barriers: In some cases, the development of energy communities may require advanced technologies that may not be readily available or affordable.

Governments can provide subsidies for renewable energy projects (RES). Community members contribute financially to the implementation of the project.