Energy Communities: investment opportunities to rebuild fairer economies
Electric vehicles with bidirectional charging, ‘everything as a service’, demand side flexibility and hydrogen are just some of the innovations long predicted by the energy experts who helped shape and integrate them. The emergence of energy communities, however, happened more quickly. In the space of just a few months, they became the new hot topic of new energy. But how did this happen, and what does it mean for the future energy system, especially within the context of a world in needs of a good health and economic recovery strategy?
We could argue that it all started with the two European directives (the Renewable Energy Directive for Renewable Energy Communities, and the Electricity Market Directive for Citizen Energy Communities) giving energy communities unprecedented rights. But giving credit where credit is due, these two directives are the results of energy communities, represented by the European cooperative REScoop, demonstrating to the European Commission that they have an essential role to play in the energy transition. Energy communities argued as well that every single person in Europe has the inherent right to take ownership of such a fundamental matter and yield benefits from it.
This is not just a new stakeholder type penetrating the market, like aggregators did 15 years ago; this is a deeper and more profound transformation that is slowly shaking an industry reserved until now to professionals. More than an innovative trend, it is a society and energy system transformation. Now, incumbents are rushing into trying to understand if this is going to affect their business model, how to work with energy communities, where the opportunities are, how the system of tomorrow will look, and how responsibilities will be distributed.
It seems that most recognise if well designed, energy communities can become a cornerstone of our energy systems, helping to solve many aspects such as social acceptance of renewable integration, holistic approaches to zero carbon systems, enhanced social bonds, etc.
In summary, we are past the preconceived and antagonising image of energy communities being a thing of the hippies from the 70s. The energy communities of today are modern, ahead of the curve, and excellent grounds for innovation.
While all was going well, COVID-19 came knocking at our doors, and with it a second uninvited guest: a global economic crisis. At Delta-EE, our current mission is to help companies navigate the energy transition. As such, it feels like it is part of our mission to promote and relay the call of many organisations and individuals to implement an economic recovery ensuring our society and local communities to become more resilient, fair, and low carbon in the long term.
On the one hand, this crisis is causing the biggest fall in global energy investment in history. On the other hand, as my colleague Jeremy Harrison underlined in a whitepaper on localisation of energy, while some lost their income, the months of lockdown also generated an unprecedented amount of savings. For instance, French people accumulated a historically high with a level in May 2020 almost equal to the whole of 2019 year. However, this level of savings is judged excessive and French citizens are now encouraged by their government to consume their savings in an effort to help relaunch the economy.
I can’t help but think, is this really what we should or want to do? For a part, of course we all need to catch up and go enjoy a good beer on a terrace followed by a romantic meal at the restaurant and indulge a bit. But for the other part, building a fairer future while mitigating risks, energy communities can become an important part of a society organised around more resilient and fair economies, a society that the world needs and many people long for.
Energy communities can be an opportunity for a relatively safe investment, yielding in average ~4-6% of interests compared to the 0.5% of a saving account, an investment that brings resilience not only to the local economies but also to the energy system. In addition to its good economic value, investing in energy communities is making accelerated moves toward a net zero carbon world and enhancing social and local cohesion. While the transformation of power systems integrating decentralised systems is ongoing and brings many structural questions, energy communities have the potential to bring some optimistic answers for rebuilding economies.