There is a new emerging trend in renewable energy with a rather idyllic sounding name: energy communities. These communities are designed as a model for the brave new world of producer-consumers–individuals that not only take energy from the grid, but feed back into it via their personal energy production devices, most commonly solar panels. These “prosumers” are transforming the way that utilities function within and interact with communities, and have raised questions about how to move forward in a rapidly changing energy landscape. There are several approaches to this energy evolution. One, which Oilprice reported on way back in January of 2018, is the use of blockchain technology to manage prosumers’ interaction with the local energy grid in an efficient and transparent manner. Blockchain has lent itself well to the rapid growth of Distributed Energy Grids (DERs) and prosumers that are producing more energy than they can consume, and are therefore selling it back to the grid. In this case, blockchain has a particularly novel and democratizing effect. As it stands now, most prosumers are operating under the control of local utilities.
While these producer-consumers are revolutionizing the way that the energy market works on a small scale, they remain a microcosm of the age-old market model, as their buying and selling remains under the control of the utilities. However, “with the introduction of the blockchain decentralized network, producers and consumers would finally be able to buck this system and trade energy directly within a designated area,” Oilprice reported.
Another distinct approach to the prosumer element of evolving energy markets is the idea of energy communities, which have emerged as a particularly popular idea quite recently. Earlier this year, the European Commission released a 60-page report on an emerging trend in renewable energy known as energy communities. The report divides these energy communities into two different categories: “renewable energy communities” and “citizen energy communities”. Overall, the report states, “energy communities can be understood as a way to ‘organise’ collective energy actions around open, democratic participation and governance and the provision of benefits for the members or the local community.”
The European Union seems to see energy communities as an inevitable, and indeed, essential part of the future of the European energy landscape, as the 60-page document that seeks to establish policy that “fosters supportive energy policy frameworks” and “empowers customers and boosts social innovation.”
Current conventional energy systems stand to benefit in a number of ways through the implementation of energy communities. These communities can bring flexibility to local service networks and “alleviate the need for traditional network upgrades.” The heterogeneity of energy community systems makes them difficult to standardize, but also offers more resilient and tailored models that are designed to best fit the communities they serve. “Customers may also benefit from lower energy prices and access to private capital from renewables investments through citizen participation,” the European Commission report states.
It’s easy to see why the EU is eager to integrate energy community models into their plans–in just 30 years, it is projected that nearly half of all households in the European Union will be producing renewable energy. “Energy communities will largely remain connected to the energy system, even though stand-alone systems may apply for example on islands or in remote areas. Their integration into the energy system must be done in a cost-efficient way, accounting for real savings in the energy system as a whole and delivering value to all customers,” the European Commission report goes on to say.
While Europe is planning to make plans for the integration of energy communities into future EU governance, however, Chile has beaten them to the punch. The Chilean government has just unveiled a new plan for distributed energy generation which will be set in motion by November 6. According to reporting by PV Tech, these new rules “will introduce the possibility of systems with a generation capacity no larger than 300 kW to supply power for multiple consumers. Such energy communities will enable users to coordinate a shared PV array with a single grid connection to inject surplus power back into the electricity network.”
This plan is part of the country’s green stimulus plan, which aims to recover the national economy in the wake of the COVID-19 pandemic through the means of “an efficient, sustainable energy sector.” Chilean minister for energy Juan Carlos Jobet was quoted by PV Tech as saying: “In this sense, this regulation – which was set up through a participatory process – allows us to continue promoting Chile’s great potential in the field of renewable energy through robust regulations that allow the development of projects.”
Chile’s decision is in line with a worldwide trend toward economic recovery plans based on clean energy and “green stimulus” measures. A separate report from PV Tech earlier this summer synthesized the findings of “a raft of new studies” which have “come to underscore the business case of pushing renewables to the heart of the COVID-19 recovery, amid claims green energy plays offer a low-cost, high-return opportunity for investors.” In layman’s terms: green energy creates jobs. The World Economic Forum has also highlighted the post-COVID economic recovery era as an opportunity for a “new energy order” and a “great reset.” As Chile takes the plunge into the energy communities model, the rest of the world will most certainly be watching to see if the plan can deliver on its promises.