Bridging the Energy Transition: Energy Communities and Combating Energy Poverty in European Cities

The European Union’s commitment to achieve climate neutrality drives a paradigm shift in how energy is generated, distributed, and consumed. Central to this transition are two intertwined concepts: energy communities and energy poverty alleviation. Both address critical challenges while fostering sustainable, inclusive growth. This article explores these themes, drawing insights from workshops conducted in Liberec and Košice, with actionable strategies applicable across European cities.

Energy Communities: A Catalyst for Urban Sustainability

Why Are Energy Communities Essential?

Energy communities embody collective action towards renewable energy adoption, which is integral to achieving the EU’s climate-neutrality goals. By 2050, 75% of energy demand should be met by renewables, with 16% generated through collective projects. This requires nearly half of European households to participate in renewable energy generation, with over a third engaging in community initiatives.

Energy communities democratise energy management, empowering citizens to generate, consume, and trade renewable energy while fostering environmental stewardship and local economic resilience.

Business Models for Energy Communities

The diversity of energy community models allows for tailored approaches to local needs. Reis et al., in their article on Business models for energy communities, identify eight key models, including cooperatives, prosumerism and local energy markets. This article focuses on energy cooperatives as the most prevalent model in Europe, with approximately 2,400 in operation.

Energy Cooperatives: A Proven Model

Energy cooperatives exemplify citizen-driven, democratic governance. Members collectively own and manage renewable energy projects, ensuring transparent and equitable decision-making. These cooperatives typically fall into one of the following categories:

1. For-Profit Cooperatives: Members invest in large-scale projects such as wind or solar farms, benefiting from returns in competitive energy markets.
2. Nonprofit Local Cooperatives: These focus on self-consumption and local supply, reinvesting surpluses into community improvements like infrastructure.

Citizen-driven governance is a hallmark of energy cooperatives. They operate democratically based on voluntary, open membership, adhering to the "one member, one vote" rule. This empowers members to participate actively in decision-making while ensuring transparent management. Flexible organisational models enable cooperatives to adapt to varying local needs:

Some cooperatives oversee low-voltage distribution networks, controlling billing practices and incentivising self-consumption through dynamic pricing. In countries like Portugal, cooperatives act as local distributors, while in The Netherlands, they focus on generation and supply without managing the grid directly

Real-World Examples

• Eeklo Energy Cooperative: Eeklo’s city council partnered with Ecopower through a public tender, prioritising sustainability and community engagement. Local citizens became co-owners of wind turbines, reducing energy consumption by 50%.
• Barcelona’s Solar Initiative: The city-funded solar panel installations and used a public tender to allocate energy. Vulnerable groups received 30% of the generated energy (for free), ensuring equity. 
• València’s Resident-Led Model: By offering public rooftops for solar installations and supporting Energy Offices, the city empowered neighbourhoods to lead energy projects. 

Municipal Leadership in Energy Communities

Municipalities play a central role in fostering the growth and success of energy communities. As the closest level of governance to citizens, they possess unique insights into local needs and priorities. By leveraging their resources, authority, and influence, municipalities can create an environment where energy communities thrive - ensuring equitable access to benefits while addressing economic, social, and environmental challenges.

To effectively play this role and better understand how to support energy communities, a best practice is to engage directly with existing communities, inviting them to share their experiences, barriers, and challenges. This collaborative approach enables municipalities to tailor their strategies to real needs and remove obstacles. 

Key ways in which municipal leadership can support and empower energy communities:

• Providing financial and logistical support, such as access to land and rooftops
• Simplifying participation for vulnerable groups
• Establishing legal frameworks to promote sustainability and inclusivity

Combating Energy Poverty: A Social and Environmental Imperative

Understanding Energy Poverty

Energy poverty, characterised by limited access to affordable energy, affects millions in Europe, posing both social and enviromental challenges. Addressing this issue requires a strategic approach, such as the methodology developed by the Energy Poverty Advisory Hub (EPAH). Designed for municipalities and their stakeholders, the EPAH methodology is a practical framework to guide local governments - whether they are new to the issue or have prior experience - in effectively tackling energy poverty.

The EPAH methodology, outlined in "EPAH Handbooks: A Guide to Understanding and Addressing Energy Poverty" uses a comprehensive three-step framework. This framework provides a clear pathway for municipalities to address energy poverty through diagnosis, planning, and implementation. Designed based on diverse experiences and data collected across geographical contexts, the handbooks include practical information and tools to support local governments in applying these steps effectively. 

A Three-Step Framework to develop local actions to tackle energy poverty (EPAH methodology)

1. Diagnosis:
   • Establish a working group with stakeholders.
   • Collect and analyse data using relevant indicators (see Covenant of Mayors Template).
   • Develop a nuanced understanding of local energy poverty.
2. Planning:
   • Evaluate potential actions like energy advice points, home renovations, and incentive regulations.
   • Identify barriers (financial, social, technological) and opportunities for impactful interventions.
   • Formulate an energy poverty strategy with clear communication.
3. Implementation:
   • Develop operational and financial plans.
   • Monitor progress and apply an energy poverty lens across policies.

Key Policies to Mitigate Energy Poverty

Effectively combating energy poverty requires a multifaceted approach that addresses both immediate needs and long-term solutions. Below are key policy measures that municipalities and stakeholders can implement to reduce energy poverty while promoting equity and sustainability.

1. Awareness Campaigns

Awareness campaigns are essential for equipping communities with the knowledge and tools to address energy poverty. Tailored communication strategies can help engage diverse groups effectively.

• Target Groups: Tailor messages to diverse vulnerabilities, considering age, cultural background, and digital literacy.
• Objectives: Provide practical information and promote behavioural changes with relatable stories and immediate benefits.
• Channels: Use print media, digital platforms, radio, and in-person outreach to engage various demographics. For example, employ social media for younger audiences and door-to-door campaigns for elderly residents.
• Timing: Align campaigns with seasonal needs, such as preparing for winter energy costs.
• Tone and Language: Ensure messaging is empathetic, simple, and accessible, avoiding overly technical jargon.

2. One-Stop Shops (OSS)/ Energy Advisory Points

One-Stop Shops (OSS) provide centralized hubs where vulnerable households can access energy advice, technical guidance, and financial assistance, bridging the gap between resources and those in need.

• Integrated Services: OSS facilities serve as hubs offering energy advice, technical assessments, and financial aid to vulnerable households.
• Training and Awareness: Staff should be equipped to address social issues and communicate technical concepts in understandable terms.
• Cross-Sector Collaboration: Link OSS with social services to provide seamless support for at-risk households.

See Reach Energy for more information

3. Energy Efficiency Renovations

Energy efficiency renovations not only reduce energy costs but also improve living conditions, making them a vital strategy in tackling energy poverty.

• Home Audits: Identify homes with high energy needs and prioritise renovations based on impact.
• Financial Programs: Simplify application processes for subsidies and loans, ensuring affordability for low-income residents.
• Tenant Protections: Implement legal safeguards to prevent rent increases or evictions tied to renovations.
• Reliable Contractors: Establish vetted networks to guarantee quality and timely project completion.

4. Incentive Regulations and Financial Measures:

Financial incentives and regulatory measures play a critical role in supporting both immediate energy relief and sustainable improvements for vulnerable households.

• Short- and Long-Term Solutions: Offer immediate relief through financial assistance while promoting structural improvements like upgrading heating systems.
• Municipal Leadership: Create funding mechanisms tailored to vulnerable households, such as grants or low-interest loans.

Municipal Leadership in the Energy Transition

The transition to a sustainable, inclusive energy future demands immediate and decisive action. Energy communities present a promising approach to achieving both environmental sustainability and social equity. Municipalities have the power to make a difference by fostering energy communities and combating energy poverty through targeted policies and collaborative efforts.

Every municipality, regardless of size or resources, can play a role in creating a more equitable and climate-resilient Europe. Now is the time for bold leadership and collective action.