This article was published by the International Energy Agency on August 9, 2023.
Putting people at the centre of all clean energy transitions not only improves people’s lives but is also key to successfully implementing energy and climate policies. Local energy communities, or community-based energy projects, are showing clear benefits across the globe in deploying renewable technologies, improving efficiency, supporting reliable power supply, reducing bills, and generating local jobs. At the same time, these initiatives are garnering increased attention as effective vehicles towards more inclusive, equitable and resilient energy systems.
Digital platforms and tools are making it easier to set-up cooperatives, engage stakeholders, make investments and exchange electricity. An increasing number of countries are allocating significant funds to support community-based clean projects. The Italian National Recovery and Resilience Plan has allocated EUR 2.2 billion 1 to support energy communities and self-consumption, while the USD 370 billion United States Inflation Reduction Act of 2022 offers additional financial incentives for community-based clean energy projects. The IEA recently organised discussions to explore and share experiences about the role that energy communities can play in supporting clean energy transitions.
Enhancing energy efficiency and community benefits through local generation and sharing
With ever growing pressure to accelerate decarbonization and to mitigate impacts of the energy crisis on households and businesses, community-based energy communities can help address numerous challenges faced by power systems, including losses, grid congestion and the need to accommodate growing peak demand. Recently, the IEA estimated that one gigatonne of carbon dioxide emissions come from grid losses, equal to almost 3 per cent of current global energy-related CO2 emissions. Local community-based generating, sharing and consuming of electricity can significantly avoid these losses and enhance energy efficiency. For example, in northern Perth in Australia, a battery resource shared by 119 households resulted in collective savings of over AUD 81 0002 during a five-year period. The battery also helped ease the strain on the grid by enabling an 85 per cent reduction in consumption of electricity from the grid at peak times for participating households. The energy community of Magliano Alpi in the Italian Alps developed tools to forecast energy generation and demand and share electricity, enabling the community to more effectively use their solar photovoltaic systems and cover 35 per cent of their electricity needs. Increased reliance on their own generation resources during peak demand periods alleviated grid stress and helped defer expensive infrastructure upgrades.
Digital tools boost the potential of local energy communities
Local value-chains gain
Energy communities also help develop local value-chains, jobs, and skills. The Lyndoch residential community microgrid project, which interconnected over 30 homes via a tiered grid system (from household to household, to the village, to the national grid) was the first smart embedded residential rooftop microgrid in South Africa. The pilot project is co-owned and maintained by the utility (Eskom), but members of the community were taught and certified by industry to assume roles in the development, installation, maintenance, operation, and ownership of the energy system. Such initiatives help ensure the sustainability and longevity of projects while also demonstrating the value of enhancing citizen engagement in localised clean energy transitions.
Energy community models can be effective mechanisms to deliver clean energy transitions. They not only illustrate the benefits of place-specific interventions, but also highlight the added value of inclusive people-centred approaches. Better access to financing and support, regulatory reforms, and sharing of experiences could give communities around the world greater access to local, clean and affordable energy. For instance, the European Parliament has recently provided funding for the creation of an advisory hub and support service to help collect and disseminate best practices and provide technical assistance for community initiatives across the European Union. Further mapping of initiatives and benefits is underway as part of the IEA People-Centred Clean Energy Transitions Programme and the Digital Demand-Driven Electricity Networks Initiative (3DEN).