How Energy Communities are Promoting the Rise of Solar Projects
Solar power leads the way as the most popular form of renewable energy in the European Market. With a 36% increase in installations from 2017 to 2018, the adoption of solar technology is on the rise. This trend can be attributed to the drive to meet the EU 2020 targets.
EU 2020 Renewable Energy Directive
In 2009, the EU states set targets to generate at least 20% of their energy from renewable energy by 2020. In this move, the EU defined various support schemes for member countries to cooperate in achieving their targets.
The Cooperation Mechanism is one of the EU 2020 support schemes. It employs three approaches to help members meet the Renewable Energy targets. These include;
- Joint Projects
- Joint Support Schemes
- Statistical Transfers
- The Joint Projects mechanism allows two or more EU countries to co-fund a renewable energy project. They can then share the power generated.
- The Joint Support Scheme mechanism involves the development of schemes such as a common feed-in-tariff. The programme would promote the production of renewables in two or more EU countries.
- Statistical Transfers were designed to level the playing field. Naturally, renewable energy resources are not equally distributed across Europe. As such, member states can buy shares of a renewable project from a resource-rich country. The energy shares are deducted from the producing country and added to the supporting country's energy portfolio.
These cooperation mechanisms are deployed on a macro level. They involve major policymakers, national energy regulation, transmission companies and energy producers. The concept of working together to meet renewable energy targets has trickled down to the community level. Here, Energy Communities have been formed to help regular citizens to own a share of a solar energy project.
Regulatory Victory for Energy Communities
Following the Paris Agreement, the EU began reviewing its energy policy framework. This framework would facilitate Europe's transition to low-carbon clean energy. Between 2016 and 2019, the EU developed and refined the Clean Energy for all Europeans Package.
The Clean Energy Package contains specific elements that promote the rights of energy consumers. The new regulations support the generation, storage and sale of energy by individuals. They are especially beneficial for the growth of energy communities in Europe.
What is A Solar Energy Community?
Energy communities are societies that come together and pool resources for the co-ownership of solar energy projects. They can be made up of individuals, small businesses, companies, municipalities and cooperatives, among others. They allow average people to own a share of a solar energy plant.
People mainly join energy communities to reduce their utility bills. They are also interested in participating in the renewable energy revolution. As individuals, most energy community members face several limitations to build solar projects. These include lack of capital, space and property.
Many participants of energy communities live in rental homes. As such, they cannot install home solar panels or benefit from the incentives of solar affords homeowners.
How Do Energy Communities Work?
Energy communities can be structured in various ways depending on the region's regulatory landscape. In some cases, the community members live near the project site. These members can consume the energy generated directly, which is the typical setup in off-grid locations characterized by mini-grids.
However, in most parts of Europe and North America, an extensive grid network is already established. Here, energy communities can finance new grid-connected solar power plants. Members then earn net metering or solar credits, and they can use these credits to reduce their monthly utility bills based on the amount of electricity generated and the member's share in the energy community.
Solar is attractive for energy communities because it is a low-cost solution that is scalable and readily available. The communities calculate their solar credits through a Virtual Net Metering (VNM) system. The VNM enables you to earn Net Metering Credits from a solar energy system that you didn't connect to. As long as your grid provider buys the energy generated by the solar plant, you can earn Net Metering Credits.
Are Energy Communities Good For Solar Projects?
Energy communities create an avenue for new players to participate in the transition to clean energy. The European housing statistics indicate that approximately 42% of Europeans lived in apartment blocks in 2017. Meaning that, regardless of financial capacity, almost half the population don't own roofs to install rooftop solar projects.
Through energy communities, people who were conventionally left out can now acquire solar energy assets. Here are various ways in which the energy communities can lead to higher solar sales.
Faster Transition to Clean Energy
Unlike the conventional solar home system format, energy communities support a more active uptake of solar energy. Energy communities connect multiple customers per project. While the power generated may not be for direct self-consumption, each member of the community has a share in it.
As you approach utility-scale, solar energy community projects have the advantage of quick adoption. These systems acquire land rights and social acceptance much faster than typical utility-scale solar projects. This pattern is because most of the decision-makers in the community have a stake in the project. The energy community members are usually well informed about the project, allowing the developers to focus on the implementation of the project rather than gaining social acceptance.
Overcomes Grid Limitations
In remote or rural settings, the national grid may not reach every potential customer. The cost of grid expansion is also high. Also, the challenges of upgrading weak networks for demand-side management can limit the connectivity of new projects.
Energy communities can employ smart mini-grids to connect consumers. This step avoids straining the existing grid system. The mini-grids can also connect and feed solar power to the grid directly. High-quality mini-grids with adequate net metering infrastructure reduce losses and maximize the revenue for grid-connected solar projects.
Improved Energy Storage Management
It is challenging to ensure the uninterrupted supply of electricity on the national grid. Energy communities can facilitate Community Energy Storage (CES) solutions. Collective energy storage solutions are easier to manage and maintain than in individual homes.
Energy storage is a vital component of solar energy systems, and they reduce the load and reliance on the grid at night while community solar plants with integrated energy storage provide well-balanced uninterrupted power supply options.
Cost-Effective Solar Solutions
Energy communities enable more people to overcome the investment barriers involved with solar energy projects. The high initial investment costs are among the most significant obstacles to the integration of solar projects.
Energy communities allow members to share the cost of developing a solar project. This action lowers the entry cost for each individual and makes the project more attractive.
Development of Smart Grid Technology Markets
The new EU energy policy encourages the development of decentralized energy generation. In the past, independent power producers were either small individual homes or utility-scale solar projects. Energy communities create a demand for innovative smart technologies in the solar energy space.
Energy communities need dynamic digitized solutions to monitor their solar power systems. These solutions are necessary for data analysis, system optimization and report generation for the energy community members. Advanced analytical solutions are also required for net-metered systems that generate solar credits for the community's shareholders.
The deployment of energy communities creates an opportunity for unmatched growth of solar energy in Europe. Enabling people who live in flats to participate and co-own solar projects almost doubles the potential solar investors in the EU. Integration of energy communities can accelerate the efficient development of solar projects across Europe.