To mitigate global warming, energy demand from different sectors must be increasingly covered by electricity and the share of renewable resources must be increased. This will result in a major need for more investments and new challenges to the power system. Local energy systems can address some of the challenges such as maintaining the balance of demand and supply at all times, ensuring a good quality of supply, and facilitating social acceptance and public participation in the energy transformation.
What are local energy communities?
Local energy communities (LECs), specified in EU directives such as Citizens Energy communities and Renewable energy communities, are legal entities that provide environmental, economic or social benefits to the local community by participating in activities like power generation, distribution and consumption. For example, a housing association with a shared solar panel system can be a type of LEC.
LECs change the role of end users from passive consumers to active customers, who both produce and consume energy. From a power system perspective, local energy communities can provide:
- better coordination of local resources
- better utilisation of the distribution network
- more easily accessed flexibility in the distribution network
- reduced loss and investment cost in the transmission network and increased innovation opportunities for grid customers.
Regulations and incentives
However, these benefits do not occur automatically. Adequate regulations and incentives are required for the developments to happen in a rational way.
LECs can also negatively impact the power system and society at large if regulations and incentives are not designed appropriately. In the worst-case scenario, this can put the security of supply at risk.
The FINE project
The project started by mapping actors and potential energy communities. We have categorised them into three main types of energy communities:
- Rural energy communities with weak grids,
- Urban energy communities, and
- Industrial/business clusters.
The project has also developed four different scenarios for how the regulatory framework and economic incentives for local energy communities can evolve in the years to come. These scenarios are implemented in models to study how local energy communities in Norway will be affected under different scenarios.
Other main activities are:
- Developing models of energy communities and distribution networks;
- Analysing the interaction between local energy communities and the distribution network in grid operation and planning, by including the energy community as a flexibility provider;
- Developing a tool that considers flexibility from LECs, and plans the need for network capacity based on technical constraints and socio-economic costs;
- Analysing the consequences of different regulations and incentive structures, and providing overarching recommendations for how local energy communities can be best integrated into the distribution grid.
Find out more about the research under “About energy communities” in the menu at the top.
- FINE is a Collaborative and Knowledge-building Project (KSP) founded by The Research Council of Norway.