Renewable energy communities to be funded and to provide quotas for low-income citizens

Raya Lecheva

Producing our own energy, sharing it with our neighbors, or relocating and using it elsewhere are opportunities that will completely change the way we live and organize our energy use. The idea is for end users to organize themselves in energy communities, and the state must properly assess the challenges and possible obstacles, but also the opportunities for this to happen. The question of whether this can actually happen in depopulating regions is very important, it will probably be a problem there. But it is important that opportunities are open in legislation that is still lacking.

The implementation of Directive (EU) 2018/2001 on the promotion of the use of energy from renewable sources ("Renewable Energy Directive") in the Bulgarian energy legislation is not an easy task. Several normative acts must be complied with, commented in their analysis and proposals for changes from the environmental organization "Greenpeace" - Bulgaria, which were submitted at the end of last year to the Ministry of Energy.

As it became clear at a meeting of the organization, the Minister of Energy Alexander Nikolov has not seen the proposals so far and will consider them together with his team, emphasizing that it is possible to have a wider public discussion of the changes in the legislation concerning RES, so that the end users, the whole society, can participate. The synchronization of the directive includes changes to the Renewable Energy Act.

Also, amendments to the Energy Act and some by-laws should be envisaged - e.g. Ordinance № 6 of 24.02.2014 on connection of producers and customers of electricity to the transmission or distribution electricity networks and Ordinance № 3 of 21.03.2013 on licensing of activities in the energy sector, commented by Greenpeace.

The legislation should define at least three new concepts - renewable energy community, consumer of own electricity from renewable sources (producer producer) and (virtual) net reporting.

Existing obstacles, but also possible solutions

The Community should provide for certain quotas for low-income citizens

One of the main obstacles for renewable energy communities is the inability of energy-poor citizens to be producers of renewable energy due to lack of information and start-up capital. In Bulgaria, more than 240,000 households fall into this category and according to various sources this is more than 30% of the population. We are the leaders in the energy poor in Europe, which is determined by energy costs as part of household disposable income. Unfortunately, there is still no definition of energy poor in our country.

There are many ways to overcome energy poverty, according to the organization's analysis. For example, the Renewable Energy Community may provide for certain quotas for low-income citizens who cannot afford the down payment to join the community. Another approach is to use part of the energy produced by the renewable energy community for the needs of energy-poor households. In Greece, for example, the government provides subsidies to municipalities for the construction of photovoltaic plants, part of the capacity of which is used to support low-income families. Greenpeace proposes, for example, incentives for these renewable energy communities, which provide free energy to vulnerable consumers, whether or not they are members of the community. There may also be a legal requirement for each renewable energy community to supply a certain amount of energy produced to those in need. Vulnerable consumers may be admitted as members of the community without the need for financial contributions.

Introduction of a single contact point

The Renewable Energy Directive instructs Member States to set up a single administrative contact point (national and local). Thus, citizens and investors in renewable energy communities can receive information and submit notifications and documents for the issuance of all necessary permits and contracts for connection and access or other procedures such as licenses that would be required from the energy community. The points of single contact should facilitate the whole procedure so that the applicant does not have to contact other administrative bodies. Contact points can organize community trainings to encourage the involvement of more participants.

According to the environmental organization, it is desirable to eliminate the need for a license in cases where communities operate as an energy supplier or if, for example, they wish to be licensed as an energy trader. If the need for community licensing is not completely eliminated, at least a more simplified licensing procedure may be introduced.

Together with the network operators and local authorities to determine the possibilities for such investments in the settlements.

The Spatial Planning Act may provide for the possibility of constructing renewable energy installations in the preparation of investment projects for buildings and facilities of the technical infrastructure. Accelerated decision-making procedures for the planning, design and construction of electricity grid infrastructure, as well as accelerated commissioning of renewable energy facilities, may be added.

Funds for financing renewable energy communities

A number of Member States have set up various funds to finance renewable energy communities or more favorable credit schemes. Special tax breaks may also be provided for individuals who invest in renewable energy communities. Regarding the provisions of Art. 31 of the Renewable Energy Act preferential prices, they should also apply to renewable energy projects owned and developed by renewable energy communities. It would be even better to provide preferential prices for renewable energy community projects that are even more powerful than the currently planned 500 kW.

According to Greenpeace, in determining the relevant fees due from the renewable energy communities, the EWRC may also take into account the benefits of the activities of the renewable energy communities for the entire energy system. In addition, national law must decide whether the provider will collect access fees and other administrative fees or whether the communities will collect them themselves. On the one hand, this may increase the obligations of the community, and on the other - to increase the fee to the supplier. In any case, if the community shares energy through the public network, the relevant fees must be taken into account, paying adequate access prices.

Provide a simpler procedure for connection and access to the network

A simplified procedure for joining and accessing the network of renewable energy communities could be envisaged, such as having their applications processed in a shorter time.

In Article 17 of the Renewable Energy Directive provides that Member States are to introduce a procedure by means of a simple notification for connection to the grid for installations of own energy consumers as well as installations with a capacity of up to 10.8 kW. Paragraph 2 of the same Article provides for the possibility of setting up a procedure by simple notification and for installations with a capacity of more than 10.8 kW up to a maximum of 50 kW, provided that the stability, reliability and safety of the network are maintained.

In both cases, notifications shall be submitted to the distribution system operator, which may reject the request or propose an alternative connection point only if there are reasonable concerns about the safety or technical compatibility of the installation. In case of a positive decision or no decision of the distribution system operator, the installation may be connected to the network within one month from the notification.

Notification mode for projects with installed power up to 30 kW

We propose that the above notification regime be introduced in the Bulgarian legislation regarding projects for the production of renewable energy with an installed capacity of up to 30 kW, as well as installations for the production of own energy, regardless of their capacity. This necessitates amendments to the Law on Energy from Renewable Sources with regard to small installations up to 30 kW, to which the installations for own production should be equated, according to the environmental organization.

Also, with the amendment of the Renewable Energy Act, it is advisable to include an explicit text, which obliges network operators to give priority access to renewable capacity and to buy the produced electricity with priority in order to achieve the goals set in the Directive on Renewable Energy.

It can be clearly envisaged that the connection of the renewable energy communities takes place regardless of the availability of spare capacity within the meaning of Art. 22, para. 5 of the Renewable Energy Act. With even greater justification, electricity distribution companies should not refuse access to producers of renewable energy for their own needs.

Although Bulgarian legislation is lagging behind in implementing the legislative framework that favors the establishment of energy communities, it is important to note that according to the directive, the country must assess barriers to and potential for the development of renewable energy communities.

Such an analysis will provide the necessary information and weight for the introduction of a working and effective framework. This assessment can also be useful and integrated for the purpose of planning the infrastructure of electricity distribution companies in order to indicate where energy communities can help the grid or at least not add additional costs.

The Community may be a legal entity in the form of a cooperative

Greenpeace also offers different definitions of basic concepts. According to the Directive, the Renewable Energy Community is a legal entity that owns and develops renewable energy projects and is based on open and voluntary participation and which is independent and effectively controlled by its members who are located close to renewable energy projects owned by and developed by this community.

The Renewable Energy Community shall carry out at least one of the following activities. It produces, consumes, accumulates or sells electricity, heat and cooling from renewable sources and / or shares within the renewable energy community, renewable energy produced by projects owned by the renewable energy community, including through virtual net reporting.

The primary objective of the Renewable Energy Community is to provide environmental, economic or social benefits to its members or the areas in which it operates, such as tackling energy poverty, increasing energy efficiency and promoting sustainable energy consumption. In the event that the Renewable Energy Community provides for the distribution of profits for the benefit of its members, this objective is secondary to the main objectives of the previous sentence and profits are distributed once the main objectives have been met.

The Renewable Energy Community is established in the form of a cooperative, a limited liability company, a non-profit legal entity or an association of condominium owners.

Members of the renewable energy community can be individuals, small and medium-sized enterprises or local authorities, including municipalities. Each member of the Renewable Energy Community shall have one vote in the General Assembly, regardless of the size of its shareholding. Members of the Renewable Energy Community may not be private enterprises with a main activity in the energy sector; large enterprises within the meaning of the Accounting Act.

 At least 51% of the voting rights in the renewable energy community shall be held by members who have a registered office or a permanent address in the area in which the renewable energy projects of the community concerned are located or planned. Each member of the Renewable Energy Community shall have the right to leave the Renewable Energy Community in accordance with the rules of departure applicable to the relevant legal form under which the Renewable Energy Community is established.

Each member of the renewable energy community has the right to change its energy supplier, according to the general rules provided for in the Energy Act.

We would propose to expand the powers of the EWRC by adding obligations to register renewable energy communities, to monitor their compliance with legal requirements, to maintain a public register of renewable energy communities and to monitor the removal of barriers to access to energy markets. , commented by Greenpeace.

Manufacturer user (prosumer) - business and household

According to the proposal of the eco-organization, the definition of "Manufacturer user" can be defined as an end user of electricity operating in its own premises or in other premises located within the same neighborhood, which produces renewable electricity for own consumption and which can store or sells its own renewable electricity.

A manufacturer user may also be a non-domestic consumer of his own electricity from renewable sources, when the production of electricity from renewable sources is not his main commercial or professional activity. The manufacturer user can account for the energy produced and consumed through net reporting or virtual net reporting.

There may be co-operating manufacturer users. These can be at least two co-operating manufacturer users located in the same building or in a multi-family residential building.

Additionally in the Law on Renewable energy sources can also provide some relief from the heavy administrative regime for producers of renewable energy for their own consumption, whether they are manufacturer users or renewable energy communities, as well as for installations with an installed capacity of up to 30 kW.

It is possible for manufacturers who produce only for their own needs to be equated with small roof photovoltaic installations.

The organization proposes that the accession regime be informative. Following the submission of the notification of connection, if the relevant distribution system operator does not reject the request or propose an alternative connection point, the notification shall be deemed accepted and the installation may be connected within one month of receipt of the request. The distribution system operator may refuse the connection or offer an alternative connection point only due to justified concerns regarding the safety or technical compatibility of the installation, Greenpeace suggests.

Net metering and virtual net metering or energy transfer

The Renewable Energy Directive does not mention net reporting and virtual net reporting. However, according to environmentalists, the introduction of these two new concepts is necessary in order to take into account the specifics of renewable sources and to make it easier to account for the energy produced and consumed by energy communities and manufacturer users.

Net reporting is the current equalization of the produced and consumed electricity by a manufacturer user in the same site for production of renewable energy, owned by the manufacturer user.

Virtual net metering is net metering in which at least one of the sites where energy is consumed is different from the site where energy is produced.

In this way, many households that do not have the necessary roof space for solar energy production, for example, can still have a renewable energy project that is installed at another connection point. In this way, they can intercept the energy they consume with the energy produced, as if it had been produced at their sites, by paying the relevant network access fees.

Through virtual net metering, energy flows can be managed and surplus electricity can be used more efficiently, including at other times and in places other than generation.

A number of European countries already apply net reporting. Virtual net metering is regulated, for example, in Greek law, and can benefit both renewable energy communities and citizens, with special benefits for low-income households.

Greenpeace proposes that both types of reporting be included as definitions in the Renewable Energy Act. According to them, the possibility should be provided for renewable energy communities and for manufacturer users to benefit from this type of reporting.