Energy Communities and just transition to post-lignite era

ARTICLE

Since the public debate on the energy transition began, it has revolved almost exclusively around the need for independence from fossil fuels, the alternative choices, the available technologies and the adequacy and reliability (or the lack of it) of renewable energy sources (RES) in covering the energy demand. On the other hand, the participation of local communities in the transition to post-lignite era, although commonly accepted, it barely concerns the policy-making or the public discussions.

People powered message formed with neon letters on the side of  the road

In fact, most of us think that the energy sector is dominated by a few ‘big players’ ignoring that local communities in different parts of the world have been looking for ways to participate in that filed for decades. And Europe counts many successful examples of local energy schemes.

In Greece, the case of a local community having a place in the energy market or deciding on the source of energy that will be used by its members seems quite unlikely to happen in the near future.  Perhaps, it is associated with the fact that PPC (Public Power Corporation) was the only energy producer and distributor in the country for more than 50 years. But things are changing.

European policy and energy communities in Greece

European policy on energy transition aims to shift the energy model towards clean energy and, at the same time, it acknowledges that the energy transition cannot exist without the involvement of society in it. “Clean Energy for all Europeans” package agreed in 2017 and Directive (EU) 2019/944 on renewable energy sources that followed encourage the European citizens to produce themselves the clean energy they need realising the important role that they can and must have in the transformation of the energy system. Energy communities move based on this idea and the European legal framework provides the incentives for their development.

In Europe, energy cooperation schemes have been widespread for decades. But, in Greece, if someone reads the number of existing energy communities, he will be surprised. There are 528 energy communities in the region, based on the data of the General Commercial Registry. Given that the relevant national legal framework is only two years old, one would consider that a small ‘revolution’ is taking place in the country. But is that true?

Nowadays, in Western Macedonia region, the ‘leading’ area of the country’s energy transition having PPC lignite plants closing and the region looking for a new energy and growth model, 37 energy communities are registered. 1. In Megalopolis of Arcadia regional unit, where the other lignite centre of the country is set, there are 7. But is that enough for someone to argue that the local community is participating in the transition to the post-lignite era and especially in times when the energy communities do not actually contribute to energy production yet?

So far, it seems that although we are leading to a lignite-free future, the lignite areas will remain energy centres as the planning regarding their energy character includes great investments of a few companies in renewable energy sources. PPC is one of them as it wishes to enhance its profile by turning to renewable energy. In fact, the preservation of the energy character of lignite areas through the development of RES and storage technologies is favoured by the citizens of these lignite regions too, according to the results of a survey2 conducted by the Green Tank team in cooperation with professor of the University of Athens Emmanuela Doussis, diaNEOsis and the polling company MARC.

So, the Greek energy plan makes the country’s energy mix ‘greener’ but at the same time it remains centralised. In this context, energy communities can be the key element for decentralising the energy system and activating local communities to take part in the transition process in order to maximize the resulting benefits for themselves.

The fact that energy communities have already been established in the lignite areas is promising but they have not found their place in the next-day planning yet. The recent “Just Transition Development Plan” of lignite areas presented by the Greek government does not include the energy community projects despite the fact that, already since 2018, national resources of Green Fund deriving from the allocation of part of the proceeds from the auction of emission allowances are available for strengthening the energy communities in lignite regions. Until today, these funds have not been utilised apart from the assignment of a technical guide to the Centre for Renewable Energy Sources and Saving (CRES).

The role of local and regional authorities regarding the development of energy communities towards a just transition

Energy communities set by local and regional authorities have a distinctive part in the just transition of lignite areas. The experience of both Europe and Greece on just transition3 shows that local governments play a significant role not only in shaping transition policies but also in raising issues in public debate, talking to the local community, motivating it, giving solutions and implementing democratic decision-making processes.

In this context, the local energy communities can and must participate in the energy transition. And this would mean participating directly by developing both small and big projects that meet their own energy needs and those of other local bodies and residents, or even indirectly by getting involved in big energy projects in the region. They could also claim the management of the local energy network, so that they can contribute to the further expansion of RES, reduce energy costs for their residents, develop local production and consumption of energy and ensure their energy autonomy. Furthermore, the crucial for lignite regions heating issue could be dealt by RES development through energy communities with the participation of local governments and citizens. 

In Europe, there are a number of examples of cooperation between energy communities and local governments. The case of Copenhagen is one of them. The collaboration of energy cooperative Middelgrunden4  with the local government of Copenhagen in 2000 led to the establishment of an offshore wind farm (20 turbines of 2 MW each) just 3.5km outside Copenhagen harbour. The 50% of the park belongs to the local utility of the Municipality of Copenhagen and the other 50% to the energy cooperative Middelgrunden. At first, only its citizens could be shareholders in this project, but now it is open to anyone who wants to invest in this form of cooperation. Founded in 1995, Middelgrunden currently counts 8,600 members while the offshore wind farm of 20 MW produces 50 GWh/year covering the energy needs of 40,000 households in Copenhagen.

Also, the Hvide Sande wind farm in Denmark 5 benefits not only the energy community that established it but the local community in general through regional development activities. In 2010, local unions, industries and utilities started a local community foundation and they invested in three offshore wind turbines. The consent of the local community and its active participation in the realisation of this project were key points in overcoming any obstacles in its design and implementation. Previous attempts of individuals in a similar project in that area had failed. Today, 80% of the wind farm is owned by the local foundation and the rest 20% by Hvide Sande Nordhavn Mollelaug I/S.

So, the participation of local communities in big as well as in small energy projects is not something new. The recent commitment 6 of the CEO of PPC for a 5% share of the company’s 2.55GW solar photovoltaic projects to the residents of the lignite areas with a share of € 1,000 and an annual yield of 8-10% is moving in this direction. This model can be strengthened and expanded firstly to other large companies investing in lignite areas so that local communities can enjoy the benefits of these investments, and then to other areas of the country where RES projects are developed.

The transition of Appalachia

The energy transition and the participation of local communities in it are just two of the aspects of just transition process. The social cohesion and dealing with the effects that the alteration of the productive model of lignite regions provokes to local communities is an important parameter. For this reason, the formulation of policies and synergies with society, solidarity, justice and sustainability as central lines along with the strengthening of the social economy contribute significantly to an inclusive transition and, ultimately, to a truly equitable transition.

Such an example is the Appalachian lignite region of the northeastern United States, an area where 140,000 coal miners were employed in the 1940s and only 16,000 are today. In 2013, the members of Appalachian Regional Commission 7 , the main entity managing the transition of the region, established the Appalachian Community Capital (ACC) 8 . It is a financial institution that aims to the financial assistance of Appalachian coal-impacted communities and to the creation of new jobs supporting sustainable growth by providing access to financial services and products and to sustainable lending and by finding funding capital for local residents and businesses of these areas that lack of investment privileges. Its goal is the well-being of the community and not of the shareholder. Until today, the ACC has lent more than 70 small businesses and has contributed to the creation of more than 1,800 new jobs. Furthermore, in the same area there are social enterprises like Coalfield Development9 , focused on ending the intergenerational cycle of poverty in Appalachia’s coal region. It follows a relationship-based, holistic approach to on-the-job training and incubating new businesses at the same time.

So, energy communities, as an integral part of the social and solidarity–based economy and in addition to their contribution to the shift of the energy model, can be the centre for developing the third sector of the economy, further enhancing the equitable transition to lignite areas.

The local participation in the next-day planning

The utilisation of energy communities in the transition to the post-lignite era is important for one more reason. The European experience has shown that the success of the transition is directly affected by the active participation of the local communities and energy communities offer a great possibility to enhance this participation. In order for that to happen, the energy community projects must:

  • Be part of the new Local Spatial Plans for lignite regions.
  • Be part of the Territorial Just Transition Plans so as to have access to resources of the EU new Just Transition Mechanism.
  • Be a priority in the new National Energy and Climate Plan (NECP) which Greece must develop in order to align with the new EU climate target to reduce emissions by at least 55% by 2030 compared to 1990 levels.
  • Be included in projects that will be funded by the resources of the new 2021-2027 programming period in the context of the regional programmes, the Rural Development Programme, etc.
  • Be strengthened through the release of the Green Fund resources already committed to the enhancement of the energy communities in the lignite areas and ensure the continuation of this source of funding in the coming years.
  • Be legally and financially supported by the government as an institution with strong social characteristics and not just because of market criteria. For that reason, the energy communities, since their foundation, are part of social and solidarity–based economy

Support mechanisms of energy communities

As we are getting a step closer to the liberalisation of the energy market and the full operation of the target model, energy communities will need substantial support from the state in order to be able to respond in a fully competitive environment.

The legislation on energy communities set a number of support measures which, over the years and because of the problems that appeared in the market, started to fall. 10.

Greece has notable experience and tradition regarding this kind of cooperation schemes. This experience can offer examples that should be followed but also practices that should be avoided both to protect the cooperation itself and to ensure the reliability of the energy community project. For this reason, it is important to implement the right circumstances that will give a boost to the institution while protecting it as much as possible from exploitation. Such measures could be:

  • The support of non-profit energy communities to avoid any danger for the citizens involved as a result of promised excess returns up to 30% per year.
  • The prioritisation of funding and licensing of energy communities created by the local governments of lignite areas that focus on covering the local needs.
  • Specific tax measures linked to the social benefits provided to local communities in a factual and countable way.
  • The introduction of restrictions on the resale of licenses received by energy communities, as a measure to compensate any favourable arrangements and limit their exploitation by opportunists.
  • The adoption of a licensing system that will operate in proportion to the size of the RES projects already owned by the energy community and not based on the size of the project requested. The goal is to facilitate, at first, the energy communities to work on meeting the local needs. Progressively, as the size of the projects collectively owned by the energy community increases, the licensing process will become more demanding and comparable to the one necessary for the RES projects outside the energy communities.
  • The formulation of specific financial tools for energy communities and, in particular, access to finance for very small and non-profit energy communities which face the biggest problems. A measure in this direction is the provision of guarantees. The Hellenic Development Bank can have a crucial role. At the same time, the Green Fund (National Just Transition Fund) must be strengthened with more resources in addition to emissions trading revenue, to make the most of the country’s biggest challenge: delignification and just transition of lignite regions.

The course towards energy transition brings significant changes in Greek economy and society. The global experience offers good examples and ideas regarding the active participation of local communities and the claim for justice in this process. But in order to reach the goal of just transition, the state needs to actively help the socially supported efforts. For their part, the local communities must vigorously, decisively and actively claim their place in energy planning and the day after lignite. The necessary tools and experience exist but we have to believe in the power that society really has when it takes action.