Increased priority on social objectives and energy communities is a welcome shift in recent revisions of EU climate and energy directives. CEES experience shows the need for more and more targeted funding.
Notably, for the energy community (EC) sector, these revisions boost recognition of the role of ECs across various areas, activities and objectives in the energy sector, including tackling energy poverty. With a stronger commitment to addressing societal concerns, the Fit for 55 and REPowerEU programmes acknowledge the need for structural measures that promote participation and empowerment of EU citizens. The Clean Energy for All Europeans Package obliges Member States to ensure that ECs can help reach and support low-income and vulnerable households. Still, the dual goal of engaging in the energy market and being socially engaged remains a complex challenge for ECs. Having consistently found that acts of energy solidarity are resource-intensive and require many different skills, CEES Partners carefully considered how policy changes related to financing might help all ECs deliver higher social impacts. The six suggestions below focus on leveraging the social role of ECs through supportive financing schemes.
Earmark sufficient resources
At the EU level, additional resources should be earmarked towards social objectives in the climate and energy transition. The newly established Social Climate Fund is a welcome initiative; its size and scope, however, are unlikely to meet the challenge at hand. In turn, Member States should better leverage existing EU public funds for promoting ECs and boosting their accessibility to low-income and vulnerable households. As indicated in the Financing Tracker developed by REScoop.eu, CEE Bankwatch Network and the Climate Action Network, scope exists to better leverage major funds such as the Recovery and Resilience Fund and Cohesion and Regional Development Funds for these aims. 1 The Commission’s guidelines regarding the REPowerEU chapter of the Recovery and Resilience Plans, for example, specifically highlight ECs as vehicles to tackle energy poverty. 2 Some inspiring practices are emerging. In Greece, a recent funding call in Just Transition areas focused on supporting ECs for collective self consumption projects to combat energy poverty. In Lithuania, a similar call encourages municipalities to become directly involved in collective self-consumption projects. 3
Increase transparency and ease of access to funding
Lack of transparency regarding available funding and complicated application procedures are particularly challenging for small ECs. Several CEES Partners found that calls to tackle energy poverty were often ill-targeted and failed to address structural causes. To boost the potential of ECs to deliver social impacts through available funds, policy makers should provide guidance while making procedures transparent and easy to understand.
- Support ‘one-stop shops’ for energy solidarity
‘One-stop shops’ have gained traction as an effective means to deliver social impacts linked to the energy transition. Whether in physical spaces or through online services, citizens place high value on OSS’ providing easy access to information about the energy transition (e.g. installing heat pumps and/or PV panels; renovating housing; energy efficiency advice). In fact, this approach is highlighted in the revised Renewable Energy Directive and the Energy Performance of Buildings Directive. Czechia, Spain and Portugal are among the Member States using funding from their Resilience and Recovery Plans 4 to support the creation of such OSS. Notably, Spain is also supporting ECs to directly (co-)manage some OSS.
Encourage social dialogue
To boost the effectiveness of financial instruments and public support schemes, policy makers should ensure that social dialogue is embedded in processes – from design and implementation through to monitoring and evaluation. This implies that ECs should engage citizens with ‘lived-experience expertise’ while also partnering with national community energy federations. Such national federations can ensure that ECs are genuinely cooperatively governed and are delivering strong social impacts. 5 This approach also leads to solutions that are appropriately tailored to citizens’ needs – and can be adopted or adapted for scale-up. An inspiring model is the Development Fund in the Netherlands, jointly developed by the Dutch Government and Energie Samen, the Dutch federation of ECs.
Generate innovative financing schemes
To reduce EC dependence on traditional grants, governments should develop more innovative financial tools. A permanent ‘solidarity tax’ on fossil fuel companies and private electricity suppliers could, for example, feed into a ‘Community Energy Fund’. In turn, the fund would support projects with proven social impact. Such funds could also be built up by redirecting fossil fuel subsidies, which remain high in some Member States. 6 The Commission must use the European Semester Country-Specific Recommendations process of 2024 to explicitly instruct Member States to present plans (in their annual budgets) for the phase out of fossil fuel subsidies. Revolving grants-to- loans schemes, such as the CARES system in Scotland, also ensure structural longevity. Policy efforts should also be directed towards banks to encourage the creation or scaling up of green (low interest) loans, tied to energy performance benchmarks.
Improve targeting of available funds
Finally, more effort is needed to allocate available funds to initiatives that show the greatest potential to deliver social impacts to the most vulnerable households. This requires a correct and complete transposition of EU provisions on ECs, safeguarding principles (such as open and voluntary participation), autonomy and effective control. The fact that this is currently lacking in many Member States increases the risk of ‘corporate capture’ of available funds. To make sure that support reaches the right people, Member States should assess households in energy poverty and carry out comprehensive analysis and monitoring of the distributional impacts of the climate and energy transition.
To read more about how CEES Partners sought to diversify their financing sources, click through to CEES Financing Handbook features Partner experiences.
1 REScoop.eu. Financing Tracker: https://www.rescoop.eu/policy/financing-tracker
2 European Commission (2023, 1 February). Guidance on Recovery and Resilience Plans in the context of REPowerEU: https://commission.europa.eu/document/download/3ccfc38a-2c0c-4923-ac0 45d27a6a41cb_en?filename=C_2023_876_1_annexe_EN_0.pdf
3 REScoop.eu (2024, January). REPowerEU Briefing: https://www.rescoop.eu/toolbox/repowereu-the-seeds-are-planted-now-the-persistent-gardening-begins
4 https://www.rescoop.eu/policy/financing-tracker
5 The LIFE COMET project is currently helping set up community energy federations in various EU countries. Denmark, Czechia, Greece, and Poland are just some of the countries that in the last year alone have constituted such a legal body, helping with national advocacy, networking, and capacity building.
6 https://caneurope.org/content/uploads/2024/06/EU-Fossil-fuel-subsidies_2024.pdf