By offering the service of retail energy supply (typically, electricity or heat), energy communities (ECs) can shield their members from price volatility on the wider market.
As an alternative to selling electricity they produce to the grid or making it available through energy sharing or self-consumption, ECs can opt to supply it to their members by becoming a licensed energy supplier themselves. The ability to protect members from market volatility is especially relevant when ECs are able to balance the installation’s production capacity with the energy demand of members or clients.
In Belgium, the Flemish cooperative Ecopower is licensed as both a producer and supplier of renewable energy. Having taken the decision to offer electricity at cost, Ecopower was able, in the first months of the energy crisis in 2021-2022, to shield its clients from skyrocketing prices. Such benefits are particularly interesting for those groups that are especially vulnerable within current energy systems.
Community engagement to tackle energy poverty
ECs that are energy suppliers can also decide to offer special tariffs for vulnerable customers or build energy solidarity mechanisms into their supply activities. They can also make it easy for some members to support others who are more vulnerable (see the example of Enercoop and Énergie Solidaire using on-bill micro-donations).
The role of ECs as suppliers has become particularly relevant under the current energy price crisis, which has prompted many commercial energy suppliers to stop offering fixed price contracts to their customers. Instead, they charge the market price plus a profit margin. This allows more flexibility in relation to market volatility but can lead to high prices for consumers.
Unfortunately, ECs seeking to engage in retail supply still face many barriers. Typically, the financial requirements are heavy and administrative processes for obtaining a supply licence are complex. Additionally, a high level of bank guarantees is required to operate on wholesale markets.[1]
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[1] Energy Communities Repository (2024). Barriers and Action Drivers for the Development of Different Activities by Renewable and Citizen Energy Communities.