Periodic Reporting for period 1 - PLEC (Private Law and the Energy Commons)
Reporting period: 2022-04-01 to 2024-03-31
Normal citizens pooling their money and skills to generate and to consume and/or sell renewable energy create Energy Commons. Energy Commons are essential to the energy transition and the reduction of energy poverty. Citizen involvement reduces public resistance to renewable energy projects. Energy Commons attract investments from citizens, private capital that would otherwise not be available. Energy Commons fuel local economic development as the wealth generated through renewable energy stays in the area. Finally, by sharing energy or revenue, Energy Commons alleviate or prevent energy poverty in vulnerable households. The EU has recognized the importance of the Energy Commons through the recognition of renewable energy communities (under the Renewable Energy Directive) and citizen energy communities (under the Internal Energy Market Directive).
The EU-funded project 'Private Law and the Energy Commons' first aims to find out how Energy Commons in Germany and Italy organize themselves. When citizens join hands to promote the energy transition, they decide on how to organize and what rules to give themselves: what are the goals and activities of the Energy Commons? Who can become a member? Who will manage the Energy Commons and decide what renewable energy installations to build? Who elects and monitors the managers? How are benefits distributed? How are the renewable energy projects financed?
This form of self-regulation does not happen in a vacuum. Energy Commons and their rules are discussed by academics and are subject to EU and national law that often offers privileges for those Energy Commons that follow it. The second objective of this project is therefore to examine whether the Energy Commons' rules clash with scholarly expectations and/or EU, German, and/or Italian rules and whether it would be in line with the public interest to change the law so as to accommodate the choices made by Energy Commons.
Reaching these objectives is very important because private organizations flourish more if they tailor their own affairs to their own needs; because the insights of this project enable EU and national regulators to improve existing rules on Energy Commons; and because more Energy Commons can benefit from the opportunities offered by improved laws on energy communities.
The EU-funded project 'Private Law and the Energy Commons' first aims to find out how Energy Commons in Germany and Italy organize themselves. When citizens join hands to promote the energy transition, they decide on how to organize and what rules to give themselves: what are the goals and activities of the Energy Commons? Who can become a member? Who will manage the Energy Commons and decide what renewable energy installations to build? Who elects and monitors the managers? How are benefits distributed? How are the renewable energy projects financed?
This form of self-regulation does not happen in a vacuum. Energy Commons and their rules are discussed by academics and are subject to EU and national law that often offers privileges for those Energy Commons that follow it. The second objective of this project is therefore to examine whether the Energy Commons' rules clash with scholarly expectations and/or EU, German, and/or Italian rules and whether it would be in line with the public interest to change the law so as to accommodate the choices made by Energy Commons.
Reaching these objectives is very important because private organizations flourish more if they tailor their own affairs to their own needs; because the insights of this project enable EU and national regulators to improve existing rules on Energy Commons; and because more Energy Commons can benefit from the opportunities offered by improved laws on energy communities.
To achieve these objectives, Björn Hoops, researcher of this project, conducted interviews with in total 12 Energy Commons in Germany and Italy. On this basis, Hoops made a list of decisions that Energy Commons take on their internal organization and external relations, concerning purposes, activities, membership, management, benefit distribution, and finance. Hoops then gathered the statutes of Energy Commons in Germany and Italy and analysed in total around 600 statutes to determine what choices German and Italian Energy Commons made regarding those aspects. At the same time, Hoops drafted a questionnaire on those topics to which he received around 135 valid responses.
The analysis of the interviews, statutes, and responses to the questionnaire led Hoops to divide the Energy Commons into five groups. The first group are small and democratic Energy Commons with a limited number of members, small PV generation capacity, and a direct democracy in which almost all members participate in the management. The second group consists of self-sufficient Energy Commons that often have their own heat network to which an entire village is connected, in which all inhabitants are members, and that are managed by a group of active members or even professionals, while the majority of members merely monitors the managers. The third group are medium-sized place-based Energy Commons that do not have their own grid, but have much greater generation capacity than the first group. Just as the second group, this group only has members from the local area and is run by active members. The fourth group are interest-based Energy Commons that resemble the third group but also admit members from outside the local area. The fifth group are the Investment Energy Commons that resemble the fourth group, but demote 'normal' citizens to investors and are run by a commercial company or public body. This categorization is useful because each of these groups has its own wishes and needs and can thus give regulators guidance on how to regulate their affairs in more tailored way.
Hoops then did research on the rules that apply the internal and external affairs of the Energy Commons. Hoops reviewed the literature on the Commons and Energy Democracy and found that scholars have expectations that Energy Commons should meet. For example, Energy Commons should be inclusive of vulnerable households, their members should actively participate in the management, Energy Commons should be free of corporate interests, and Energy Commons should be primarily local. Hoops also examined EU, German, and Italian law on energy communities and found that it pursues similar goals as the reviewed literature. Hoops concluded that the legislation clashes with how the Energy Commons organize themselves in practice. Many Energy Commons make a profit and distribute some of this profit among members; the larger the Energy Commons and their generation capacity, the more likely it is to collaborate with energy companies and large enterprises and the more passive many members will be; Energy Commons are often the domain of the well-off and the well-educated; and many Energy Commons expand beyond their local communities. Consequently, the energy community legislation excludes many Energy Commons.
An explanation for these findings is that the energy sector is relatively complex and expensive, favouring collaboration with large professional players and, more generally, those with money and skills. Hoops developed policy recommendations to counter this. Regulators should reduce complexity by cutting red tape for Energy Commons, for example by revisiting consumer rights for people sharing energy. At the same time, legislatures should ensure that the distribution of profits remains possible for energy communities, accept that most members will be passive investors, facilitate the collaboration with professional players, while ensuring that they do not take over the Energy Commons, and take concrete measures to promote inclusive Energy Commons.
The results were incorporated in five peer-reviewed publications, one White Paper, and two blogs. They were presented at 14 conferences, and the researcher organized five conferences to discuss the progress and results of the project.
The analysis of the interviews, statutes, and responses to the questionnaire led Hoops to divide the Energy Commons into five groups. The first group are small and democratic Energy Commons with a limited number of members, small PV generation capacity, and a direct democracy in which almost all members participate in the management. The second group consists of self-sufficient Energy Commons that often have their own heat network to which an entire village is connected, in which all inhabitants are members, and that are managed by a group of active members or even professionals, while the majority of members merely monitors the managers. The third group are medium-sized place-based Energy Commons that do not have their own grid, but have much greater generation capacity than the first group. Just as the second group, this group only has members from the local area and is run by active members. The fourth group are interest-based Energy Commons that resemble the third group but also admit members from outside the local area. The fifth group are the Investment Energy Commons that resemble the fourth group, but demote 'normal' citizens to investors and are run by a commercial company or public body. This categorization is useful because each of these groups has its own wishes and needs and can thus give regulators guidance on how to regulate their affairs in more tailored way.
Hoops then did research on the rules that apply the internal and external affairs of the Energy Commons. Hoops reviewed the literature on the Commons and Energy Democracy and found that scholars have expectations that Energy Commons should meet. For example, Energy Commons should be inclusive of vulnerable households, their members should actively participate in the management, Energy Commons should be free of corporate interests, and Energy Commons should be primarily local. Hoops also examined EU, German, and Italian law on energy communities and found that it pursues similar goals as the reviewed literature. Hoops concluded that the legislation clashes with how the Energy Commons organize themselves in practice. Many Energy Commons make a profit and distribute some of this profit among members; the larger the Energy Commons and their generation capacity, the more likely it is to collaborate with energy companies and large enterprises and the more passive many members will be; Energy Commons are often the domain of the well-off and the well-educated; and many Energy Commons expand beyond their local communities. Consequently, the energy community legislation excludes many Energy Commons.
An explanation for these findings is that the energy sector is relatively complex and expensive, favouring collaboration with large professional players and, more generally, those with money and skills. Hoops developed policy recommendations to counter this. Regulators should reduce complexity by cutting red tape for Energy Commons, for example by revisiting consumer rights for people sharing energy. At the same time, legislatures should ensure that the distribution of profits remains possible for energy communities, accept that most members will be passive investors, facilitate the collaboration with professional players, while ensuring that they do not take over the Energy Commons, and take concrete measures to promote inclusive Energy Commons.
The results were incorporated in five peer-reviewed publications, one White Paper, and two blogs. They were presented at 14 conferences, and the researcher organized five conferences to discuss the progress and results of the project.
This project has moved beyond the state of the art in three important ways. It is the first to systematically confront energy community legislation with the empirical reality of self-made rules in Energy Commons, identifying clashes and options to improve legislation. The project has introduced a novel categorization of Energy Commons that allows regulators to craft better rules for each category. Finally, the project has added a theory of complexity to Commons theory, explaining why some Commons fail to live up to expectations.
Through these scientific insights and concrete policy recommendations, the project is certain to improve energy community legislation in line with the needs of Energy Commons. The blogs draw the attention of Energy Commons to the insights on potential clashes, urging them to revisit their rules in light of current legislation.
Through these scientific insights and concrete policy recommendations, the project is certain to improve energy community legislation in line with the needs of Energy Commons. The blogs draw the attention of Energy Commons to the insights on potential clashes, urging them to revisit their rules in light of current legislation.