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Glossary · Energy industry & energy transition

Energy community

Energy Community Citizen energy prosumer renewable energies electricity market participation energy sharing Self-Consumption

An energy community is an organised association of individuals, businesses, municipalities or institutions that jointly generate, consume, store, share or market energy. Usually this concerns electricity from renewable installations, such as photovoltaics on rooftops, wind energy, battery storage or charging infrastructure. The term can also cover heat, local heating networks or cross-sector solutions, where the relevant legal system and the specific project allow this.

At its core, the idea is that energy supply is not organised solely as a relationship between an anonymous supplier and individual customers. An energy community jointly determines who invests, who uses the electricity, how revenues are distributed, who bears which risks and how decisions are made. It is thus at once technical coordination, a business model and an organisational form. Importantly, in German usage "Energiegemeinschaft" is mostly an umbrella term. Only certain sub-forms are precisely defined in law, such as the two types of community under EU law or the joint use of electricity under § 42c EnWG.

Distinction from self-consumption, tenant electricity and energy cooperatives

Self-consumption initially means only that the operator of an installation consumes the electricity itself. A solar installation on a single-family home whose electricity is used directly in the household is self-consumption, but not yet an energy community. It becomes communal only when several participants are organised together and generation, consumption or marketing are allocated according to common rules.

Tenant electricity (Mieterstrom) is a specific supply model: electricity from an installation on or at a building is supplied to final consumers in that building or in its immediate vicinity. The model can have communal elements, but it is designed above all as a supply relationship. Requirements apply to supply, billing, residual electricity procurement and consumer protection. This differs from communal building supply, which likewise starts within a building but does not presuppose full supply by the installation operator.

An energy cooperative is a legal or organisational form in which members jointly finance or operate energy projects. It can be the vehicle of an energy community, but does not have to be. Conversely, an energy community can also be organised as an association, a company, a municipal cooperation or a purely contractual association. EU law expressly permits various forms here, such as associations, cooperatives, partnerships or non-profit organisations. The term prosumer is also narrower: it refers to individual actors who both generate and consume energy. An energy community brings together several prosumers or combines them with pure consumers, municipal institutions and local businesses.

Technical basis: measuring, allocating, balancing

An energy community does not change the physical path of electricity. Electricity flows in the grid according to the laws of electrical engineering, not according to contracts. If several households in a neighbourhood notionally use electricity from the same photovoltaic installation, this does not mean that precisely that electricity reaches them. What matters is how generation and consumption are measured, allocated in time and settled in the balancing accounts.

The metering concept is therefore central. A generation meter records when and how much an installation generates. Consumption meters record when the members draw electricity. Because only electricity generated at the same time can be shared, allocation in quarter-hours is customary and in part required by law. For German energy sharing, for example, generation and each supplied consumption point must be recorded by meter reading profile measurement (Zählerstandsgangmessung) or quarter-hourly registering power measurement. An example: if the installation generates 2 kWh in a quarter-hour and a member is entitled to one quarter under the allocation key, at most 0.5 kWh is allocated to that member, but only as much as the member actually consumed in that quarter-hour. The residual electricity supplier covers the remaining demand.

This allocation affects the electricity market, grid use and balance group management. A balance group is an energy-industry account in which feed-in and withdrawals must be balanced every quarter-hour. If an energy community supplies or markets electricity, it must be clear who is responsible for deviations, who submits schedules, who pays for balancing energy and how residual electricity is procured. Small local projects appear technically manageable, but they intervene in a heavily regulated overall system.

European legal concepts

EU law recognises two types of community. The renewable energy community (Renewable Energy Community) under the Renewable Energy Directive (EU) 2018/2001 is a legal entity with open and voluntary participation. It must be autonomous and under the effective control of members who are located in the proximity of its renewable energy projects. Members are natural persons, local authorities including municipalities, and small and medium-sized enterprises. Under Article 22, it may generate, consume, store and sell renewable energy and share the energy generated by its own installations. In principle, the term covers all forms of renewable energy, including heat. Member States must create an enabling framework. Among other things, they must remove unjustified obstacles, ensure cooperation by distribution system operators and open participation to low-income households as well.

The citizen energy community (Citizen Energy Community) under the Electricity Market Directive (EU) 2019/944 is likewise a legal entity with voluntary and open membership. It is effectively controlled by natural persons, local authorities or small enterprises. Its primary purpose is to provide environmental, economic or social benefits to its members or the local area, rather than financial profit. Unlike for the renewable energy community, EU law here requires neither geographical proximity nor a restriction to renewable sources. In return, this type is limited to the electricity sector. Members retain their rights as household customers and may leave. Network charges must be transparent, non-discriminatory and cost-reflective, so that such communities, too, contribute appropriately to overall system costs. Since the 2024 amendment, Article 15a of this directive also obliges Member States to enable households, SMEs and public bodies to share energy as active customers. This applies within the same bidding zone or a more narrowly defined area.

National implementation, especially in Germany

What an energy community may do in concrete legal terms is only determined by national law. Austria, for example, has its own models for renewable energy communities and citizen energy communities. In Germany, the term is used more broadly. It overlaps with citizen energy companies (Bürgerenergiegesellschaften) under the EEG, tenant electricity, communal building supply, neighbourhood solutions and energy sharing. For each project it must therefore be clarified whether "Energiegemeinschaft" is meant as an umbrella term, as a political guiding concept or as a legally defined category.

A key innovation is § 42c EnWG on the joint use of electricity from renewable energies, in short energy sharing. Since 1 June 2026, distribution system operators must enable this use within their balancing area. From 1 June 2028, the balancing area of a directly adjacent distribution system operator in the same control zone is added. The main requirements under the statutory text (as of the version read):

  • Operators are natural persons or companies or legal entities under private law whose shareholders or members are all final consumers or legal entities under public law. The operation of the installation must not predominantly serve commercial or independent professional purposes.

  • What is shared is electricity from renewable energy installations or from storage facilities that exclusively store renewable electricity. Participating businesses must be micro, small or medium-sized enterprises within the meaning of the EU definition.

  • Two contracts are required: a supply contract and a contract on joint use. The latter regulates at a minimum the scope of use, the allocation key and any fee in cents per kilowatt-hour.

  • The operator does not have to provide full supply. However, the operator must point out in writing that supplementary electricity procurement is necessary and may be more expensive than a full supply contract. The customers freely choose the supplier for the residual electricity.

  • For small household installations up to 30 kW and for installations in multi-occupancy buildings up to 100 kW that are operated by residents of the building, certain supplier obligations under §§ 5 and 40 to 42 EnWG do not apply. Service providers may take on tasks such as market communication, billing, metering and maintenance.

It follows that since June 2026 Germany has had a statutory framework for sharing electricity via the public grid within a community. However, § 42c describes a relationship between one installation operator and several customers. It does not create a separate legal form of "energy community". Expert analyses consider practical implementation currently only partly feasible, technically, organisationally and economically. Reasons include the market communication processes and the lack of financial incentives. A politically attractive term thus replaces neither supplier obligations nor network charge rules nor a tax classification.

Why energy communities matter for the electricity system

Energy communities can facilitate investment in renewable installations because benefits and responsibility lie closer to those affected. A municipality, a neighbourhood or a group of households can pool land, capital, consumption profiles and local acceptance. The EU directive names precisely this as the objective: more local citizen participation and thereby more acceptance of renewable energy. This makes projects possible that would be too small, too complex or too risky individually.

For the electricity system, the concrete matching of generation and consumption counts for more than the idea of local self-sufficiency. Photovoltaics supplies a lot of electricity at midday, while households often consume more in the morning and evening. Heat pumps, electric cars, battery storage and controllable loads can shift these profiles. An energy community can create incentives to use electricity when it is generated locally or when the grid is relieved. This puts flexibility at the centre. However, flexibility does not arise from the organisational form. It requires price signals, controllability, digital metering, clear responsibilities and rules on access to installations. A shared battery storage unit can increase self-consumption, be operated in a grid-supporting way, be optimised on the market or be used merely to reduce individual bills. Which effect arises depends on contracts, tariffs, network charges and technical requirements.

Typical misunderstandings

First: an energy community is not the same as self-sufficiency. Many projects reduce external electricity purchases in certain hours, but remain dependent on the public grid. The grid supplies during darkness, wind lulls, maintenance and seasonal fluctuations, absorbs surpluses and provides for supra-regional balancing. An energy community is therefore normally not an island grid. German law even prescribes this point: customers must be expressly informed that the shared installation cannot cover their demand completely and not at all times.

Second: lower costs for members do not mean that system costs disappear. Grid operation, reserve capacity, metering, billing, balancing and consumer protection remain necessary. If costs are merely shifted, a model can look favourable for its members without being efficient for the economy as a whole. EU law therefore requires cost-reflective network charges so that communities contribute appropriately to system costs.

Third: participation does not arise automatically. An energy community can strengthen participation and enable local value creation. But it can also be merely a financial stake with little say. Governance decides whether members genuinely have a voice, whether returns are distributed fairly and whether households without their own roof, with lower incomes or who rent also have access.

The role of grid, market and governance

Energy communities stand at the interface between local initiative and the centrally coordinated electricity system. The grid operator remains responsible for safe grid operation. Suppliers or direct marketers take on market roles, and metering point operators provide data. The community organises participation, use and internal distribution. Conflicts arise when these levels do not fit together. Local balancing may be technically possible but is not rewarded on the market. Joint consumption may be politically desired, while metering and billing rules make it more expensive. And liability and supplier obligations can overburden small actors.

A functioning energy community therefore needs transparent membership rules, robust contracts, data protection for consumption data, clear liability, comprehensible billing and rules for joining and leaving. For larger projects, financing, securing land, permits, grid connection and marketing are added. The term shows that the energy transition also changes ownership, participation and roles in the energy industry. But it does not by itself say whether a project is grid-supporting, socially balanced or cost-efficient. For that, the metering concept, legal framework, tariff model, governance and mode of operation must be examined. An energy community is not a shortcut around the electricity system. It is an organised way of reconnecting generation, consumption and responsibility within that system.

Sources

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Edited by eCMS on 11.11.2026 19:46

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