The great potential of energy communities and how to use it

The share of renewables in Germany amounted to 43.8 percent in the first half of 2022. It is expected to rise to 65 percent by 2030. Many different measures are being discussed to achieve this goal. Local energy communities, as well as the implementation of sector coupling in neighborhoods and cities, can play an important role in achieving this goal. For several years now, Kiwigrid has been observing the developments surrounding energy communities in Germany and Europe and is already supporting specific projects in Switzerland in cooperation with the Swiss energy supplier IWB. 

In this blog, we provide an overview of what lies behind energy communities and how they can contribute to a successful energy transition. We also take a look at the regulation and development of energy communities in various European countries.

What are energy communities?

The EU's RED II (Renewable Energy Directive), last revised in 2018, defines energy communities as the bundling of energy production and consumption to promote the collective participation of smaller players in the energy market and to balance the energy system at a decentralized level. Thus, energy communities provide local generation of energy from renewable sources that can be consumed in the surrounding area. In Switzerland, they are also referred to as associations for self-consumption (ZEV).

The EU directive distinguishes four different levels of energy communities:

  • The precursor to the energy community: Renewable self-consumer.
  • Collective Self-Consumption (CSC)
  • Renewable Energy Communities (RECs)
  • Citizen Energy Communities (CEC)

A renewable self-consumer is an end-user who generates electricity from renewable sources for their own consumption and stores or sells it. This can be, for example, a homeowner with a PV system who not only consumes her own self-generated renewable energy directly, but also stores and resells it in case of a PV surplus. When at least two such self-consumers living in the same house act together, it is called collective self-consumption. An example of this is the so-called “Mieterstrom” (tenant electricity) in Germany 

Renewable Energy Communities (RECs), as well as Citizen Energy Communities (CECs), are autonomous communities based on open and voluntary participation of individuals, SMEs or local authorities. Their main purpose is not to generate financial profits, but to achieve environmental, economic or social benefits for shareholders, members and the region. While renewable energy communities require physical proximity and are based on physically connected meters and energy systems in close range, citizen energy communities are purely virtual in nature. An example of this would be a single-family home complex in Bremen that is connected to a neighborhood in Hamburg.

Advantages of energy communities

In its Clean Energy Package, the EU recognized the role of energy communities as critical drivers of the energy transition. Energy communities organize collective and citizen-led energy actions that pave the way for a clean energy transition and put citizens first. They help increase public acceptance of renewable energy projects and facilitate private investment in the clean energy transition. At the same time, they bring direct benefits to citizens by increasing energy efficiency and lowering electricity bills. Energy communities can also help stabilize the electric power system through demand and response, as well as through storage, thus taking advantage of flexibilities.

Energy communities in the EU

The EU RED II directive aims to strengthen the role of self-suppliers and communities using renewable energy. Currently, many different forms of energy communities can be found across Europe and different countries are implementing the concept quite differently. Spain already has its own legal framework for energy communities, and many other countries are in the process of developing their own version. In some EU member states, citizen energy communities are already authorized at the building level (e.g., multi-family housing), and in some countries they are even already being implemented at the block level (multiple buildings).

In Germany, there is already a local initiative for collective self-consumption called "Mieterstrom", where electricity can be sold to tenants within a residential area (and not only in the same building). However, the tenant electricity concept does not yet incorporate the Clean Energy Package's key concept of energy sharing. 

In 2018, Switzerland introduced so-called "associations for self-consumption (ZEV)", which allow owners or tenants and landlords in apartment buildings, as well as neighbors, to jointly produce and consume electricity off the meter. However, the price charged for solar electricity per kWh must not be higher than the price paid for electricity supplied externally.

How Kiwigrid contributes to the success of energy communities

With its products The Independent Home (TIH) and the HEMS APIs, Kiwigrid focuses on providing the software for optimal energy management in the home. For energy communities, Kiwigrid has so far provided tailored products for individual use cases in isolated projects. Based on its energy IoT platform KiwiOS, Kiwigrid can provide energy communities with the necessary energy management, as well as with data infrastructure management and processing. This allows the electricity meters of different residential units, PV systems, charging stations, and heat pumps to be connected, intelligently controlled and managed as part of an energy community. In addition, Kiwigrid can simplify the implementation and merging of systems for energy suppliers, automate the creation of balancing zones, and make meter changes more user-friendly.

Thanks to experience gained through past projects, Kiwigrid is ready to start developing a suitable product once the connection of single-family homes to energy communities picks up pace in Germany.

Kiwigrid helps Swiss energy providers build energy communities

Kiwigrid recently realized its first major project with IWB in Switzerland: The two companies jointly developed a software product for energy and asset management. A decentralized and highly efficient energy supply is being established at the Westfeld site in Basel. As an expert in energy management systems and IoT for renewable energies, Kiwigrid was considered the optimal partner. The Westfeld project marked the start of the partnership. However, it is not to remain the only joint project. IWB and Kiwigrid intend to implement further self-consumption associations in Switzerland, for which there are already some interested parties.


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