Cross-Border Energy Communities (CBECs)

In response to climate change challenges, the European Green Deal has set the goal of achieving carbon neutrality for the EU by 2050, involving actions to decarbonise the European energy sector. Among the advances in European energy policy, the Clean Energy for All Europeans legislative package has enabled the recognition and definition of Citizen Energy Communities (CECs) and Renewable Energy Communities (RECs) through the adoption and transposition by Member States of the Renewable Energy Directive II (REDII) and the Internal Market Energy Directive (IEMD).

Energy communities have been revealed as very efficient tools in some European territories, but their cross-border implementation shows a few challenges. Whereas the European Green Deal aims to achieve a just transition by “leaving no one and no place behind”, particular attention must be paid to the EU’s border regions, in particular when it comes to economic, social and territorial cohesion as set in Article 174 of the Treaty on the Functioning of the EU.

Already well-known challenges many CB regions face are peripherality, remoteness, low and/or sparse population, ageing, etc. Furthermore, they encounter enormous difficulties in implementing CB public services, building CB infrastructures, and more. These hurdles have been highlighted by projects like b-solutions, also implemented by AEBR with the support of DG Regio. The brochure Border Regions for the European Green Deal already described specific obstacles in implementing the Green Deal in cross-border contexts and the need to foster practical tools.

While cross-border regions have been qualified as “living labs of European integration” by the European Commission’s 2021 Report, exploring the possibilities to enhance the development of such citizen energy communities across borders would help achieve a just transition in the EU and respond to several Policy Objectives of the European Cohesion Policy, especially:

PO2: A greener, low-carbon transition towards a net-zero carbon economy and resilient Europe, and
PO5: Europe closer to the citizens, as well as
Interreg Specific Objective 1 (ISO1): A better cooperation governance.

Thus, the Clean Energy for All Europeans package creates the opportunity to develop Cross-border Energy Communities by allowing Member States to introduce provisions that enable cross-border participation in energy community projects. However, transpositions of the REDII and IMED directives differ across Member States, as highlighted by the REScoop.eu Transposition Tracker. Hence, the transposition of provisions relating to Cross-border Energy Communities may vary from one Member State to another and may not be systematic, creating difficulties for a cross-border implementation.

With this in mind, the European Commission has promoted a Handbook on Cross-border Energy Communities, as ‘renewable energy communities’ (REC) or ‘citizen energy communities’ (CEC) —as defined by EU legislation— which are cross-border in nature. This Handbook intends to serve as a tool for all players (citizens, local authorities, etc.) wishing to exploit the opportunities offered by developing Cross-border Energy Communities (CBECs) by producing the knowledge necessary for deploying such communities. In particular, it contains:

an inventory of cross-border obstacles to the establishment and operation of CBECs;
another inventory of existing Cross-border and quasi-Cross-border Energy Communities (CBECs & Q-CBECs); and
a step-by-step methodology for setting up CBECs and developing their activities.

In addition, the Handbook provides definitions of CBECs and Q-CBECs, which will be used as a reference for this project (see the “appetisers” at the end of this article).

This project aims to exploit the knowledge created with the Handbook and support a number of stakeholders in cross-border regions to initiate pilot actions leading to the development of such CBECs or Q-CBECs. It intends, therefore, to complement the knowledge gained through practical experiments.

The main objective is to pilot the development of CBECs or Q-CBECs by launching, managing and implementing a call for proposals and providing support to selected pilot actions, including two main methodologies to support selected stakeholders:
i) Financial support in the form of a sub-grant to implement the necessary tasks for developing the CBEC.
ii) Technical support in the form of guidance for developing the communities, which REScoop.eu will deliver.

Fulfilling the general objective of the project, each pilot action is expected to advance at least the development of a (quasi-)Cross-border energy community, and deliver the following:

A roadmap detailing the implementation of a CBEC or (quasi-)CBEC, which might include evidence of moving forward from one stage to the next or completing a stage in establishing an energy community. This roadmap may:
- initiate or consolidate a stage of development of a CBEC or Q-CBEC, either building awareness, supporting its emergence or studying its development;
- plan the chosen implementation of the stage of development of a CBEC or Q-CBEC, either building awareness, supporting its emergence or studying its development;
- reflect on the governance and/or a legal form of a CBEC or Q-CBEC and provide a preliminary partnership agreement.
Highlight the obstacles/ barriers faced.
Highlight the good practices/ factors of success during the phase.
Identify and/or link relevant actors across the border and structure their relations.

As a result, the project will contribute to the priorities of the EU strategic and legislative context in various ways:

Select, support, and highlight examples of CBECs or Q-CBECs, particularly best practices, to inspire players wishing to participate in cross-border energy cooperation.
Build on existing cases identified in the Handbook.
Support their further development and improve their knowledge of the difficulties encountered by these projects, ways of overcoming them, and best practices.
Highlight, through concrete examples, the obstacles encountered by project developers and how they have overcome them.
Highlight, through concrete examples, the best practices.
Establish roadmaps and advance towards Q-CBECs or CBECs.
Contribute to the objectives set by the Cohesion Policy, especially PO2 and PO5, as well as European Territorial cooperation, notably the specific objectives set in Interreg (ISO1).
Foster a just transition in the EU, more specifically, the fair implementation of the European Green Deal and Clean Energy for all European Package across European regions and territories. In that sense, this call also seeks to reinforce European territorial, social and economic cohesion in the energy sector.
Disseminate and show the potential of replicability for further approaches on other borders and incite others to follow the examples set.

Implementing CBECs is the overall aim in the long run. But the realistic aim within the project timeline is not the implementation of fully operational CBECs, but the production of a feasible roadmap to advance the development of each (quasi)-)Cross-border energy community approach, in order to reach tangible results which might be disseminated and replicable.

A few tapas/appetisers from the Handbook:

The two definitions of energy communities introduced by the REDII and IMED Directives frame energy communities around specific criteria characterised by the following set of common elements (for more information, see also: RESCoop.eu. Q&A, 2021: What are ‘citizen’ and ‘renewable’ energy communities?):

Governance: open and voluntary participation.
Ownership and control: participation and effective control by citizens, local authorities and smaller businesses whose primary economic activity is not the energy sector.
Purpose: generate social and environmental benefits rather than focus on financial profits.
Activities: generation, distribution, supply, aggregation, consumption, sharing, storage of energy and provision of energy-related services.

At the same time, citizen energy communities (CECs) and renewable energy communities (RECs) differ with respect to the following features:

Geographical scope: RECs should be located near the community’s renewable energy projects, while CECs are not bound geographically.
Activities: RECs can cover all forms of renewable energy in the electricity and heating sector, while CECs are technology-neutral.
Participants: In CECs, any actor can participate, but stakeholders involved in large-scale commercial activity where energy is the primary economic activity cannot make decisions. Besides citizens and small end-users, any size entity can participate in a CEC, while RECs’ restricted membership limits the participation to micro-, small- and medium-sized enterprises (MSMEs), whose membership/ participation is not their primary economic activity.
Autonomy: RECs must be autonomous from individual members and other traditional market actors, while autonomy is not mentioned for CECs.
Effective control: RECs can be effectively controlled by MSMEs that are located in proximity to the community’s projects, while CECs exclude medium-sized and large enterprises from being able to exercise effective control.

Both Directives (RED II and IMED) acknowledge the importance of cross-border cooperation and include the possibility of creating “cross-border renewable energy communities” and “cross-border citizen energy communities“. In particular, RED II in Article 22 and Article 16 of the IMED Directive stipulate that RECs and CECs shall be open to cross-border participation.

However, even if the legal provisions in principle allow the establishment of CBECs at all EU borders, the lack of definition and the fact that transposition to national law is uneven and voluntary, lead to constellations that hinder or even prohibit cross-border cooperation on energy and the creation of CBECs. While the progress of the transposition of the provision on definitions for RECs and CECs into national law, as well as enabling frameworks and support schemes at the national level, are monitored by the REScoop transposition tracker, there is no monitoring of the “cross-border participation” provisions for RECs and CECs.

Considering the common elements for energy communities of the RED II and IMED Directives and adding the cross-border notion, CBECs can be defined as follows:

Definition of a Cross-Border Energy Community (CBEC)

A “Cross-border Energy Community” is a “renewable energy community” or a “citizen energy community” of a cross-border nature, that is to say, a legal entity:

(a) which is based on voluntary and open participation in both border regions of the same cross-border region and is effectively controlled by members and shareholders of the cross-border region where it is set in place and operates. The shareholders are natural persons, local authorities, including municipalities or small- and medium-sized enterprises (SMEs);

(b) has for its primary purpose to provide environmental, economic or social community benefits to its members or shareholders in both border regions of the same cross-border region where it operates, rather than to generate financial profits;

(c) may engage in generation, including from renewable sources, distribution, supply, consumption, aggregation, energy storage, energy efficiency services or charging services for electric vehicles or provide other energy services to its members or shareholders in the cross-border region where it is established and operates.

Some of the aforementioned activities shall be of a cross-border nature (e.g. energy is produced at least in one border region of a cross-border region and distributed, stored, supplied, or consumed in the other border region or in both border regions of the same cross-border region).

(Based on Article 2(16) Recast Renewable Energy Directive and Article 2(11) Recast Internal Electricity Market Directive)

Given the complexity of setting up and running an energy community in a cross-border context, it is useful to widen the definition of CBEC and introduce the concept of “Quasi cross-border energy communities” (Q-CBEC), thereby adding to the formal definitions of energy communities.

Definition of a Quasi- Cross-Border Energy Community (Q-CBEC)

A “quasi cross-border energy community” is an energy community that develops energy related activities (e.g. generation, distribution, supply, consumption) or provides energy services on one side of a national border, or separately on both sides of a same cross-border region, but without distributing energy across the border, and has at least one of the following aspects:

(a) Joint management: management as a cross-border legal personality, e.g. an EGTC;

(b) Joint funding: participants in one border region contribute to the funding of investments of another border region in the same cross-border region;

(c) Joint resources: human resources, technical expertise or knowledge, or equipment are shared amongst the two or more border regions of the same cross-border region.

Legal instruments

While energy communities in general can take different legal forms, such as cooperatives, social enterprises, not-for-profit associations or partnerships, the creation of a single legal entity is more complex in a cross-border context. Practice shows that three different groups of legal instruments can enable the establishment of CBECs or other local cross-border energy initiatives as legal entities. However, not all instruments are available at all EU or European Economic Area (EEA) borders, and there are also uncertainties associated with each group that could potentially act as barriers.

1st group: EU legal instruments for CBC that can be applied at all EEA borders: the EGTC, the “European Economic Interest Grouping” (EEIG) and the “European Cooperative Society” (SCE).

2nd group: specific legal instruments that may allow the establishment of a CBEC as a legal entity in the context of intergovernmental agreements on CBC on some EEA borders (including CH): the Karlsruhe Agreement (1996) for FR-CH, DE-CH, DE-FR, DE-LU, and FR-LU borders; or the Isselburg-Anholt Agreement (1993) for DE-NL.

3rd group: other legal instruments based on the national law (private or public) of one of the neighbouring countries.

(Read more in the Handbook)

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