Half of EU citizens – including local communities, schools and hospitals – could be producing their own renewable electricity by 2050, meeting 45% of the EU’s energy demand, according to new research published on Monday (26 September).
The study, performed by Dutch consultancy firm CE Delft, for the first time evaluates the potential of decentralised power generation across the continent.
It found that 264 million people in Europe could produce their own renewable electricity by 2050, provided the right regulatory framework is put in place. Sweden is expected to lead the way, with an estimated 79% of the population able to produce their own energy in 2050.
Germany and other EU countries like the Netherlands were praised in the study for championing small-scale energy production by households who can sell their surplus electricity back to the grid at a guaranteed price.
“Across Germany, you would see solar panels on the roofs and hundreds of energy cooperatives flourishing,” said Sebastian Mang, climate change and energy officer at Greenpeace EU, which was among the organisations behind the study.
“But in Spain, there is a ‘sun tax’ which makes it very expensive to install solar panels on your roofs or have energy storage at home. And there is only a handful of cooperatives,” he told reporters at a briefing in Brussels where the study was presented on Monday (26 September).
“Why? ― The market was designed for big actors, not for small actors,” Mang said.
The study was commissioned by environmental NGOs Greenpeace and Friends of the Earth Europe, in association with the European Renewable Energies Federation (EREF) and the European Federation for Renewable Energy Cooperatives (REScoop.eu).
Together, they are calling for the European Commission to enshrine so-called “energy citizens” at the centre of the EU’s flagship Energy Union initiative.
Molly Walsh, a campaigner at Friends of the Earth Europe, said there was a lot that “energy citizens” can do to drive the transition to a low-carbon energy system, citing electric vehicles that can store energy to smart boilers that heat water when electricity demand is lowest.
But data was so far lacking to determine the potential of small-scale renewable electricity generation across Europe, she said – a gap now filled with the new study by CE Delft.
Backers of the “energy citizens” concept are also quick to highlight that the notion is actually wider than just individual households placing solar panels on their rooftops. It also covers municipalities, schools, hospitals or government buildings, as well as small businesses with fewer than 50 employees.
Commission support – in principle
The European Commission is expected to table a revised Renewable Energy Directive and Market Design Initiative in December this year or early next year. Both pieces of legislation are considered crucial to ensure citizens can become active participants in the renewable energy transition.
The vision of a decentralised energy system with consumers at its core is actually supported by the Commission, at least when it comes to the headline objective. In a public consultation for its Market Design Initiative earlier this year, it said: “A fundamental change is necessary in the role consumers play in the market”.
“Consumers need to be able to act as buyers and sellers,” the Commission said, calling on citizens to “leverage their great bargaining power” through collective schemes such as energy cooperatives.
Such a fundamental shift in energy production can be achieved with “new enabling technologies such as smart grids, smart metering, smart homes” and “self-generation and storage equipment” the Commission continued, saying these technologies “are empowering citizens to take ownership of the energy transition”, “reduce their bills”, and “participate actively in the market”.
But the European Renewable Energies Federation (EREF), which supported the CE Delft study, says it remains to be seen whether the EU executive really intends to follow up on these good intentions.
“The Commission mentions the role of citizens but it remains a nice wording so far,” said Dr. Dörte Fouquet, Director at EREF, which represents independent producers of green energy.
“We hear a lot about citizens’ energy,” Walsh added, noting the Commission’s Energy Union strategy encourages citizens to take ownership and actively participate in the energy transition.
According to Walsh, there will be a chapter in the new renewables directive about energy citizens and energy cooperatives. However, it’s not clear yet how detailed it will be on key issues such as priority grid access and guaranteed feed-in tariffs for small-scale renewable energy producers.
“It can’t just be nice words,” Walsh said. “We’re looking for a right to produce and store your own renewable energy and to be able to send it on the grid,” she stressed.
For the coalition, Spain is the example to avoid. There, preferential feed-in tariffs for renewables were rolled back in a hurry in 2009 following the bursting of the solar bubble. And retroactive changes were brought to national legislation on renewables that made the installation of new solar panels “prohibitive”, Walsh said.
Cooperatives take on the big utilities
Even in Germany, new laws coming into effect next year will make it harder for energy cooperatives to compete against large utilities, the “energy citizens” coalition says.
“They’ve put in place geographical constraints and various other limiting factors, like auctioning systems,” Mang remarked, saying this will make it harder for cooperatives to compete against the cheap prices offered by big energy utilities in response to public tenders for renewables.
“Cooperatives will always remain different market actors. They cannot compete with the E.ONs of this world who can put 30, 40 or even 100 of wind turbines up,” Mang said.
The European Commission seems to acknowledge this and says its upcoming market design initiative will promote small-scale production and energy cooperatives.
“The move away from generation in large central power plants towards de-centralised production from renewable energy sources requires an adaptation of the current rules of electricity trading and changes the existing market roles,” said an EU official responsible for energy and climate policy who spoke to EURACTIV on condition of anonymity because she isn’t allowed to speak publicly.
In fact, the big players have already started adapting to the changing energy market, and claim they are embracing the shift to distributed generation systems based on small-scale, decentralised renewable energy generation.
Eurelectric, the trade association representing Europe’s large energy utilities, such as E.ON, Enel and EDF, says it “fully supports customer empowerment and the active role of customers in the electricity markets”.
“Europe is moving beyond the early deployment of distributed generation,” said Eurelectric Secretary General Hans ten Berge, calling on the regulatory framework to be adapted accordingly.
The “energy citizens” coalition, for its part, is suspicious of big utilities’ intentions. They point to various “pushback” strategies that big energy firms have put in place to retain their market share against competition from smaller players.
The first, most visible part of the strategy is to venture into the market for small-scale renewables. In Belgium for instance, French energy giant Engie is advertising solar panels installation among a range of new services it now offers to individual households.
“There is a struggle going on,” said Dirk Vansintjan, the President of REScoop.eu. “The battle will take place on the rooftops of citizens,” he said. “Big companies don’t want to give up everything. But putting solar panels on our roofs, this is a bit too far, I think.”
Another, less visible part of the strategy is to compete aggressively at every local auction for installing new renewable energy capacity. Vansintjan mentions the example of two municipalities in the German-speaking part of Belgium who had chosen local energy cooperatives to install four new wind turbines.
EDF, the French energy giant who had lost the bid, launched a legal challenge against the decision before the country’s highest court.
“It’s a gigantic French state company who was annoyed by two small energy cooperatives and two municipalities,” Vansintjan said. “The whole EDF machine came into motion against two energy cooperatives and two municipalities – just for four wind turbines.”
Behind the scenes, Vansintjan says a deeper transformation is happening in the energy market. “Every big utility is now creating their own cooperatives. EDF has done it, Engie has done it – all the big players are doing it. It seems our model is quite threatening for them, so they copy it and claim they can do the same.”
The fact that large industrial players are interested in local renewable energy generation is not a problem in itself, and is probably even a good thing, according to the “energy citizens” coalition.
“Big and small, we need them all,” says Fouquet, of the European Renewable Energy Federation (EREF).
However, the move raises issues of fair competition between the large dominant players and smaller energy co-ops, especially when it comes to local bids for renewable capacity.
“Defining what an energy cooperative actually is will be important” when the European Commission draws up its updated Renewable Energy Directive, says Mang of Greenpeace. If big energy utilities can pose as cooperatives and receive special allowances for this part of their business, “then that becomes a market failure,” he warned.
At first sight, small-scale renewable energy installations owned by citizens may indeed prove more expensive for municipalities, Fouquet said. But in the long run, they are probably cheaper than going for big wind turbines, she argues, because the load being placed on the grid is lighter. Small-scale installations are also better suited to provide the kind of demand- and supply flexibility expected from a modern energy system, she says.
“Big utilities want to go into this demand-side business more,” says Fouquet. “They say, ‘We don’t need priority access, we need priority dispatch’ – and their spokesperson this time will be one of the big Nordic TSOs.”
Public acceptance of renewables is another issue raised by the “energy citizens” coalition. When a big player like Engie wins a contract to install new wind farms, it may choose to install the turbines near populated neighbourhoods, where they often create annoyance with the population. Local energy cooperatives are less likely to have such buy-in problems because they are driven and owned by local communities who decide on the best location.
Yet, there is some concern among the “energy citizens” coalition that the big players will steal the small-scale renewable energy revolution they are trying to spearhead.
“Can they do this? To some extent, yes,” said Molly Walsh of Friends of the Earth. But then there will always be an issue of “trust” with the renewable energy transition, she points out. “There is a struggle going on,” Vansintjan concurred. “Of course, the big companies want to keep their market share – it’s normal. But we want Europe to give citizens at least a fair share.”
“It’s very political, it’s a choice.”