Collective Self-Consumption and Energy Communities: A Complete Guide to the Future of Shared Energy

Energy is the engine of our modern society, but the way we produce and consume it is undergoing a monumental transformation. In a world increasingly focused on environmental sustainability and the pursuit of energy independence, concepts like collective self-consumption (CSC) and renewable energy communities (RECs) are emerging as fundamental pillars of the green transition. While the idea of producing and sharing energy locally might have seemed utopian until recently, today, thanks to an evolving regulatory framework and increasingly accessible technologies, it is a concrete and advantageous reality.

Imagine an apartment building where photovoltaic panels on the roof not only cover the energy needs of common areas but also allow individual apartments to benefit from the excess clean energy produced. Or, think of a group of small businesses in the same building deciding to join forces, invest in a renewable plant, and share the energy produced, reducing their utility bills and environmental impact. These are just a few examples of the potential offered by collective self-consumption.

This article serves as a comprehensive guide to fully understand the world of collective self-consumption and its close relationship with energy communities, with a special focus on the Italian context and the relevant regulatory updates as of May 16, 2025. We will explore what “collective self-consumption” exactly means, how it works, what the benefits are for citizens and businesses, and how it differs from and integrates with the broader Renewable Energy Communities. If you’re interested in understanding how to become an active part of this energy revolution, you’re in the right place.

Understanding Collective Self-Consumption (CSC): Definition and Regulatory Context

Collective self-consumption (CSC) represents an innovative configuration that allows a group of renewable energy “self-consumers” to act collectively. These individuals, while they may have separate utility contracts, are located in the same building or condominium and share the electricity produced locally by one or more plants powered by renewable sources.

The technical definition, as outlined by Italian law (primarily Legislative Decree 199/2021, which transposes the European RED II Directive), states that collective self-consumption occurs when renewable energy produced by plants within a building or condominium is consumed by the end customers who are part of the group. It is essential that these plants are owned by one or more self-consumers or by a third party, provided that the plant remains fully available to the group.

The reference regulatory framework includes:

• European Directive RED II (EU 2018/2001): Introduced and promoted the concepts of renewable energy self-consumers acting collectively and energy communities.
• Legislative Decree No. 199 of November 8, 2021: Implemented the RED II directive, defining the rules for collective self-consumption and energy communities in Italy.
• ARERA Resolutions: The Italian Regulatory Authority for Energy, Networks and Environment (ARERA) has issued and continues to update the technical and operational rules for accessing the widespread self-consumption service and for the valorization of shared energy. Among these, Resolution 727/2022/R/eel (TIAD – Consolidated Text for Widespread Self-Consumption) is particularly relevant.
• MASE Decree (Ministry of the Environment and Energy Security) CACER of December 2023 (entered into force in January 2024): Defines the incentives for configurations for the sharing of renewable energy (CACER), which include both CSCs and RECs.

It is important to note that, as of May 16, 2025, the regulatory framework is now consolidated and operational, with defined procedures for the establishment, management, and access to incentives for collective self-consumption groups. Understanding these regulations is the first step to fully harnessing the opportunities offered. The goal is clear: to promote the distributed generation of energy from renewable sources, reduce dependence on the national grid, lower energy costs for participants, and actively contribute to decarbonization.

Who Can Participate in a Collective Self-Consumption Group?

End customers (individuals, small and medium-sized enterprises, territorial bodies or local authorities, including research and university entities, religious bodies, third-sector entities, and social security and welfare bodies) located in the same building or condominium can participate in a collective self-consumption group. This is the fundamental geographical constraint that distinguishes CSC from a Renewable Energy Community, which has a broader perimeter (primary substation).

Participants can be:

• Owners of apartments/real estate units within the condominium/building.
• Tenants or borrowers, with the agreement of the property owner.
• Small and Medium-sized Enterprises (SMEs) with their legal and operational headquarters in the same building/condominium.
• Public or private entities that have an office in the building.

Joining the group is voluntary and open to all who meet the geographical requirements. It is not necessary for all condominium residents or all occupants of the building to join. The group is usually managed through internal regulations that define how costs and benefits are shared, as well as decision-making procedures. It is crucial that the rights of end customers, particularly those of residential customers, are not prejudiced by participation in the group.

How Does Collective Self-Consumption Work Technically?

The technical operation of a collective self-consumption system is based on the virtual sharing of energy produced by one or more renewable plants installed within the same building or condominium. Let’s look at the key steps:

1. Energy Production: Photovoltaic systems (or other suitable renewable sources, although PV is the predominant technology for these configurations) produce electricity. These systems can be installed on common parts of the building (e.g., condominium roof) or on areas belonging to individual participants.
2. Individual Instantaneous Self-Consumption: The energy produced is primarily used to cover the instantaneous consumption of a single participant (if the system is directly connected to their utility) or of the building’s common utilities (e.g., stairwell lights, elevator).
3. Feeding Excess Energy into the Grid: Energy produced and not immediately self-consumed at the individual or building level is fed into the public electricity grid.
4. Withdrawal from the Grid: Simultaneously, all members of the collective self-consumption group continue to draw energy from the grid to meet their needs when the system is not producing (e.g., at night) or when production is insufficient.
5. Measurement and Virtual Sharing: This is where the concept of “virtual sharing” comes into play. The GSE (Energy Services Manager) receives measurement data of the energy fed into the grid by the production plant(s) and the energy withdrawn by each group member. The “shared” energy is equal, in each hour, to the minimum between the electricity fed into the grid by the production plants and the electricity withdrawn by the group of end customers.
6. Valorization and Incentivization of Shared Energy: The virtually shared energy benefits from valorization and incentive mechanisms. These include:
   • Valorization payment (or premium tariff): An economic incentive paid by the GSE for each kWh of shared energy. The amount of this incentive is defined by the CACER Decree and varies based on the plant’s size and, in some cases, the geographical area.
   • Reimbursement of undue tariff components: Since shared energy is considered “avoided” from the distribution grid, some components of the bill (such as part of the system charges and transmission and distribution fees) on the shared energy are reimbursed.
   • Possible sale of energy fed in and not shared: Energy fed into the grid but not self-consumed or shared within the group can be valorized through market mechanisms (e.g., dedicated withdrawal).

It is important to note that group members maintain their own meters and individual supply contracts. The “sharing” occurs at an accounting and incentive level, not through a separate private physical network (except for direct physical self-consumption). The group’s representative, usually a condominium administrator or a delegated person, manages relations with the GSE.

The Role of the GSE (Energy Services Manager)

The GSE plays a crucial role in the collective self-consumption system and, more generally, in widespread self-consumption configurations. Its main responsibilities include:

• Qualifying configurations: Verifying that collective self-consumer groups comply with regulatory requirements.
• Managing energy flows: Collecting and analyzing production and consumption data from the plants and group members.
• Calculating shared energy: Determining the amount of electricity virtually shared within the group.
• Disbursing incentives: Paying the provided incentives (premium tariff) and managing the reimbursement of tariff components.
• Providing support and information: Publishing guides, technical documents, and providing assistance to operators and citizens.

To access the benefits, the representative of the collective self-consumption group must submit a specific application to the GSE through its dedicated portal, once the production plant is operational and the configuration has been established.

Benefits of Collective Self-Consumption for Citizens and Businesses

Participating in a collective self-consumption group offers a series of significant benefits, both economic, environmental, and social.

Economic Benefits:

• Reduced bill costs: Thanks to the self-consumption of locally produced energy and the valorization of shared energy (through incentives and reimbursement of charges), participants can see a significant decrease in their energy expenses.
• Government incentives: The premium tariff paid by the GSE for shared energy represents additional income that helps repay the investment in the plant and generate an economic return.
• Greater stability of energy prices: Producing and consuming energy locally reduces exposure to the volatility of energy prices on wholesale markets.
• Increased property value: The presence of a photovoltaic system and participation in a collective self-consumption configuration can increase the market value of properties within the building.

Environmental Benefits:

• Use of renewable sources: Collective self-consumption is based on the production of energy from clean sources, directly contributing to the reduction of greenhouse gas emissions and the use of fossil fuels.
• Reduced grid losses: Consuming energy close to the point of production minimizes the energy losses that occur during transport on the national electricity grid.
• Promotion of distributed generation: It fosters a more decentralized and resilient energy model, less dependent on large centralized production plants.

Social Benefits:

• Active citizen involvement: Participants become protagonists of the energy transition (prosumers), increasing awareness and responsibility towards energy consumption.
• Community building and collaboration: It stimulates collaboration among group members (e.g., condominium residents) to achieve a common goal.
• Combating energy poverty: It can be a solution to reduce energy costs for low-income families in the building, if structured appropriately. For more on managing your finances in an inflationary context, you can read our article on how to fight inflation and save money.
• Local development and employment: The construction and maintenance of the plants can generate local job opportunities.

Considering the Italian context, where many citizens live in condominiums, collective self-consumption presents itself as a particularly suitable solution to extend the benefits of photovoltaic production to a wider audience of users who, individually, might not have the space or resources to install their own system.

Collective Self-Consumption (CSC) vs. Renewable Energy Communities (REC): Key Similarities and Differences

Collective Self-Consumption (CSC) and Renewable Energy Communities (RECs) are two models for sharing renewable energy promoted by European and Italian legislation, but they have substantial differences, despite sharing similar goals. Understanding these distinctions is crucial for choosing the most suitable configuration for your needs.

Main Similarities:

• Objective: Both aim to promote the production and consumption of energy from renewable sources at a local level, reduce energy costs, increase efficiency, and actively involve citizens and businesses in the energy transition.
• Sharing principle: They are based on sharing the energy produced by renewable plants among a group of members.
• Access to incentives: Both configurations can access incentive and valorization mechanisms for shared energy, such as those provided by the CACER Decree. The GSE (Energy Services Manager) is the reference body for managing these incentives.
• Nature of participants: Individuals, SMEs, territorial bodies, local authorities, etc., can participate.
• Voluntary basis: Membership is always voluntary and open.

Key Differences:

Characteristic	Collective Self-Consumption (CSC)	Renewable Energy Community (REC)
Geographical Perimeter	Members in the same building or condominium.	Members whose utilities (PODs) are connected to the same primary substation of the distribution grid.
Legal Entity	It is not mandatory to establish a separate legal entity. It can be managed through a mandate to the administrator or a condominium regulation.	It is mandatory to establish a separate legal entity (e.g., association, cooperative, consortium, foundation, etc.) whose primary purpose is not financial profit.
Plant Ownership	The plants can be owned by the members or a third party, but always within the building/condominium and available to the group.	The plants can be owned by the REC, its members, or third parties, as long as they are available to the REC. The plants can be located in multiple points within the perimeter of the primary substation.
Plant Capacity	The legislation does not set specific power limits different from the general ones for accessing incentives (usually up to 1 MW for incentivized RECs and CSCs).	The maximum capacity of individual plants that can access incentives for RECs is typically 1 MW. An REC can consist of multiple plants.
Primary Purpose	To provide environmental, economic, or social benefits to its members or to the local areas where it operates, rather than financial profits.	To provide environmental, economic, or social community benefits for its shareholders or members or for the local areas where it operates, rather than financial profits. It has a broader “community” vocation.
Managerial Complexity	Generally simpler to establish and manage, especially in condominium contexts.	Potentially more complex to establish (requires a legal entity) and manage, given the potential greater heterogeneity of members and the size of the perimeter.

Which to Choose?

The choice between CSC and REC depends on various factors:

• Specific context: If it involves a single building or condominium, CSC is often the most direct and simple solution.
• Number and type of participants: For larger and more diverse groups, distributed over a wider area (but still under the same primary substation), an REC is more suitable.
• Willingness to create a legal entity: If you do not want to create a new legal entity, CSC is preferable.
• Group objectives: If the primary goal is to share energy within a single building, CSC is ideal. If you want to create an energy project with a broader impact on the local community, involving different actors and promoting widespread social benefits, an REC might be more appropriate.

It is also possible that a building that starts as a CSC may, in the future, decide to join a larger REC, if conditions permit. The article Renewable Energy Communities (REC): A Complete Guide to the Future of Shared Energy offers a detailed analysis specific to RECs.

Practical Steps to Create a Collective Self-Consumption (CSC) Group

Creating a collective self-consumption group, although more streamlined than an REC, still requires following some fundamental steps. Here is an operational guide updated to May 16, 2025:

1. Feasibility and Interest Check:
   • Preliminary analysis: Assess the technical feasibility of installing a renewable plant (e.g., roof suitability, available space, absence of constraints).
   • Involving residents/users: Present the idea to the other occupants of the building, explain the benefits, and gather memberships. It is crucial to reach a sufficient consensus.
   • Defining objectives: Clarify the group’s goals (savings, sustainability, etc.).
2. Plant Design and Installation:
   • Choosing a professional/installer: Rely on qualified technicians for the design and installation of the photovoltaic system (or other type of renewable plant). It is advisable to request multiple quotes.
   • Sizing the plant: The plant should be sized based on the consumption of the building and participants, also considering the energy to be shared.
   • Obtaining permits: Depending on the type and size of the plant, municipal permits or other procedures (e.g., SCIA, Single Authorization) may be necessary. For plants on buildings, they often fall under free construction or simplified procedures.
   • Installation and testing: Physical construction of the plant and subsequent testing.
3. Establishing the Collective Self-Consumption Group:
   • Identifying the representative: Identify a person who will act as the group’s representative to the GSE and other entities. This is usually the condominium administrator or a delegate of the participants.
   • Deed or private agreement: Draft a document (e.g., minutes of a condominium meeting, authenticated or registered private agreement) that attests to the participants’ will to form a CSC group, identifies the members, the production plant(s), and the representative. This document is necessary for the application to the GSE.
   • Internal regulations (recommended): Define the methods for sharing installation and maintenance costs, the distribution of benefits from shared energy (incentives, savings), and the rules for management and withdrawal from the group. For a guide on signing contracts, it may be useful to consult how to sign a contract: the definitive guide to avoid mistakes.
4. Grid Connection and Compliance with the Distributor:
   • Request the connection of the production plant to the local distributor’s electricity grid (e.g., E-Distribuzione).
5. Request for Access to the Widespread Self-Consumption Service from the GSE:
   • Once the plant is connected and active, the group’s representative must submit the request for access to the valorization and incentive service for shared electricity to the GSE, through the dedicated portal. It will be necessary to attach the required documentation, including that which attests to the group’s formation.
6. Management and Monitoring:
   • Monitoring consumption and production: It is useful to have monitoring systems to keep track of the plant’s performance and energy flows.
   • Distribution of benefits: Apply the rules defined in the internal regulations to distribute the economic advantages among the members.
   • Plant maintenance: Ensure proper maintenance to guarantee the efficiency and lifespan of the plant.

It is advisable to be assisted by expert consultants or specialized companies throughout the process, especially for the design, authorization, and management of procedures with the GSE.

Incentives and Tax Aspects for Collective Self-Consumption in 2025

Incentives play a key role in promoting the spread of collective self-consumption. As of May 2025, the incentive framework is mainly defined by the CACER Decree (Configurations for the Sharing of Renewable Energy), which came into force in January 2024, and by the implementing resolutions of ARERA.

Main Forms of Incentivization:

1. Premium Tariff (or Incentive Payment) on Shared Energy:
   • This is an economic contribution recognized by the GSE for each kWh of renewable electricity produced by the configuration’s plants and virtually shared among the group members.
   • The amount of the premium tariff varies based on the plant size and, for photovoltaic plants, can be influenced by the hourly zonal energy price (for plants above a certain power threshold, part of the tariff may be variable).
   • The CACER Decree established differentiated tariffs:
     • For plants up to 200 kW: a higher fixed tariff.
     • For plants from 200 kW to 600 kW: a slightly lower fixed tariff.
     • For plants over 600 kW (up to 1 MW, the limit for CSC/REC): a tariff that may have a variable component.
   • Bonuses are provided for certain geographical locations (typically for the regions of Central and Northern Italy, to compensate for lower solar irradiation compared to the South).
   • This incentive has a duration of 20 years.
2. ARERA Valorization Payment (Reimbursement of Charges):
   • In addition to the GSE’s premium tariff, shared energy benefits from the reimbursement of some tariff components that would otherwise have been paid on the bill for energy drawn from the grid. This mainly concerns a part of the general system charges and transmission and distribution tariffs.
   • This benefit is managed by ARERA and recognized directly on the bill or through other forms of compensation.
3. Valorization of Energy Fed in and Not Shared:
   • Energy produced by the plant and fed into the grid, but not instantaneously self-consumed or shared within the group, can still be valorized through the Ritiro Dedicato (RID) mechanism at market prices, or sold on the open market.

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Tax Aspects (to be verified with a tax consultant for the specific situation):

• Tax Deductions for Installation: For photovoltaic systems serving residential properties (and therefore often relevant for condominium CSCs), it is usually possible to take advantage of tax deductions for building renovations (Home Bonus) or, in specific contexts and periods, other benefits such as the Superbonus (if still applicable and with the requirements of the moment). It is essential to check the tax legislation in force at the time of investment.
• VAT Treatment: The installation of photovoltaic systems can benefit from reduced VAT rates.
• Taxation of Incentives: The incentives received (premium tariff) and the proceeds from the sale of energy may have tax implications depending on the nature of the recipient (individual, condominium, business).
  • For individuals not acting in the course of a business activity, incentives and proceeds may not constitute taxable income if the plant serves the home and does not constitute a commercial activity.
  • For condominiums, tax management can be complex. Often the condominium can act as a “transparent entity” and the benefits are attributed to the individual condominium residents, but a correct accounting and tax setup is crucial, possibly with the support of an accountant.
  • For businesses, proceeds and incentives contribute to forming business income according to ordinary tax rules.

Given the complexity and continuous evolution of tax legislation, it is absolutely essential to consult an expert tax advisor or accountant in energy matters for a precise assessment of your situation and to ensure the correct application of the rules and the optimization of benefits. For a general overview of taxes, our complete guide to VAT: what it is, how it works, and deductions may be useful.

Overcoming Challenges: Critical Aspects and Solutions in CSC Implementation

Despite the numerous advantages, implementing a collective self-consumption group can present some challenges. Knowing them in advance allows you to address them proactively.

Common Challenges:

1. Agreement Among Participants (especially in a Condominium):
   • Problem: Reaching a consensus among all potential participants (e.g., condominium residents) regarding the initial investment, the allocation of costs and benefits, and the management of the system can be complex due to divergent interests or lack of information.
   • Solutions:
     • Clear and transparent communication: Organize informational meetings, present personalized savings simulations.
     • Well-defined regulations: Establish clear and shared rules for management, the division of benefits (e.g., based on thousandths, consumption, or equal shares), and withdrawal procedures.
     • Involvement of a proactive condominium administrator or an external facilitator.
2. Bureaucratic and Regulatory Complexity:
   • Problem: Despite simplifications, the procedures for forming the group, connecting the plant, and accessing GSE incentives can seem complex for non-experts.
   • Solutions:
     • Rely on expert professionals: Qualified installers, energy consultants, or companies specializing in the creation of CSCs and RECs can guide you through the bureaucratic process. The GSE itself provides guides and support.
     • Use templates and best practices: Refer to successful experiences and tested regulation models.
3. Initial Investment:
   • Problem: The cost of purchasing and installing the renewable plant represents an initial investment that not all participants may be able or willing to bear.
   • Solutions:
     • Third-party financing (TPF): A third party (ESCO, utility, investor) can build and finance the plant, then sell the energy or services to the group members.
     • Access to subsidized financing or loans: Explore options for home renovation loans that may include energy efficiency improvements.
     • Investment allocation: Divide the cost among participants based on fair criteria.
4. Technical Management and Maintenance:
   • Problem: Ensuring the proper functioning and maintenance of the plant over time requires specific skills.
   • Solutions:
     • Maintenance contracts (O&M): Sign contracts with specialized companies for routine and extraordinary maintenance.
     • Monitoring systems: Install systems that allow you to monitor the plant’s performance and promptly detect any anomalies.
5. Fair Distribution of Benefits:
   • Problem: Defining a method for dividing incentives and savings that is perceived as fair by all participants can be tricky, given different consumption profiles.
   • Solutions:
     • Analysis of individual consumption: Base the distribution on real consumption data or on defined participation shares.
     • Flexibility: Provide for adjustment mechanisms in the regulations over time.

Careful planning and effective communication with expert support are key to successfully implementing a collective self-consumption project and maximizing its benefits for all participants. For more on managing consumption, the article on how to save on your natural gas bill may be useful.

The Future of Shared Energy: Prospects and Developments

Collective self-consumption and energy communities represent one of the most promising frontiers of the energy transition. Looking to the future, and considering the context as of May 16, 2025, we can expect further developments and an increasingly widespread adoption of these models.

Emerging Trends:

• Integration with Electric Mobility: Charging infrastructures for electric vehicles within condominiums or buildings hosting CSCs can be powered directly by locally produced renewable energy, creating advantageous synergies and further reducing the costs and environmental impact of mobility.
• Storage Systems: The integration of battery storage into systems serving CSCs will become increasingly common. This will allow excess energy produced during the day to be stored for use when the plant is not producing (e.g., evening/night), increasing the share of self-consumption and independence from the grid. Incentives often also favor the installation of storage systems.
• Digitalization and Smart Platforms: The use of digital platforms and smart meters will facilitate optimized management of energy flows, the distribution of benefits, and interaction among group members. Artificial intelligence algorithms could be used to predict production and consumption and optimize sharing.
• New Business Models and the Role of ESCOs: Innovative business models will further develop, with Energy Service Companies (ESCOs) and other operators offering “turnkey” solutions for the creation and management of CSCs, including financing, installation, maintenance, and administrative management.
• Greater Awareness and Participation: With growing awareness of sustainability and energy saving issues, an increasing number of citizens and businesses will be interested in actively participating in these forms of energy sharing.
• Regulatory Evolution and Simplifications: It is likely that the regulatory framework will continue to evolve to further simplify procedures and remove any obstacles, making access to collective self-consumption even easier. New tools may emerge to facilitate the comparison of electricity and gas tariffs for the residual energy drawn from the grid.
• Focus on Social Inclusion: Greater attention will be paid to ensuring that the benefits of collective self-consumption are also accessible to the most vulnerable segments of the population, helping to combat energy poverty. This is a theme related to social bonuses for electricity, gas, and water.

Collective self-consumption is not just a technical solution for producing clean energy, but a true paradigm shift that promotes a more democratic, decentralized, and sustainable energy model. Its spread will contribute significantly to achieving decarbonization goals and creating more resilient and aware communities. The future of energy is increasingly in the hands of citizens and local communities.

Conclusions

The advent and progressive spread of collective self-consumption (CSC) represent one of the most significant and promising innovations in the current energy landscape, especially in the Italian context characterized by a high density of condominium buildings. As we have explored in this guide, updated to the dynamics of May 16, 2025, the benefits of adopting this model are multiple and tangible, ranging from a concrete reduction in bill costs for individual participants, to an active contribution to environmental sustainability through the use of renewable sources and the reduction of CO2 emissions.

The ability for groups of citizens, families, and small businesses to become prosumers—that is, conscious producers and consumers of energy—marks a crucial step towards a more democratic, decentralized, and resilient energy system. Sharing locally produced energy not only optimizes the use of resources but also strengthens the sense of community and collaboration within buildings, transforming a daily necessity like energy supply into an opportunity for cooperation and mutual advantage.

The regulatory and incentive framework, despite its inevitable initial complexities, has been progressively structured to support these initiatives. The CACER Decree and the resolutions of ARERA, together with the central role of the GSE, now provide a solid foundation for the effective implementation and management of collective self-consumption groups. It is true that the process for establishment and access to incentives requires attention and, often, the support of professionals, but the economic returns and the environmental and social advantages are such as to justify the effort.

Future prospects, with the integration of storage systems, synergy with electric mobility, and the development of digital platforms for even smarter management, only increase the attractiveness of this model. Collective self-consumption, along with Renewable Energy Communities, is therefore configured not as a passing trend, but as a cornerstone of the ecological transition, capable of generating widespread value and making citizens active protagonists of change. It is an invitation to look at our roofs and our buildings no longer just as living or working spaces, but as potential power plants of clean, shared energy, engines of a more sustainable future for all.

Frequently Asked Questions

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