Renewable Energy Communities (RECs): A Guide to Shared Energy

Energy is a fundamental component of our daily lives, and the transition to more sustainable sources is one of the crucial challenges of our time. In this scenario, Renewable Energy Communities (RECs) are emerging as an innovative and participatory model for the production, consumption, and sharing of clean energy. But what are they exactly? How do they work, and what benefits do they offer? If you’re asking yourself these questions, you’re in the right place. I’ve decided to delve into this topic to offer you a complete guide that will help you understand the potential of RECs and how they can represent a true grassroots revolution in the energy sector.

The idea of citizens, small and medium-sized enterprises, territorial bodies, and local authorities joining forces to produce, consume, and locally manage energy from renewable sources is not only fascinating but is already a growing reality. Get ready to discover how you too can become a protagonist in this change, actively contributing to environmental sustainability and benefiting from economic and social advantages.

What Are Renewable Energy Communities (RECs)?

Renewable Energy Communities, or RECs, represent a new approach to energy management, based on sharing and local production from renewable sources. Imagine a group of people, companies, or public entities deciding to join forces to produce clean energy, such as solar or wind, and share it among the members of the community itself.

In more technical terms, an REC is an autonomous legal entity based on the open and voluntary participation of its members. These members can be individuals, small and medium-sized enterprises (SMEs), territorial bodies, or local authorities, including municipalities. The primary purpose of an REC is not to generate financial profits, but rather to provide environmental, economic, or social community-level benefits to its members or the local areas where it operates.

The beauty of RECs lies precisely in this collaborative spirit: it’s not just about installing a photovoltaic system on your own roof (although that can be a starting point), but about creating a true local and participatory energy system. The energy produced by the community’s plants is first consumed by the members themselves (collective self-consumption), and any surplus can be fed into the national grid, generating further benefits.

The Regulatory Framework in Italy

In Italy, Renewable Energy Communities received a decisive boost with the transposition of European directives, particularly Directive (EU) 2018/2001 (RED II) on the promotion of the use of energy from renewable sources. This directive introduced the concept of a ‘renewable energy community’ and established a regulatory framework for their development.

Subsequently, Law Decree 162/2019 (Milleproroghe) introduced an initial experimental phase, and Legislative Decree 199/2021, which implements the RED II directive, defined the regulatory framework for RECs and collective self-consumption more comprehensively. Added to this are the resolutions of the Regulatory Authority for Energy, Networks and Environment (ARERA) and the implementing decrees of the Ministry of Environment and Energy Security (MASE) that define the technical aspects and incentives.

It’s crucial to stay updated on these regulatory aspects, as they are constantly evolving to best support the growth of these initiatives. Understanding the legal framework is the first step for anyone interested in forming or joining an REC.

How Does a Renewable Energy Community Work?

Understanding the practical operation of an REC is essential to fully appreciate its advantages. The mechanism is based on a few fundamental pillars: the production of energy from renewable sources, self-consumption (instantaneous and deferred), and the sharing of energy within the community.

The heart of an REC is its renewable energy production plants. These can be of various types, although the most common in a community context are photovoltaic systems, thanks to their modularity and ease of installation on building roofs or land. However, small-scale wind, biomass, or hydroelectric plants can also be included, depending on the resources available in the territory.

Production and Collective Self-Consumption

Once the plants are active, the energy produced is primarily intended for instantaneous self-consumption by the REC members. This means that the energy is consumed at the very moment it is produced, reducing the amount drawn from the national grid. It is the most efficient and economical way to use renewable energy.

Energy that is not consumed instantaneously can be:

• Stored: If the REC is equipped with storage systems (batteries), the excess energy produced can be saved and used at a later time, for example, during the evening hours or when production is lower than demand. This significantly increases the community’s degree of self-sufficiency. You can learn more about saving energy at home with practical tips, some of which can be amplified by participating in an REC.
• Virtually shared: Thanks to a ‘virtual sharing’ mechanism, the energy produced and fed into the grid by a producing member can be ideally attributed to the consumption of another community member, even if they are not physically connected to the same plant. The GSE (Energy Services Manager) plays a key role in this, tracking energy flows and recognizing incentives.
• Fed into the public grid: Excess energy that is not self-consumed or shared is fed into the national grid. For this energy, the REC can receive remuneration and specific incentives.

The Role of Members: Producers and Consumers

Within an REC, members can take on different roles:

• Producers (Prosumers): These are the members who make surfaces (roofs, land) available for the installation of production plants or who already own their own plants and decide to contribute them to the community.
• Consumers: These are the members who benefit from the energy produced by the community, purchasing it at favorable conditions or simply sharing in the economic benefits derived from the sale of excess energy and incentives.

It is important to emphasize that you do not need to own a production plant to be part of an REC. Even those who do not have the ability to install photovoltaic panels, for example, because they live in an apartment building with an unsuitable roof or are renting, can join as a simple consumer and benefit from the community’s advantages. This inclusivity is one of the strengths of RECs. Understanding your own bills is a first step, and a complete guide on how to read your electricity bill can be very useful in this context.

Production plants must be connected to the electricity grid through a single point of delivery (POD) for plants that came into operation before a certain date, or be located under the same primary substation for newly built plants, according to the latest regulations. This geographical proximity is essential to maximize the effectiveness of energy sharing.

The Advantages of Joining or Creating an REC

Participating in a Renewable Energy Community offers a series of significant advantages, ranging from the economic to the environmental and social spheres. These benefits are the driving force behind the spread of this model in Italy and Europe.

Economic Advantages

1. Savings on the Electricity Bill: Self-consumption of locally produced energy allows for a significant reduction in the amount of energy drawn from the national grid, resulting in a cut in bill costs. The less energy purchased from the traditional supplier, the lower the expense.
2. Government Incentives: RECs benefit from specific government incentives for shared energy. The GSE provides an incentive tariff for each kWh of energy produced from renewable sources and shared within the community. This incentive is in addition to the remuneration for energy fed into the grid and not self-consumed.
3. Revenue from the Sale of Energy: Excess energy produced and fed into the public grid is remunerated, generating an economic income for the REC, which can be redistributed among members or reinvested in new projects.
4. Reduction of Energy Poverty: RECs can help mitigate energy poverty, which is the difficulty some households face in affording an adequate energy supply. By providing energy at lower and more stable costs, they help ensure access to energy for more vulnerable segments of the population.
5. Increase in Property Value: For those who make their property available for the installation of plants, participating in an REC and having a renewable energy production system can represent an increase in the property’s value. A residential photovoltaic system, considering installation, costs, and incentives, becomes even more advantageous in a community context.

Environmental Benefits

1. Reduction of CO2 Emissions: The use of renewable sources for energy production directly contributes to the reduction of greenhouse gas emissions, helping to combat climate change. Every kWh produced from sun, wind, or other clean sources is a kWh not produced from fossil fuels.
2. Promotion of the Energy Transition: RECs are a grassroots driver for the transition to a decarbonized and decentralized energy system, in line with European and national sustainability goals.
3. Less Impact on the Electrical Grid: Distributed generation and local self-consumption reduce transmission losses on the electrical grid and can contribute to greater grid stability, decreasing the need for large energy transport infrastructures.
4. Conscious Energy Use: Being part of an energy community often raises members’ awareness towards a more conscious and responsible use of energy, promoting virtuous and saving behaviors.

Social Advantages

1. Social Cohesion and Active Participation: RECs foster the creation of social bonds within the community, promoting collaboration and active citizen participation in projects of collective value.
2. Local Development and Employment: The construction and management of plants can generate new local job opportunities, especially for specialized technicians and companies in the renewables sector.
3. Education and Awareness: Energy communities play an important educational role, increasing awareness of energy, sustainability, and technological innovation issues.
4. Local Energy Autonomy: They contribute to greater energy autonomy for territories, reducing dependence on external suppliers and volatile energy markets.

These combined advantages make RECs an extremely interesting and promising model for the future of energy. The ability to compare electricity and gas tariffs, choosing between fixed or variable prices can be positively influenced by participation in an REC, which offers a third way: shared energy.

How to Form or Join a Renewable Energy Community

If the advantages have convinced you, you might be wondering how to take action. There are mainly two paths: forming a new REC or joining an existing one.

Steps to Form an REC

Forming a Renewable Energy Community is a process that requires commitment and good planning, but it is absolutely achievable. Here are the key steps:

1. Form a Promoting Group: The first step is to bring together a group of people, companies, or entities interested in forming the REC. This initial core will be the engine of the project.
2. Feasibility Analysis: It is essential to conduct a preliminary analysis to assess:
   • The potential energy demand of the members.
   • The renewable resources available in the area (solar radiation, windiness, etc.).
   • The suitable surfaces for plant installation (roofs, land).
   • A preliminary estimate of the investment costs and potential benefits.
3. Define the Legal Form: The REC must be an autonomous legal entity. The most common forms are unincorporated associations, incorporated associations, energy cooperatives, participation foundations, or even consortium companies. The choice depends on the specific objectives, the number of members, and the management complexity. Seeking legal and tax advice is advisable.
4. Draft the Bylaws and the Articles of Association: These documents will define the REC’s operating rules, the rights and duties of members, the procedures for joining and withdrawing, governance, and the objectives (which must be primarily environmental, economic, or social for the community).
5. Identify the Plants and Participants: Define which plants will be part of the REC (new or existing) and gather memberships from members (producers and consumers), ensuring they are under the same primary substation (for new plants).
6. Plant Design and Installation: If new plants are being built, proceed with the detailed design, obtaining the necessary permits, and installation.
7. Request for Access to Incentives: Once the REC is formed and the plants are built (or identified), an application is submitted to the GSE to be recognized for the incentives provided for shared energy.
8. REC Management: Once operational, the REC requires ongoing management, including monitoring energy flows, distributing benefits, maintaining the plants, and communicating with members.

How to Join an Existing REC

If you don’t have the intention or resources to start a new REC, you can look for an already active community in your area and ask to join. The steps are generally simpler:

1. Search for Local RECs: You can inquire at your municipality, trade associations, energy sector operators, or through online searches to identify active RECs in your area.
2. Check Membership Requirements: Each REC has its own bylaws that define the criteria for admitting new members (e.g., residence in a specific area, type of utility user).
3. Submit a Membership Application: Usually, you fill out a membership form and provide your electricity utility data (POD).
4. Contribute and Benefit: Once admitted, you become part of the community, contributing according to the established methods (for example, by making your roof available or simply as a consumer) and benefiting from the shared energy and other advantages.

There are also specialized platforms and consultants that can facilitate both the formation of new RECs and the connection between interested citizens and existing communities.

The Future of RECs: Challenges and Opportunities

Renewable Energy Communities represent one of the most promising innovations in the energy landscape, but their full development also involves challenges to be faced and opportunities to be seized.

Current Challenges

• Bureaucratic and Regulatory Complexity: Despite progress, the bureaucratic process for forming and managing an REC can still be complex, especially for non-experts. Continuous simplification is desirable.
• Access to Funding: The initial investment for the plants can be significant. Although there are incentives and forms of subsidized financing (such as those provided by Italy’s PNRR), further facilitating access to credit is crucial.
• Spreading Awareness: Many citizens and small businesses are not yet aware of the opportunities offered by RECs. Greater information and awareness campaigns are necessary.
• Technical and Managerial Skills: The effective management of an REC requires specific skills, both technical for plant maintenance and administrative and legal. It is important to invest in training and support.
• Grid Integration: As the number of RECs and distributed generation plants increases, it will be necessary to adapt and modernize the electrical grids to manage more complex and bidirectional energy flows. Technologies like smart grids and smart lighting for energy savings play an important role in this.

Future Opportunities

• Technological Innovation: The development of more efficient and economical storage technologies, intelligent energy management systems (EMS), and digital platforms for energy sharing will open new frontiers for RECs.
• Aggregation and Scalable Models: The creation of REC networks or the adoption of replicable and scalable models can accelerate their large-scale dissemination.
• Involvement of Public Administrations: An active role by municipalities and local authorities in promoting, facilitating, and participating in RECs can be decisive for their success.
• New Energy Services: RECs could evolve to offer their members additional services, such as electric vehicle charging, energy efficiency services, or participation in broader energy markets.
• Contribution to Energy Stability and Security: A more decentralized energy system based on local renewable sources increases the country’s system resilience and reduces dependence on fossil fuel imports.

RECs are not just a passing trend, but a fundamental piece for building a more sustainable, equitable, and participatory energy future. The collective commitment of citizens, businesses, and institutions will be the key to transforming this vision into a widespread reality.

Conclusions

Renewable Energy Communities represent, in my opinion, one of the most exciting and concrete opportunities to redesign our relationship with energy. We are facing a paradigm shift: from passive consumers to active protagonists (prosumers) of the energy transition. The idea that groups of neighbors, small local businesses, or entire municipalities can unite to produce their own clean energy, share it, and derive collective benefits is incredibly powerful.

I have tried to show you how this model is not just a theory, but an already operational and growing reality, supported by a regulatory framework that, although perfectible, is laying the groundwork for their widespread dissemination. The economic advantages, such as reduced bill costs and access to incentives, are certainly a strong driver. But we must not forget the enormous environmental value of reducing emissions and promoting renewables, nor the social benefits in terms of cohesion, local development, and the fight against energy poverty.

Of course, challenges are not lacking: bureaucratic complexity, the need for initial investments, and the spread of a shared energy culture require commitment and collaboration at all levels. However, the opportunities that are opening up are immense. I’m thinking of integration with smart technologies, the creation of new energy services, and the fundamental contribution that RECs can make to the security and resilience of our national energy system.

Personally, I believe that the success of Renewable Energy Communities will largely depend on our ability to network, to share knowledge and experiences, and to overcome an individualistic vision to embrace a more collaborative and community-oriented approach. Every single REC, no matter how small, is a seed for a more democratic and sustainable energy future. The invitation I extend to you is to get informed, to explore the possibilities in your area, and, why not, to become the promoter of a new initiative. Change starts with us, too.

Frequently Asked Questions

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