The Local Energy Revolution: How Energy Sharing Is Changing the Energy World

Trend Paper – May 22, 2024

Munich/Pforzheim, April 2024 – Energy sharing is a trending topic worldwide as it offers great opportunities for the decentralized energy transition. It opens up new ways for private individuals to benefit from the expansion of renewable energies without too much complication. Energy sharing allows citizens to co-finance local solar installations, to use the solar power themselves, and to sell surplus electricity. This innovative concept incentivizes the installation of PV modules and the local consumption of renewable energy.

Citizen energy communities are already participating in wind and solar parks, but they cannot use the generated electricity themselves. Uncomplicated models for supplying local consumers with electricity from PV systems are often missing. The EU’s ongoing electricity market reform, which was adopted by the European Parliament in April 2024, shifts the focus to energy sharing to promote a sustainable energy supply.

Energy revolution for all: The right to energy sharing is coming

Energy sharing fills the gap between self-consumption and citizen energy communities, and further simplifies on-site supply. It will also make it easier for private individuals to become an active part of the energy transition even if they have limited financial resources. The EU reform facilitates the participation in the generation and consumption of electricity by introducing the role of the “active consumer”. Consumers can sign several electricity supply contracts, for instance with another active consumer and a company covering the remaining electricity demand. The “organizer” – another new role – handles market communication for active consumers, coordinates agreements between participants, suppliers and grid operators as well as billing and contract management.

Once the new concept has been implemented, Sandra from Munich, who is at the office during the day, will be able to sell the PV power produced at midday to her brother who lives in Hamburg. And if she goes on a skiing vacation in winter, she can pass on any unused electricity to her daughter Ida, who can power her heat pump with it. Things can easily get complicated, so Sandra can commission an “organizer” with coordinating and billing. Energy sharing means that Sandra is not subject to supplier obligations, but she still has to meet consumer protection rules. This is where new players come into play.

What other requirements have to be met for energy sharing to work?

The technologies that enable energy sharing already exist, but are not yet available everywhere. These technologies include smart meters and functioning, up-to-date data communication between energy sharing players, other energy market participants and grid operators. Compared with other countries, Germany is lagging behind when it comes to the digitalization of the energy transition.

Concepts for virtual balancing groups that allocate and bill electricity in complex energy sharing groups already exist. Energy sharing can provide an operating system for the energy transition that integrates existing approaches for on-site supply. Decentralized generation requires generation and consumption to be coordinated more effectively. Energy sharing can be an important lever here.

Some pioneers, such as Portugal, Italy and Austria are already showing what the decentralized energy transition can look like. Their approaches are very different from each other: They range from “on-site supply” for a local area to nationwide use. They all have one thing in common: Rather than just supplying a building from a joint installation, they trigger investments in renewables.

German Association of Energy Market Innovators (bne): Keep it simple – implementing a local energy transition that is simple, unbureaucratic and scalable

Robert Busch, CEO of bne: “Excessive complexity and bureaucracy are death traps for innovation in Germany.” This is why, together with its member companies, the bne has developed a simple concept for energy sharing, which is limited to a neighborhood and the low-voltage and medium-voltage grid levels. Households, companies and public institutions can play an active role in sharing electricity from renewable sources at a local level via the public grid. This could be a supermarket with a large roof-mounted photovoltaic system that supplies solar power to neighboring EV charging stations, or it could be residents of a district who get together to power a large heat pump that supplies heat using photovoltaic electricity from a decentralized installation. The concept excludes companies whose primary purpose is to supply energy.

The participants in energy sharing do not necessarily need to have a legal form. They can simply enter into private agreements, which releases them from certain supplier obligations. As they use the electricity themselves rather than feeding it to the energy market, there is no need for complicated billing for the EEG feed-in tariff. Robert Busch emphasizes: “Billing needs to be as simple as possible for local energy communities. The model allows for grid operators and energy suppliers to reliably balance and procure power.” An “energy sharing coordinator” takes over market communication and energy billing. This means that energy sharing is not a pilot project, but can be implemented anywhere and is accessible to everyone.

EM-Power Europe: Spotlight on energy sharing

Energy sharing is one of the hottest topics at the moment. That is why EM-Power Europe, the international exhibition for energy management and integrated energy solutions, is giving the topic plenty of airtime. Visitors will find information on suitable solutions, technologies and business models both at The smarter E Forum and in the exhibition halls. In addition, the Energy Communities and Smart Energy Sharing session at the EM-Power Europe Conference on June 19 will offer in-depth insights into energy communities, citizen participation schemes and local decarbonization projects that contribute to grid safety and customer protection. EM-Power Europe will take place from June 19–21, 2024 in Munich as part of The smarter E Europe, Europe’s largest alliance of exhibitions for the energy industry, with the parallel events Intersolar Europe, ees Europe and Power2Drive Europe.

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