Pope Francis called them “new expressions of integral citizenship and democracy,” and experts agree on their social, environmental, and economic value. Yet, from integration into the power system to market reliability, energy communities still face significant challenges. “Let’s take urgent action, or we will miss out on their potential,” warn operators.

“There are too many fossil and non-renewable sources. There’s too much energy dirtied by injustice, wars, unjust labour relations and the concentration of enormous profits in a few hands. One cannot be a sovereign citizen if one remains an energy subject. Production and consumption must become increasingly fair and inclusive.” These are not the words of Greta Thunberg, nor those of a climate activist. This speech was delivered by Pope Francis to members of the Italian electricity transmission company Terna at the end of August. Energy communities are “new expressions of integral citizenship and democracy,” he added, and for all these reasons, they deserve “to be supported and encouraged.” As of early 2024, in the European Union there were over 9,000 energy communities, yet a January EU report also pointed out their “specific challenges in trying to enter and participate in the market with larger commercial actors.”

In the very same weeks, a joint study by the ETIP Smart Networks for Energy Transition (SNET) and the International Smart Grid Action Network (ISGAN) recognised energy communities as “essential players in the future customer-driven multi-energy ecosystem” and identified “four crucial enablers” for their deployment: social engagement, legislation and regulation, adequate market structure and technical solutions. Professor in Power Systems and Smart Grids at the Technical University of Vienna, Albana Ilo coordinated the report. “Increasing distributed energy resources alone won’t suffice,” she says. “The power grid is the largest machine ever created, and as there are strong interdependencies within the power system, to keep it running and maintain supply quality, we must solve several problems simultaneously.”

Among these problems, the report identifies a “lengthy and staggered process” of development and implementation of energy communities, unfolding in four phases. While the first ones are characterised by energy sharing and other basic operations within the energy communities themselves, it’s only with their integration into the power system that they will provide benefits in terms of flexibility to both the grid and the market. Helping to make this process smoother is one of the missions of the Italian RenPower Group. Focusing on the design, construction and operation of renewable energy production plants, the company also collaborates closely with the Università Politecnica delle Marche, one of the partners of the European project eNeuron, in optimising the design and operation of local energy communities.

“We are primarily energy analysts, specialised in the design of energy communities and renewable plants,” explains its CEO Diego Margione. “We provide administrative support during the setup phase, offering free models of articles of incorporation and regulations, but we also handle the design and implementation of energy plants for the communities we help establish.” One of the main obstacles to accomplishing this mission is the significant geographical disparity in “accessing the opportunity to create an energy community,” he says. “Along the Italian coasts, for example, there is still plenty of grid capacity, while in many rural and sparsely populated areas, where energy communities would be especially useful, grid access is practically impossible.” Suppliers claim the work is too complex or that primary substations need to be expanded, explains Margione, but essentially, “the local grids are not equipped to handle all the connection requests from renewable sources.”

Besides technical problems, evidence suggests that a comprehensive and appropriate architecture is crucial to integrating energy communities into the power system. While the international report “Energy communities’ impact on grids” finds that their current development doesn’t provide “adequate interaction and operational potential,” it also states that they must “act on equal terms with other market players” and “fulfil all related duties and responsibilities.” In other words, explains Ilo, “For them to be integrated into the power system, they must first be acknowledged as reliable stakeholders.” Yet, in addition to various technical and market structure-related obstacles, the report she coordinated also emphasises the existence of organisational and legislative barriers.

Matteo Lorenzetti is Process & Innovation Manager at Astea, an Italian multi-utility company whose activities include energy production, “with the primary goal of building plants to serve its assets and enhance local self-consumption of renewable sources.” “We operate a cogeneration and district heating plant that produces and distributes heat to 1,250 households,” he explains. “It is currently powered by natural gas, but we have installed two heat pumps, a high-efficiency co-generator connected to a storage system, and we are shifting towards an energy mix increasingly focused on renewables.” One of the main obstacles that slowed down their operations was the complexity and sluggishness of the regulatory process, Lorenzetti recounts: “The 2021 European directive which first introduced incentives for renewable energy communities was so vague regarding how they should be structured and their scope that, like many others, we stood by and waited.” Things have since become clearer, and large companies like Astea have been excluded from participating directly in renewable energy communities (in Italian “Comunità energetiche rinnovabili”, also known under the acronym CER) to ensure their benefits are distributed more equitably and to support local and sustainable initiatives. “However, since some of our plants are highly energy-intensive and spread out over a wide area, the solution we adopt to optimise the use of the renewable energy we produce is remote self-consumption,” explains Lorenzetti.

Things are evolving, but as the Pope also acknowledged in his address, in Italy, renewable energy communities are struggling to make headway. According to a 2024 report by Legambiente, shared energy experiences across the country have risen overall to 154, and renewable energy communities to 67, but “there could have been 400 more.” Long-awaited decrees have since clarified the topic of incentives, but in addition to the issue of grid connection, Legambiente still denounces many bureaucratic obstacles, a slow authorisation process, and vague tax regulations, which make it difficult to assess CERs' economic sustainability.

Raising awareness and fostering education are key factors in unleashing renewable energy communities’ potential, as emphasized by Lorenzetti: “Optimising their benefits requires a real paradigm shift. It will no longer suffice for users to act as passive consumers, but for this to be possible, an interface that makes data understanding and sharing simple and accessible for everyone is also needed.” Significant architectural, managerial, and—most importantly—financial barriers are still to be overcome, adds Margione: “Energy communities can be a powerful and impactful tool for balancing energy systems and preventing grid overload, but we’re still missing out on their great technical and social potential.” Some experts, meanwhile, question the need to continue with research and development projects, arguing that the time has come to speed up the transformation with a more pragmatic approach. “Start comparing and testing the solutions available to satisfy the grid’s requirements and accommodate distributed energy generation,” is Ilo’s call to European institutions. “We will never achieve the decarbonisation without taking action and embracing a holistic approach, considering all the different aspects together.”