Co-creation of energy communities in Portugal – the role of municipalities

Published On: April 20, 2022Categories: Articles, FeaturedTags: ,

Co-creation of energy communities in Portugal – the role of municipalities

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Concrete examples are a way of motivating people to transform the reality that’s closer to them, when they realize that good ideas can become good practices. That is why the third regional event of the H2020 mPower project focused on the results and topics raised by Energaia (the energy agency representing 7 municipalities in the south of the Porto Metropolitan Area). This time, with the help Energy Cities and Carbon Coop, the project collaborated with the first renewable energy cooperative in Portugal – Coopérnico – and invited Portuguese municipalities to participate in the debate both in an online format (November 3, 2021) and in person, in the beautiful city of Vila Nova de Gaia, in an event generously hosted by the respective municipality (November 17, 2021).

European examples

In the online session two projects were presented that showed the strength that citizen involvement can bring to the energy transition in local communities. Dries Vleugels from Leuven joined the event to tell us about a project that promoted a public tender for the installation and financing of self-consumption systems in the city’s public buildings – with one important characteristic: they had to be 100% financed by citizens. Thus a project was born where, via local cooperatives, citizens were able to participate in – and benefit from – renewable energy installation in their municipality. Timo Wyffels, from Ghent, explained how the city created a one-stop-shop for energy (De Energie Centrale) and how the municipality works from the ground up and from the dialogue with citizens, creating opportunities for the emergence of new ideas and their replication or expansion. It is through this constant dialogue that they are able to understand the most common issues the citizens experience and understand how they can best support them in meeting their needs and solving issues often in the form of supporting and connecting local citizen-led initiatives, businesses and other stakeholders. The municipality thus takes on the role of a facilitator, enabler, connector and promoter. In this way, and by partnering with local energy cooperatives and communities, they are able to build a joint sustainability narrative for the city.

In this session, another two projects were presented that used innovative technical and legal solutions to support and enable energy communities. Alastair Mumford presented the Synthetic Power Purchase Agreements, a financial instrument through which the county of Devon (England) made a direct contract with the network of energy communities to buy its energy at a price agreed between both parties (strike price) in order to stimulate local renewable production. The other solution presented there was the Virtual Net Metering, by Dimitris Kitsikopoulos, a model through which the Hyperion community in Athens consumes energy produced by a system that is located elsewhere, given the scarcity of available area in roofs to supply urban consumption. This community, which was developed under the principle of the common good and not profit, also wants to advance energy democracy and make energy communities an energy poverty mitigation mechanism.

Cities and communities in Portugal

On the 17th the event entered the physical realm in Vila Nova de Gaia, where we hosted officers and politicians representing various municipalities (and some energy agencies). According to António Castro, from local urban development agency Gaiurb, there are technologies and solutions for sustainability, but sometimes it is difficult to explain their benefits to the common citizen, and Guilherme Luz, from Coopérnico, recalled precisely that the first word of the expression ‘comunidades de energia’ (energy communities) is ‘comunidades’ (communities). They are a way for citizens to get directly involved in the energy transition and the energy sector, collectively taking power. More than technologies or certain activities, energy communities must start from the idea of ​​cooperation between people. This is what the handbook ‘Comunidades de Energia: Um Guia Prático’ (‘Energy Communities: A Practical Guide’), translated by Coopérnico and launched at the session, brought to the table. This manual brings several examples from Europe in order to answer various questions about Renewable Energy Communities (RECs) that may arise: what are they? What and who are they for? What examples are there? Who should take part? What legal form to choose?

Francisco Gonçalves from Energy Cities explained how municipalities can function as promoters, facilitators, members or even consumers of Renewable energy communities (RECs), through financial support (such as participatory budgets), training for community leaders or local stakeholders, legal assistance (for example with one-stop shops) and providing spaces or serving as intermediaries or networkers/brokers between the various actors. Valencia for example has been at the forefront of this work with the ambitious aim to have 100 RECs by 2030. Municipalities however are not alone in this endeavour and must be able to count on the support of regional and national governments which among other things have the responsibility to transpose European legislation. For example: France announced 1000 new RECs for 2028; Occitania aims to have 100,000 citizens as participants of RECs (channelling funds through ADEME); Scotland will make £25,000 (per project) available for non-profit projects in the region, through the ‘Scottish Government’s Community and Renewable Energy Scheme’ (CARES); and the Netherlands aim to have 50% citizen participation in all new renewable production projects by 2030.

National examples

During the morning, examples in Portugal were presented and discussed. We heard from municipalities and energy agencies from across Portugal and both rural and urban contexts.
Two elected representatives joined us from rural areas: Vila Boa do Bispo (in the North of Portugal) and S. Luís (in the South of Portugal). Miguel Carneiro from Vila Boa do Bispo explained that sustainability is not always a mobilising theme for communities in and of itself. Therefore for his election campaign he ‘wrapped’ the idea in a way that explained its direct benefits. The project, with the support of the Smart Village Network and Coopérnico, supports the set-up of a REC initially installing solar across a block of publicly and civically owned buildings belonging to the Junta de Freguesia (Parish Council) itself, the Casa do Povo (People’s House) and the local volunteer firefighters. The municipality acts as a promoter, member and consumer. Despite the bureaucratic difficulties they have already managed to approve the internal regulations in the Assemblies of the three entities and started preparing one of the roofs. Miguel ended by saying that the forecast of local benefits, the advances already made and the governance model chosen give him the resilience he needs to bring this project to fruition.

Unlike Vila Boa do Bispo, the village of S. Luís village in Odemira already had a very active citizen movement promoting sustainability. Manuel Campos, president of the village’s Parish Council and an active participant in the project told us that between 2011 and 2020 the group managed to obtain an accumulated funding of 525k€ for PV systems through various Odemira’s municipality participatory budgets. One of the successful applications in 2020 was a project to create a Renewable Energy Community in the region. The process of co-creation to set up this company has been supported by the H2020 European project PROSEU. The idea is to install 120 kWp in municipal buildings and schools, day centres, homes and communities. Based on the savings achieved they aim to invest in more panels until they fully satisfy the energy needs of the municipality’s public buildings — an objective that is expected to be achieved this year (2022).

Rui Pimenta from the Porto Energy Agency considers that municipalities have a lot of potential to implement RECs, especially considering the amount of buildings they have available (many of which are energy inefficient). In his opinion the start should be made with social housing in order to mitigate energy poverty. He presented the first REC in a social housing neighborhood in Portugal — Agra do Amial in Porto — with an initial investment financed by the EEA Grants. In this neighbourhood energy bills are 80€ per house on average which is much higher than the 29€ average they pay on rent. Due to its potential and scope, the REC was even classified by the energy regulator (ERSE) as a pilot project – the first in Portugal. It comprises 181 homes, a school and a kindergarten and aims to implement and test the technical and economic feasibility of innovative practices and technologies, integrating self-consumption, storage solutions, energy efficiency and electric vehicle charging.

After Rui’s presentation Carla Pires from Gaiurb, told us about the ‘Afurada Living Lab’, also part of the EEA Grants and located in the municipality in which the event was taking place: Vila Nova de Gaia just across the river from Porto. She explained to us that with this type of funding the municipalities aren’t as much the promoters as they are the beneficiaries, since they just provide territory for tests. The REC will be installed in public institutions in a fishing village in the municipality. In addition to reducing energy purchases by 65% it will contribute to reducing energy poverty, fulfilling the strategic ambition of increasing the number of RECs and involving citizens in the energy transition. These citizens will thus produce, consume, share, store and perhaps even sell energy – reducing losses and  dependence on the grid and opening up the possibility of having production and consumption in different places. A management platform and a REC visualisation platform will also be created. Interestingly for this session they ultimately have the ambition to create a citizen cooperative across the region in partnership with the Energaia agency.

The last example came from Lisbon, presented by Maria João Rodrigues from the Lisboa E-Nova agency. She presented a Renewable Energy Community being implemented at Hub Criativo do Beato (Beato’s Creative Hub) — a set of buildings from an old army food factory that were refurbished to become a centre for innovation and entrepreneurship. This is another project financed by the EEA Grants, but it differs from the others in the sense that it is only developing the digital tools, the business model and financing the stationary storage; only later will the entities that use it get involved (and possibly other adjacent buildings). The main objective of the project is to test a surplus sharing model based on a hierarchy of priorities, with various possibilities of integration with the distribution system operator (DSO). The big challenge in this case is to model a community that integrates low and medium voltage in order to pay the least possible tariff for accessing the grid.

Legislation and its limitations

A long-awaited participation during the event came from the Secretariat of State for Energy represented by Andreia Carreiro. She presented the Government’s vision as detailed in the Roadmap for Carbon Neutrality and the NECP 2030. From her perspective RECs are collective self-consumption with a more active participation of citizens, a model in which proximity serves to avoid grid overload, reduce costs and maximise opportunities following the 4 D’s of the energy transition: decarbonisation, decentralisation, democratisation and digitalisation. She also announced that the tender dossier for a platform on which municipalities could register RECs had been closed and alerted to the public consultation that was open for the revision of a 2019 decree in order to create the regulations for the organisation and function of the National Electrical System (which will include the self-consumption legal regime).

The debate session that followed was divided between technical-legislative issues and a very rich sharing of experiences that demonstrated the diverse contexts and views of the participants. A problem immediately raised was that the Local Public Administration did not have access to funds from the Recovery and Resilience Plan to finance energy efficiency works, such as the installation of solar panels and only to Portugal 2030 funds, that have different financing rates and a longer running time. The need to have access to information from the DSO in order to be able to simulate energy communities based on consumption data was also raised. However, the technical-legislative topic that fueled most of the debate was about the much agreed on necessity to educate the municipalities. One of the speakers, Miguel Carneiro, said he had and still has to explain several issues to the municipality in order to progress with the Vila Boa do Bispo’s project. Maria João Rodrigues highlighted that this training must come from the bottom up, based on the local agencies and not on the national agency (ADENE). Andreia Carreiro agreed, explaining that ADENE should have this responsibility in liaison with all the agencies, as they are the ones who should receive the projects’ promoters. She still didn’t know when the legislation would be approved, which made the public consultation mentioned even more urgent.

In the sharing of experiences between communities S. Luís noticeably differed from other projects for having had a door-to-door approach that involved the ‘coletividades’ (local associations that promote sport, leisure and artistic activities) and promoted the collective purchase of panels. However the issue that aroused greater discussion was the rebound effect and possible solutions for it. This effect happens whenever greater energy efficiency induces behaviours that consume more energy, which can compromise the initial objectives of a given project and the fairness of the sharing model used in a REC. A possible solution is to introduce a criterion to reward the best energy performance and translate this into a simple rule to communicate to the DSO. While this is not yet regulated and written down there are things, according to Andreia Carreiro, that shouldn’t be prevented from happening, such as remuneration for not using energy. Pilot-projects would be needed to fine-tune the legislation to be equipped for these kinds of issues. Another participant added that these concerns are real, but that they need to be discussed so that solutions emerge and can be trialled, tested and improved. In the meantime projects have to start somewhere, as Ana Rita Antunes from Coopérnico stated, giving the example of Vila Boa do Bispo. She admits that the model here isn’t perfect yet, but that in order to overcome bureaucratic barriers, learn and gain scale it was important to make a start — assuming that in the long term the initiatives will have a multiplier effect and that solutions will be found on the way of how the entities can pay according to the benefits.

World Cafe

In the afternoon of the day in Vila Nova de Gaia the various participants took part in a ‘World Cafe’ workshop. Organising themselves into round tables they explored how renewable energy communities can contribute to various issues that municipalities are currently facing. We share a summary here of the main findings.

Alleviating Energy Poverty

The RECs – understood as communities in the broadest sense – can play an important role in bringing people struggling with energy issues out of isolation, exploring the problem and potential solutions together and creating both a sense of belonging and an empowerment to be able to improve the situation they find themselves in together. RECs can therefore be an effective and empathetic means of identifying vulnerabilities, being close to the population and promoting energy literacy. This mechanism works better the more horizontal the relationship between municipality and community is.

Health starts at home and if health is seen as a public good the RECs can become active political agents advocating for cheaper access to energy, intervention in social housing, renovation of the housing stock and access to appropriate tools. These tools, which can be information and communication technologies, funding programs or appropriate legislation (e.g. taking into account housing tenure) must be designed with the active participation of the RECs to be truly effective.

Reduce emissions and increase renewable production

Participants in RECs have key local expertise that makes them a valuable aid in correctly assessing facilities, as well as the best locations for renewables. Likewise they can participate in the management of the production system and get in arrangements with neighbours to optimise consumption periods for hours when more energy is available, as well as using storage technologies. They can also install an electric vehicle charging station for the entire REC, optimising its use and creating the conditions for more neighbours to opt for the use of this type of vehicle.

Basically, RECs make the acquisition of systems and technologies for the production and consumption of renewable energy easier by allowing the optimization of systems by sharing costs and benefits. This type of cost-benefit optimization can also be scaled up to the municipal level, establishing for example a local renewable production network that is monitored by the municipality and shared by everyone who can benefit from it.

Promoting energy democracy and citizen participation

One of the most important components of RECs is that they allow citizens and their communities to get involved in the decision-making process about their energy systems: when and how to invest in these systems, who to do it, how and with whom the energy will be shared and how to ensure that everyone participates in the community. At the end of the day RECs are supposed to bring social and economic benefits to their participants before profits, and to guarantee energy democracy dynamics.

In order to develop these dynamics, two very important things are necessary:
1) Energy literacy – that is people having knowledge about the functioning of RECs in particular, but also about the many dimensions of energy systems and renewable energies, so that they are able to take solid decisions;
2) Decision – making and meeting mechanisms that allow stakeholders (individuals, local communities, public entities, social movements, cooperatives or associations) to share, discuss and make decisions together.

Both of these can be leveraged through physical or virtual spaces dedicated to the RECs and provided by the municipalities, such as forums, permanent assemblies or collaborative online platforms that allow for open, transparent and public decision-making processes on the RECs to be implemented.

Increase energy efficiency and decarbonise mobility

RECs provide the necessary conditions to adjust the different consumption profiles within the community in order to increase energy efficiency. They facilitate the sharing of energy resources, the fight against social inequalities (through the use of common resources) and cultivate the shared use of means of transportation. RECs can also make an important contribution to solve many problems associated with the quality of housing and the housing conditions for citizens, by organising, for example, collective renovation actions. At the municipal level they allow savings to be reinvested in the local economy and in improvements in neighbourhoods, parishes and municipalities. Thus RECs make communities healthier.

Finally, and it is worth reinforcing, the spirit of community is very important in the implementation of mutual aid actions, namely through training for energy efficiency and renewable energies, in behavioural awareness and even eventually with the compensation of the most active participants.

This article was written by João Braga Lopes, Junior Communications and Social Projects Officer at Coopérnico.
Images by Joaquim Martins