Consumers sharing cheap renewable electricity? It’s possible, if EU really wants to

Energy sharing under the EU’s proposed electricity market design reform is under threat from opposition in the European Parliament, which could allow EU countries to limit it to neighbourhood-level only. This cannot be allowed to happen, writes Monique Goyens.

Monique Goyens is the director general of BEUC, the EU consumer organisation.

Consumers have been facing unprecedented increases in their bills recently, in the months (and years) since the energy crisis began. To get out of this, Europe needs to accelerate investments in renewable energy.

But it also needs to be easier for consumers to access cheap renewables to be able to make long-term savings on their bills. Energy sharing – between friends, neighbours or peers – could be part of the solution.

In response to the energy crisis, the European Commission proposed a series of short- to medium-term sticking plaster reforms to prevent fossil fuel price spikes from hitting households and industry again, including increasing the domestic supply of renewables.

The transition to more renewable power generation is of course a good thing. Wind farms and solar parks are becoming increasingly visible features in our landscapes around Europe. Many consumers are also making the switch by installing solar panels on their rooftops and are seeing the benefits in terms of reduced energy bills.

However, many consumers cannot invest in their own solar panels because they cannot afford the investment, they live in an apartment building or because they are tenants. As a tenant myself, this is a difficulty that I have also faced.

To address this obstacle, the Commission’s electricity market design reforms propose to enable consumers who own solar panels to be able to directly share energy. This is a brand-new model for consuming renewable electricity collectively and remotely. It comes in addition to energy communities as a new model for consuming renewables collectively and remotely.

It works by allowing consumers with solar panels to allocate their excess production (e.g., during the day when they go to work) to a community, to neighbours or family members living elsewhere.

This is a win-win: both for those producing the electricity – as they can often get better remuneration than offered by their energy company – and for those buying it, for whom it can be cheaper than from their existing supplier.

For consumers, this can translate to savings per household of up to €1,100 per year on average on their electricity bill. For prosumers (with solar panels at home), it’s also good news.

Sharing non-used power with other consumers for a higher fee than they could get for it on the wholesale market can also help to pay back some of their initial investment in solar panels, for example.

Make energy-sharing work for all

But for energy sharing to work best, it should not be limited to a few neighbours living on a single street. Renewable power generation can vary in different regions, according to the amount of daylight available for solar, for example. That’s why it works best at country level. The Commission’s proposal would allow consumers to do exactly this.

Research shows that sharing solar, wind and other renewables amongst a bigger group of consumers allows electricity grids to better match demand and shared supply. Efficient energy sharing requires a critical mass of people.

But now, energy sharing under the electricity market design reform is under threat from opposition from the European Parliament, which could allow EU countries to limit it to neighbourhood-level only.

This cannot be allowed to happen. If energy sharing is confined to a hyper-local level, prices will likely remain high, preventing the arrival of new market players, such as service companies or start-ups that help facilitate sharing.

Policymakers should look to Austria for inspiration. The Alpine nation already allows consumers to share renewable electricity across the entire country. A one-stop shop helps consumers to set up or to join new energy-sharing schemes.

The costs for using the grids are allocated in a fair way: the higher the distance for sharing excess power, the higher the cost.

Europe’s electricity market design should help consumers access cheap renewable energy and make savings on their bills. Energy sharing is a means to achieve this. It’s not a pipe dream, it exists already and countries like Austria are setting the example for how it should work.

This should now be rolled out across the EU. European legislators should revise their ambition accordingly and stop energy sharing from being reduced to a local niche offering. It’s time to think big.