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17 May 2021
newsletter
austria

Austria: Electricity producers welcome in future energy communities

Introduction

The current version of the Renewable Expansion Act has become more practical in relation to one central point: energy community participation.

The government bill on the Renewable Expansion Act (EAG) published in March 2021 contains significant changes compared with the assessment draft issued in September 2020 (for further details please see "Sparking change: Renewable Energy Expansion Act published for evaluation"). Among other things, these changes concern the planned energy communities (the amalgamation of several decentralised electricity producers and consumers forming communities within which self-generated renewable (green) energy is consumed, stored or sold).1

Citizen participation

According to the assessment draft, participation in such a community should already be limited by law and geared mainly towards citizen participation and less towards profit-oriented entrepreneurs. The focus is on citizens bringing their (photovoltaic) systems into the community and sharing the energy generated with other members.

The concept sounds simple but is complicated in practice. The requirements for establishing an energy community are far too complex and daunting for ordinary citizens. For instance, prospective energy communities must:

  • set up their own company (eg, an association or a cooperative);
  • adhere to the electricity allocation regulations within the community;
  • integrate generating plants into the community; and
  • conclude relatively complex contracts with the responsible electricity network operators.

The fact that the communities would not have worked in their current form was only one of the points of criticism raised in the numerous comments received on the assessment draft. As long as experienced market participants, ideally with the appropriate financial strength, are prohibited from participating in an energy community (professional utilities, suppliers, electricity traders and larger companies are explicitly excluded from participating for reasons relating to union law), the question remains as to which entities will set up and operate energy communities.

However, the government bill provides for an exciting innovation in this regard. Section 16(c) of the planned amendment to the Electricity Industry and Organisation Act, which is part of the EAG legislative package, makes it possible for electricity generation companies to be a part of a renewable energy community. This means that larger photovoltaic, wind farm and hydropower projects could also become part of an energy community.

Benefits

This option is interesting for several reasons for project developers and producers which are not involved in supply or trade at the same time. Such developers and producers could supply community members directly with electricity at reasonable prices, especially since the energy generated within the community can be transported to the consumer at discounted network tariffs.

In addition, intra-community generation and trade or consumption by members should benefit from other special regulations under electricity law, such as:

  • not participating in the balance group system;
  • exceptions to paying green electricity subsidy costs;
  • an exemption from having to adhere to energy supplier regulations; and
  • an exemption from having to adhere to dealer regulations.

However, the greatest benefit of the innovation is that project developers can use the energy communities as a new citizen participation model and thus increase local acceptance for new (large) plants. It remains to be seen whether and to what extent electricity producers can generate profits with this model because energy communities are not allowed to focus primarily on profit gain.

Electricity producers will most likely generate profits because the profit barrier refers to the community as a legal entity and not to the individual members. Even if the opposite view were taken, there is still the option of limiting participation in the community to certain (small) parts of a project or generating plant.


Endnotes

1 For further details on energy communities, please see:

This article was first published on International Law Office, 17.05.2021.
author: Bernd Rajal