The energy crisis we are currently experiencing, linked to the war in Ukraine and geopolitical instability, has brought with it significant increases in gas and electricity costs, as well as increasing difficulties in terms of supply.
Climate change, for its part, has made the summer of 2022 one of the hottest ever, causing a 35 percent increase in energy consumption and numerous blackouts.
In today’s day-to-day reality, self-generation and self-consumption of energy could be the way forward to cut costs and facilitate energy supply, eliminating dependence on depleting and increasingly difficult-to-source fossil fuels.
A new trend, therefore, is taking hold among apartment buildings, businesses and associations that are beginning to organize to create Renewable Energy Communities (RECs).
What are Renewable Energy Communities
RECs are associations formed by different entities that come together for the purpose of producing renewable energy independently, sharing costs and benefits. These communities harness solar, hydroelectric, wind, and geothermal energy for self-supply.
There has long been talk about energy transition and the creation, which has now become necessary, of an increasingly autonomous and decentralized model capable of responding to crises such as the one we have been facing in recent months.
To create a REC, it is necessary for two or more parties to come together to produce and consume energy. The surplus produced can be sold to the grid according to what the market prices are, as established by Decree 162/19, Art. 42 bis, and subsequent implementation measures (ARERA Resolution 18/2020/R/eel and MiSE DM of September 16, 2020).
Talking today about self-generation of energy from renewable and clean sources means taking a step toward the Agenda 2030 goals. For this reason, it is useful to indicate how RECs work and what incentives are proposed.
The difference between RECs and collective self-consumption: how Renewable Energy Communities work
To understand how Renewable Energy Communities work, it is important to start with the difference with collective self-consumption, a decidedly hot topic in recent years.
Let’s make it clear right away that starting to produce energy through solar panels installed on the roof of one’s home does not mean creating a REC. In fact, in this case, we talk about collective self-consumption. What is this all about?
When we talk about collective self-consumption we mean a group of at least two people who are in the same building and who self-generate energy and self-consume it within their block.
An REC has the same configuration but covers a larger area. The affected buildings interface with the secondary transformer substation to which a PV system is connected. The secondary substation is the neighborhood substation, to which 50 to 200 households can be connected. Secondary substations derive from primary substations, which can also affect territories involving multiple municipalities and, specifically, populations as large as 60,000.
The goal of a Renewable Energy Community is to ensure affordable renewable energy. Excess energy is sold and the proceeds can be used to finance projects in the area. The money can, eventually, be shared among the households participating in the ERC as long as selling the energy is not their main occupation.
This is the perfect solution at this time in history as well as a step toward environmental protection.
The purpose of RECs: the three problems that can be solved
Renewable Energy Communities, therefore, take the form of a possible solution to three problems: energy poverty, energy transition, and energy autonomy.
When people do not have the ability to access services that guarantee decent living standards such as electricity, heating and gas, we speak of energy poverty.
Data from the European Commission speaks clearly: 35 million citizens live in a state of energy poverty and, in the worst cases, do not have a functioning electricity grid in their homes. The issue is also present in Italy where, in 2022, it is estimated that there will be more than 2 million households living in a state of energy poverty.
There is clearly a need to find a solution as soon as possible, and for this, RECs could be instrumental.
Maximizing energy autonomy is the second benefit of CERs.
Dependence on third-country energy sources has suddenly forced us to go in search of new solutions and push on the autonomy accelerator. This is why Renewable Energy Communities are the most correct direction to go in. That’s not all, because achieving energy independence also means being able to minimize the effects of the increases in the cost of energy to which one is constantly subjected, especially at moments such as the one we are currently experiencing.
As far as the effect of RECs on the energy transition is concerned, however, we must remember that the goal is the production of 70 Giga Watts produced from renewable sources by 2030, the deadline that by now everyone knows.
Currently, emissions from fossil fuels are still such that they succeed in destroying the environment, and that is why action must be taken. The time has come for a well-rounded understanding of the importance of renewables and clean energy. Simplifying bureaucracy and pushing renewables could be a great way to speed up the path to the energy transition.
Incentives for Renewable Energy Communities: possible scenarios
This is why it is useful to talk about incentives for RECs and what Italy is doing to raise awareness of the topic. The goal is to establish 15,000 Renewable Energy Communities in Italy, pushing Italians to take advantage of some of the incentives developed by the government.
Support for self-consumption and RECs will be contained in a new decree that is about to become a law and that aims at energy autonomy and the decarbonization of our country in line with the set deadline.
Currently, the Italian project has been submitted to the European Union and consists of two different measures, namely grant funding and tariff incentives.
Thanks to NRRP funds, soft financing would be granted to cover 40 percent of the cost of building a new plant or upgrading an existing plant in the territory of a municipality of up to 5,000 inhabitants.
There are two objectives. First, they want to incentivize the production of energy from renewables, and second, they want to offer savings to those who join RECs. This offers a definite cut in utility bills by offering those who decide to take part in a Renewable Energy Community the opportunity to have access to a special tariff.
Thus, RECs are being increasingly incentivized and are proving to be a new hope for an increasingly sustainable, environmentally conscious and energy self-sufficient future.
Our Group, which has always cared about issues related to sustainability, innovation and environmental protection on which it lays the foundation for the development of its businesses, is active in the establishment of Renewable Energy Communities through its subsidiary CerLab.
