Community-driven energy transition: The potential of energy communities

The ongoing energy crisis and the increasing desire of the population to actively participate in the energy transition are increasingly leading to a decentralization of the energy landscape. With the advent of prosumers, private households that generate and consume their own energy, energy communities also emerged. It brings together private individuals and local companies to produce, share and consume renewable energy locally. Energy communities not only promote cohesion within local communities, but also increase participants' energy independence. In addition, the legal framework of many countries provides for financial incentives, such as the introduction of reduced network charges. These contribute to lower electricity bills for members of energy communities. But it is not only participating people who benefit from energy communities, because they are also a decisive element for driving the national energy revolution forward. The European Union and national regulatory authorities are actively seeking to promote them in order to involve the population and companies in a sustainable, decentralized energy system of the future.
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Sharing energy collectively — from vertical to horizontal

In Europe, the concept of neighborhood electricity trading has gained traction through established models such as tenant electricity (in Germany), joint generation plants (GEA; in Austria) or the merger for self-consumption (ZEV; in Switzerland). These constructs make it possible to share energy on a vertical level, i.e. within a single building or a few buildings that are connected via a private network. The integration and use of the public electricity grid enables mergers across property boundaries and creates a basis for the joint use of energy on a horizontal level, for example in entire neighborhoods. This visionary approach makes additional private networks obsolete and promotes greater efficiency and cooperation in the use of renewable energy sources in the immediate vicinity. The result? A significantly improved CO2 balance of the municipality, a noticeable reduction in participants' energy bills, more energy independence as well as stronger cohesion and community building, and much more.

The emergence of energy communities was actively supported by the EU and national regulatory authorities, such as the Renewable Energy Directive (RED II) and the Internal Electricity Market Directive (EMD). These legal frameworks lay the foundation for the establishment and ongoing operation of energy communities and facilitate seamless integration into existing energy systems. It is now the turn of the individual EU member states and are faced with the task of incorporating EU directives into their national legislation. Thanks to active support from the EU, a clear direction is emerging: Energy communities will become even more important and play an important role in the European energy transition.
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How do energy communities work?

Energy communities enable the population to actively participate in the energy transition and benefit from it in the following ways:

• ‍Private ownership of renewable energy plants‍
  • Members install renewable energy systems that cover their own consumption with self-generated energy. The excess energy is pooled and sold to other members of the community.
• ‍consumption of locally generated energy based on neighbourhood energy trade‍
  • Excess energy from one member can meet another's needs. By shifting consumption to periods of high production, the efficient use and distribution of renewable energy within the Community is made possible.‍
• Joint production plants - One plant supplies all members‍
  • By pooling financial resources, a power generation plant is acquired collectively, which distributes the energy locally to all shareholders depending on the investment share.

Austria as a pioneer in terms of energy communities

Compared to European countries, Austria is at the forefront of the design and implementation of energy communities and serves as a prime example for other countries. Three key aspects are decisive for this:
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‍1. Fast pace in legislation:
Back in July 2021, Austria passed the Renewable Development Act (EAEC), which incorporates both the European Directive on Renewable Energy Communities (RED II) and the Internal Electricity Market Directive (EMD), and thus made it part of national legislation. This significantly promotes the expansion of renewable energies and energy communities.

2. Efficient energy sources:
In order to be able to calculate transactions between the various members of the energy community, access to accurate energy data is required. Distribution system operators (DSOs) in Austria are required to install smart meters within two months for all persons who want to join an energy community. These collect data on energy consumption and production, which is then transmitted to community managers via the national platform for energy industry data exchange (EDA). Consumption and production data is provided at 15-minute intervals, increasing transparency and enabling efficient management and billing of transactions within the energy communities.

‍3. Substantive support from the state:
In order to push ahead with expansion even more, the Austrian Coordination Office for Energy Communities created, a state institution that supports the creation of energy communities. By providing valuable resources, advice and strategic support, this initiative ensures that energy communities in Austria are not just a vision or a pilot project, but become a thriving reality. The coordination office acts as a catalyst and contributes to the growth of energy communities throughout Austria. Since the EAEC came into force, more than 1500 energy communities have been established in Austria (as of May 2024). Many of them already use PowerQuartier from Exnaton. Read here Find out more about our successful cooperation with Carinthian energy supplier Kelag or have a look here the largest solar park project, which is managed via our billing platform in cooperation with Burgenland Energie.

Financial benefits for members

• Elimination of fees: “electricity tax” and “green electricity subsidy contribution”
• Reduced network charges: up to 64%
• Savings for consumers: lower prices for purchases from the Energy Community (approx. €100 per standard household per year, 4-digit savings for companies per year)
• Higher income for producers: when selling to the Energy Community compared to feeding into the grid

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Hello, local electricity communities!

With the Renewable Energy Directive (RED II), the EU already set clear requirements for neighbourhood electricity trading in 2018. Energy history was written in Switzerland on June 9, 2024. In the referendum, the Swiss electorate clearly voted in favour of the new electricity supply law, paving the way for a rapid and comprehensive expansion of renewable energy and a collective energy transition. As a result, local electricity communities, the Swiss equivalent of the Energy Community, will also be possible for the first time from January 1, 2025. Until now, ZEVs and EVGs (self-consumption associations) have been possible in this country, which restrict the joint use of energy to individual buildings or, in the best case, to connected residential areas. However, these have received little attention from many Swiss energy supply companies so far, but rather called on energy service providers who install their own measurement infrastructure to their customers in order to be able to offer it as an additional service.
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One noteworthy project is the first energy community in Switzerland called Quartierstrom. As the origin of Exnaton, the research project was developed under the direction of ETH Zurich and with support from the Walenstadt water and electricity plant. Since the successful completion of the project, little has been done from a legal perspective for a long time. This is now changing: With the adoption of the “Federal Act for a Secure Power Supply with Renewable Energies” by the Swiss population, Switzerland has a legal framework for neighborhood electricity trading from the beginning of 2025. It is now up to the Federal Office of Energy (SFOE) to enable pragmatic solutions in the ordinance.

Key points for electricity communities in Switzerland

• Participants: Householders and companies generate, share and consume energy within the community.
• Scope: Communities must be within a municipality, be with the same DSO and be on the same network level.
• Incentive system: Depending on the number of network levels involved, up to 60% reduction in network charges (the current regulation provides for between 15 and 30%).
• Required infrastructure: Each member needs a smart meter, which is installed by the distribution network operator.
• Entry into force: 1.1. 2025.

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What benefits do energy communities bring to traditional players in the energy industry?

The debate about energy communities as a relatively new concept of decentralized energy generation and consumption has so far placed a strong focus on end users and their benefits. However, traditional players in the energy industry, such as utility companies or network operators, face major challenges in effectively managing and accurately billing energy communities. In addition, as a result of the increase in private investments for the production of renewable energy, customers are purchasing less energy from energy supply companies, which is why they feel compelled to rethink and adapt their previous business models. A positive development, on the other hand, is the development of new customer segments. Energy supply companies can increasingly assume the role of an energy service provider, expand their service portfolio and offer active prosumers new products related to renewable energies. In addition, the introduction of energy communities as a new service offers further benefits for traditional players:
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• New revenue streams: offering additional energy management services and innovative business models
• Innovation by law: Proactive use of legal frameworks in order to maintain and strengthen market leadership in supply areas
• Improved grid stability and efficiency: Optimizing network operation, minimizing long-distance transport and improving grid stability
• Optimized demand management: Gain insights into installed equipment and use their data to accurately forecast demand for efficient resource allocation, load balancing, and improved operational performance

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Exnaton makes managing energy communities easier than ever

Our innovative billing software enables energy companies to easily manage, visualize, and deliver services to energy communities and other self-consumption models. Our white label SaaS platform is used by more than 20 energy supply companies in four countries and can be adapted to customer needs in order to meet all national tariff requirements. Energy is distributed dynamically at 15-minute intervals and can be billed, for example, based on the SPOT market prices of EPEX SPOT or other pricing models. Through seamless integration with SAP IS-U and other ERP and CRM systems, you can launch renewable energy products and provide services to energy communities within just a few weeks.
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Exnaton is not only a multi-award winning spin-off company from ETH Zurich, one of the most renowned technology universities in Europe, but is also supported by first-class venture capital firms such as True Ventures, Global Founders Capital and Ventures the day after tomorrow. Our competent energy experts develop specific solutions tailored to your needs and those of your customers. Get in touch with us today and take a step into the future of decentralized energy supply.

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