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  • European Union Policies and Directives on Renewable Energy and Community Energy

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    The European Union (EU) has taken a leading role in the global fight against climate change. Central to its strategy is the promotion of renewable energy and the empowerment of citizens and local communities through community energy initiatives. This document provides a comprehensive overview of the EU's legislative and policy framework aimed at advancing renewable energy and integrating community participation into the energy transition.

      

      

  • 1. Introduction

    The 21st century has witnessed a growing global consensus on the urgent need to transition from fossil fuel-based energy systems to cleaner, more sustainable alternatives. The energy sector is one of the largest contributors to greenhouse gas emissions, and transforming it is essential to mitigating climate change, improving air quality, and ensuring long-term energy security. Within this context, the European Union has emerged as a global leader in climate action, implementing robust and ambitious strategies that integrate renewable energy development with broader sustainability and social goals.

    The EU's climate and energy policy is anchored in international commitments, such as the Paris Agreement, and its own internal objectives, including the European Climate Law, which legally binds the EU to become climate-neutral by 2050. To achieve these goals, the EU has developed a comprehensive set of legislative instruments and financial mechanisms to accelerate the deployment of renewable energy sources (RES), improve energy efficiency, and decarbonize the economy.

    One of the unique features of the EU's energy transition is the emphasis on community energy. This approach recognizes the vital role that local communities, cooperatives, and individual citizens can play in driving the energy transformation. By enabling decentralized, community-based production and consumption of energy, the EU fosters social innovation, increases public support for renewable initiatives, and ensures that the benefits of the transition are shared equitably.

    The following sections will explore in detail how the EU has structured its policy landscape to support these goals, including key directives, funding programs, and the evolving role of community energy in achieving a sustainable future.

     

     

  • 2. Overview of EU Renewable Energy Policy

    The EU's renewable energy policy is rooted in its broader climate goals, especially the aim of achieving climate neutrality by 2050. These policies are designed to reduce greenhouse gas emissions by 55% by 2030 (compared to 1990 levels) as set out in the European Climate Law. Renewable energy deployment is supported by sector-specific targets (e.g., for heating, cooling, electricity, and transport) and is accompanied by carbon pricing mechanisms such as the EU Emissions Trading System (EU ETS).

    The "Fit for 55" package includes a revision of the Renewable Energy Directive, the Energy Efficiency Directive, and the introduction of the Social Climate Fund. These reforms aim to facilitate the decarbonization of energy systems through an integrated policy approach across sectors.

     

     

      • Timeline for renewable energy in the EU

        2023

        Revised Directive EU/2023/2413 entered into force

        2022

        REPowerEU Plan: new EC proposal to further raise the renewable energy target

        2021

        Fit for 55: EC proposal to revise the directive and raise the target for 2030 to 40%

        2019

        EU power production from wind and solar surpass coal for the first time

        2018

        Revised Renewable Energy Directive: 32% renewables target for 2030

        2014

        Onshore wind is cheap­er than coal, gas and nuclear energy

        2009

        Renewable Energy Directive: EU target of 20% renewables by 2020 and national binding targets

        2008

        Olmedilla Photovoltaic park (Spain) - largest power plant (60MW) in the world - generates enough to power 40 000 homes/year 

        2003

        Directive on biofuels and renewable fuels for transport: national tar­gets for biofuels

        2001

        Directive on electricity production from renewables: national indicative targets 

        2000

        First large-scale offshore wind farm (Denmark) 

        1997

        Energy for the future: renewable sources of energy: indicative EU target of 12% renewables by 2010 

        1991

        Germany introduces first feed-in-tarif for renewables 

  • 3. The Renewable Energy Directives (RED I, II, III)

      • RED I (2009/28/EC)

        • Set a binding EU-wide target of 20% of final energy consumption from renewable sources by 2020.
        • Introduced sustainability criteria for biofuels and required Member States to submit National Renewable Energy Action Plans (NREAPs).
        • Established a system for Guarantees of Origin (GOs) for tracking electricity generated from renewables.

      • RED II (2018/2001/EU)

        The Renewable Energy Directive (2018/2001/EU) entered into force in December 2018, as part of the Clean energy for all Europeans package, aimed at  maintaining the EU’s status as a global leader in renewables and, more broadly, helping it to meet its emissions reduction commitments under the Paris Agreement.

        It established a new binding renewable energy target for the EU for 2030 of at least 32%, with a clause for a possible upwards revision by 2023. This target is a continuation of the 20% target for 2020. In order to help EU countries deliver on this target, the directive introduced new measures for various sectors of the economy, particularly on heating and cooling and transport, where progress has been slower (for example, an increased 14% target for the share of renewable fuels in transport by 2030). It also includes new provisions to allow citizens to play an active role in the development of renewables by enabling renewable energy communities and self-consumption of renewable energy and established better criteria to ensure bioenergy's sustainability.

        • Increased the 2030 target to 32% renewable energy in gross final consumption.
        • Included binding sustainability criteria for solid and gaseous biomass fuels used in electricity and heating.
        • Strengthened provisions for consumer rights, energy self-consumption, and storage.
        • Obligated Member States to develop integrated National Energy and Climate Plans (NECPs).

        Given the need to speed up the EU’s clean energy transition, the Renewable Energy Directive EU/2018/2001 was revised in 2023. 

      • RED III (Directive (EU) 2023/2413)

        The amending Directive EU/2023/2413 entered into force on 20 November 2023, whith an 18-month period to transpose most of the directive's provisions into national law, with a shorter deadline of July 2024 for some provisions related to permitting for renewables.

        • Raised the EU-wide renewable target to 42.5% by 2030, with an additional 2.5% indicative top-up.
        • Introduced faster permitting procedures: Renewable energy projects in “go-to” areas must be approved within 12 months.
        • Mandated sector-specific targets such as:
          • 49% RES share in buildings.
          • 29% RES share in industry.
          • A 5.5% share of advanced biofuels and RFNBOs in transport.
        • Promoted cross-border cooperation and joint renewable projects among Member States.

        The main differences between RED II and RED III focus on setting significantly more ambitious and binding targets compared to RED II. With regard to permitting, RED III introduces simplified processes to address the obstacles identified during the implementation of RED II. This development marks a stronger commitment by the European Union to align energy systems with the objectives of climate neutrality by 2050. The main differences can be summarized in the table below.

         

        RED II (2018)

        RED III (2023)

        Global Objective

        32% of renewable energy in gross final energy consumption by 2030.

        42,5% (mandatory) with na aspirational goal of 45%

        Sectoral Goals

        Incentivized, but not binding for specific sectors

        Binding targets for the transport, industry and heating/cooling sectors.

        Transports

        14% renewable energy in transport by 2030.

        29% reduction in the intensity of GHG emissions or 14.5% of renewables in transport.

        Bioenergy

        Sustainability rules introduced for bioenergy

        Sustainability criteria strengthened with stricter measures.

        Licensing

        General framework for approval of renewable projects.

        Simplified and faster licensing processes.

         

         

  • 4. Energy Communities: RECs and CECs

    The EU’s Clean Energy for all Europeans Package (CEP, 2019) introduced for the first time provisions for ‘renewable energy communities’ (RECs), and ‘citizens energy communities’ (CECs), empowering citizens to take ownership of renewables instead of exclusively depending on corporations.

      • Renewable Energy Communities (RECs)

        • Must operate on a not-for-profit basis, prioritizing environmental and social goals over financial profits.
        • Legal entities are often cooperatives, associations, or foundations.
        • Allowed to generate, store, and sell renewable electricity, including participating in balancing markets.
        • Must be effectively controlled by local members located in proximity to the projects.

      • Citizen Energy Communities (CECs)

        • Defined under Article 16 of the Electricity Directive (EU) 2019/944.
        • May participate in all energy sectors, not limited to renewable energy.
        • Empower members to produce, consume, store, share, and sell electricity.
        • Can own and operate distribution networks, subject to regulatory approval.
        • Must ensure voluntary and open membership and democratic decision-making processes.

        Energy communities contribute to reducing energy poverty, improving local economic resilience, and fostering public acceptance of renewable energy infrastructure.

  • 5. Electricity Market Design and Citizen Participation

    The internal electricity market reform under the Clean Energy for All Europeans package promotes:

    • Dynamic pricing contracts to enable consumers to respond to market signals.
    • Removal of unjustified barriers to energy self-consumption.
    • Aggregation services allowing prosumers to pool energy and participate in wholesale and balancing markets.
    • Smart metering and demand-side flexibility to improve grid efficiency.
    • Peer-to-peer trading platforms to facilitate direct energy exchanges between consumers.

    These measures promote digital innovation and decarbonization while increasing consumer engagement. Article 15 of the Electricity Directive affirms the right of households and businesses to participate actively in the energy system.

     

     

  • 6. The European Green Deal and REPowerEU

      • The European Green Deal (2019)

        • Proposes over 50 actions to reduce emissions, promote biodiversity, ensure clean air and water, and enable a circular economy.
        • Strengthens the Emissions Trading System and introduces the Carbon Border Adjustment Mechanism (CBAM).
        • Supports offshore renewable energy strategy, aiming to install at least 60 GW of offshore wind and 1 GW of ocean energy by 2030.

      • REPowerEU (2022)

        • A strategic response to the energy supply crisis caused by geopolitical tensions.
        • Aims to deploy over 320 GW of solar photovoltaics and 600 GW of wind power by 2030.
        • Introduces the EU Solar Rooftop Initiative, requiring solar panels on new public and commercial buildings by 2027.
        • Supports green hydrogen development, with a target of 10 million tonnes of domestic production by 2030.

        REPowerEU includes emergency regulations to accelerate permitting and provide exemptions from certain environmental assessments in predefined “go-to” zones.

         

         

  • 7. Funding and Support Mechanisms

    • Horizon Europe (€95.5 billion): Finances research into renewable technologies, energy storage, smart grids, and carbon removal.
    • LIFE Programme: Provides grants for pilot projects in renewable deployment, energy efficiency, and biodiversity protection.
    • Just Transition Fund (€17.5 billion): Helps regions move away from fossil fuels through re-skilling, social support, and infrastructure upgrades.
    • Cohesion Fund & European Regional Development Fund (ERDF): Fund community-level and regional projects in RES, particularly in less developed regions.
    • InvestEU Programme: Offers loans and guarantees to support private investments in sustainable infrastructure.
    • Modernisation Fund (€48 billion): Funded through EU ETS revenues, targeting 10 lower-income EU countries to modernize energy systems.

    Additional mechanisms include Contracts for Difference (CfDs), feed-in premiums, and auctions to promote cost-effective renewable development.

     

     

  • 8. Impact on Member States and Local Communities

    Implementation varies across Member States depending on administrative capacity, local governance, and public acceptance. Notable impacts include:

    • Germany’s Energiewende: Over 800 energy cooperatives, many using feed-in tariffs and regional ownership.
    • Denmark: Over 40% of wind power capacity is community-owned.
    • Netherlands: The Postcoderoosregeling tax scheme encourages local solar investments.
    • Spain and Portugal: Recent legal reforms enable peer-to-peer energy trading and collective self-consumption.

    Challenges include grid congestion, lack of financing tools for small actors, and complex permitting rules. The EU’s technical assistance facilities and streamlined approval processes aim to address these barriers.

     

     

  • 9. Conclusion

    The EU's renewable energy directives and supporting policies represent a comprehensive and technically sophisticated framework for achieving a climate-neutral Europe. Through a combination of binding targets, citizen empowerment, and financial support, the EU is laying the groundwork for a resilient, inclusive, and sustainable energy future. Energy communities and prosumers are no longer peripheral actors—they are central to the transformation of the European energy system.

     

     

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