Western Balkan countries must create legal framework for energy communities, democratize energy

Energy communities, where citizens, businesses and local administrations team up to produce energy for self-consumption, but also sell it, are the right solution for the Western Balkans to speed up decarbonization and make the energy transition sustainable. The current energy crisis and soaring energy prices are only adding to the significance of energy communities, since they can also provide energy security for consumers – steady supply at affordable prices. Governments should create a regulatory framework to enable energy communities to be established and then leave everything else to local actors, primarily local governments, according to speakers at the conference Citizen Energy Communities/Renewable Energy Communities.

The conference Citizen Energy Communities/Renewable Energy Communities in Sarajevo, Bosnia and Herzegovina was organized by the Regional Center for Sustainable Energy Transition (RESET) from BiH and the Heinrich Böll Foundation, with Balkan Green Energy News as the media partner. Participants talked about the experience of two European countries – Greece and Croatia, but also the current situation in BiH, offering recommendations to decision makers, authorities, and public utilities on how to facilitate the development of ”citizen energy” as a way to democratize, decentralize, and demonopolize the energy sector. Speakers also urged BiH authorities to complete the regulatory framework as soon as possible by adopting laws in the Federation of BiH and by-laws in the Republic of Srpska, and aligning them with legislation in other fields.

Kušljugić: energy communities are like “little power utilities”

“It is also essential to educate local governments, non-governmental organizations, the media, businesses, and citizens. It is particularly important for local governments to understand that they can do a lot on their own, because they can be initiators, catalysts, coordinators, but also actors of energy communities,” said Professor Mirza Kušljugić, the chairman of RESET’s managing board.

He described energy communities as “little power utilities,” which generate, store, consume, sell, and distribute energy, but also deal with energy efficiency and help reduce energy poverty.

Given that the terms citizen energy community (CEC) and renewable energy community (REC) are rather new and unfamiliar to many people, their meaning was clarified by Damir Miljević, an energy transition consultant and a member of RESET.

The term citizen energy communities refers to actors and projects in a single location, while renewable energy communities are not limited in this way, which means that someone in BiH can own a share in a solar power plant in South Africa, for example. This detail is important, he noted, for all countries with large diaspora communities.

Miljević: energy produced by consumers will always be available to them

Another difference is in that RECs can produce all kinds of energy, while CECs generate only electricity.

Another benefit of these communities, which is particularly important today, is energy security, given that consumers who produce a portion or all the energy they consume will always have that energy at their disposal regardless of what is going on with large state-owned power utilities.

The key to success in the field of citizen energy is to transpose EU directives correctly, adopt adequate by-laws, ensure easy access to the grid, and provide support in the form or information, promotion, technical assistance, and subsidies, according to Miljević.

Greece: the liberal approach has yielded results, but not up to expectations

Greece is among the EU countries with the highest numbers of energy communities, and its experience is significant for any country that has yet to develop this concept, mainly in terms of missteps in creating the regulatory framework.

Greece introduced energy communities in 2019 and has so far seen the establishment of 1,300 of them, with a total capacity of about 600 MW, with a further 5,000 applications pending approval. However, these communities have failed to deliver on what is the key purpose of the concept, namely citizen participation.

Kuras: Greece has passed a new law to prevent private businesses from continuing with the current practice

Private companies in Greece have taken advantage of the loophole in the regulatory framework that allowed a for-profit energy community to be established by five or more members. This has resulted in a very small number of energy communities founded by citizens, only about a dozen so far, while most of the communities in the country were set up by private businesses.

Dimitris Kouras from ADMIE, the National Independent Power Transmission Operator (IPTO), said the reason companies did that is because energy communities were subject to far less stringent requirements for building a power plant.

In the end, the law on energy communities was good for the development of renewable energy sources, but not for energy communities as they should be – with much greater citizen participation, according to him.

Greece has now passed a new law, which is expected to prevent private firms from continuing with the current practice and enable a greater involvement of citizens. Under the new rules, an energy community can be established by no fewer than 60 members.

Croatia: the laws that introduced energy communities are in fact blocking them

Vjeran Piršić, president of the Eko Kvarner civic association, said that Croatia has adopted regulations which transpose the relevant EU directives and formally introduce energy communities, but that these regulations contain barriers preventing the establishment of energy communities, except, as he said, in some skyscrapers in downtown Zagreb.

Ana-Maria Boromisa from Zagreb-based Institute for Development and International Relations explained that energy communities in Croatia are regulated by various laws – the law on the electricity market and the law on renewable energy and high-efficiency cogeneration, but also other regulations such as the law on natural gas.

Boromisa: luckily, Croatia is an EU member so the European Commission demands that we remove these barriers

So when consumers start teaming up, they face different restrictions and cannot agree on anything, she said, noting that the law contains “multiple infinite loops.”

Another problem is that a renewable energy community can only be established by a residential building or a group of buildings, which means that villages and agriculture are left out.

Moreover, energy communities are restricted to the territory of a single municipality, and can be connected only to a single substation, while Croatia has more than 26,000 substations, according to her.

On the other hand, there are plenty of good examples, such as Križevci, Krk and, more recently, Zagreb, she added.

“Luckily, we are in the EU, and the European Commission says that we must remove these barriers. We’ll see what happens by the end of the year,” says Boromisa, who also chairs the City of Zagreb’s working group on citizen energy.

Mario Rajn (Križevci): mayors must take responsibility

Also speaking at the conference was Mario Rajn, the mayor of Križevci, which is home to Croatia’s first two solar power plants financed by citizens. He said that those who lead cities, namely mayors, must take the greatest responsibility and personally attend all meetings where such projects are being presented.

Although most politicians shy away from a green agenda fearing they might lose voter support, his example shows otherwise. He launched an energy transition in 2017, and was re-elected in 2021 on a clear green agenda with 75% of the votes.

Rajn was re-elected on a green agenda, to the surprise of many

The example of Križevci demonstrates that local administrations can achieve a lot by engaging citizens. At the beginning of the energy transition, the local government could have started the installation of solar power plants on public buildings by itself, but it wanted to involve citizens, so it offered them a model to invest and earn.

Even though the state approves subsidies, the City of Križevci co-finances solar power projects with its own funds, offering up to 80%, or EUR 600, for project development, and up to 40%, or EUR 3,000, for installation costs.

BiH: Republic of Srpska has adopted laws, and FBiH is preparing to follow suit

The Republic of Srpska and Brčko District have enacted laws that enable the establishment of energy communities, while the Government of the Federation of Bosnia and Herzegovina (FBiH) has just adopted draft regulations and sent them to parliament for approval.

Thanks to this move, FBiH is no longer the only part of Europe where there are no conditions for the development of citizen energy, according to Armin Đuliman, an expert from FBiH’s operator of renewable energy sources and high-efficiency cogeneration (OIEiKE).

However, the regulations adopted in the Republic of Srpska, as is the case in Greece and Croatia, do not contain the best solutions, according to Saša Savičić, adviser at the Republic of Srpska’s Ministry of Mining and Energy. Although they introduce the concepts of renewable energy communities and citizen energy communities, these regulations do not elaborate on them, he explained. On the other hand, the drafts in FBiH are detailed enough. Moreover, the Republic of Srpska has not yet adopted by-laws to make prosumers and energy communities possible.

Savičić: educating citizens is crucial

Authorities in both entities of BiH must complete the regulatory framework, identify other regulations important for citizen energy, and align them with the regulations in the energy sector. At the same time, they must start educating citizens and other interested actors as soon as possible, because all will be in vain unless citizens are acquainted with the topic, according to Savičić.

To support this claim, he recalled that the state power utility’s public invitation for the installation of 50,000 household solar systems attracted far fewer applications.

The absence of regulations, however, has not discouraged businesses that wish to install solar panels. Over the past year, since the onset of the energy crisis, firms have been building photovoltaic power plants at a fast pace. Amina Drmno Trlin, director of ProCredit Bank in BiH, said that the bank financed the installation of 5 MW of solar power plants between 2014 and 2021, while the capacity in this year alone has reached 17 MW.

Avdaković: businesses, especially exporters, are always one step ahead of the state

Businesses, especially exporters, are always one step ahead of the state since they know what they are going to face at the border. They adapt quickly and implement the necessary measures, said Samir Avdaković, director of the Institute of Advanced Technologies and Systems (ATS).

He is convinced that one should not put too much hope in the state authorities and that the right approach is bottom-up, starting from elementary schools, kindergartens, local self-governments. This approach was backed by Senad Aganović, an expert from the FBiH Regulatory Commission for Energy (FERK).

He said that citizens and local self-governments must find their interest and then put pressure on those at the top to draw up appropriate regulations, according to Aganović.

The four panels at the conference were moderated by Damir Miljević, Mirza Kušljugić, Nihad Harbaš of nLogic Advisory, and Mirzet Ribić from Fundament.