Energy Communities in urban areas: Comparison of energy strategy and economic feasibility in Italy and Spain

Abstract

Energy communities using renewable energy sources directly contributes to reduction of climate-change gas emissions and energy consumption in the European Union. In addition, energy communities enable citizens to transform from (passive) consumers to prosumers (active consumers and producers) and to play a proactive role in the deployment of energy transition in urban areas. As the transposition of European rules about energy communities into the national laws of EU Member States is very articulated and differentiated, this study proposes a framework to analyze and compare regulatory and financial instruments. This framework is applied to the analysis of the case of Italy and Spain, as representative of European states in which collective actions in the energy sector are not very common, with the aim of highlighting the main critical issues affecting the effectiveness of energy transition strategies and assessing the economic feasibility for energy communities. Analyzing regulations and procedures, including at the local level, it appears that municipalities play an important role as promoters of initiatives among citizen communities, while complex bureaucratic procedure is the most critical issue in both countries and can significantly hinder the spread of energy communities. With respect to the different financial incentives available for the formation of energy communities in Italy and Spain, a few cases studies are hypothesized, calculating the most relevant cost-effectiveness indicators, e.g. Net Present Value. It turns out that a project with the same characteristics achieves greater economic feasibility in Italy than in Spain, depending on the type and size of incentives set by national laws, and, above all, that financial incentives are necessary to make the formation of energy communities cost-effective and thus to achieve direct citizen involvement in energy transition actions.