A Deeper Look at Electricity Markets

10. Local energy markets

Putting people at the centre of all clean energy transitions not only improves people’s lives but is also key to successfully implementing energy and climate policies. Local energy communities, or community-based energy projects, are impacting positively at a global level by deploying renewable technologies. Community energy can provide local flexibility, reduce transmission losses, and enable decentralised balancing, especially when paired with smart technologies and demand response. Energy communities can also reduce bills and generate local jobs. The European Energy Communities Facility, launched in 2024, provides direct support for these initiatives. At the same time, these initiatives are garnering increased attention as effective vehicles towards more inclusive, equitable and resilient energy systems.

Digital platforms and tools are making it easier to set-up cooperatives, engage stakeholders, make investments and exchange electricity. An increasing number of countries are allocating significant funds to support community-based clean projects. For example, the Italian National Recovery and Resilience Plan has allocated 2.2 billion euros to support energy communities and self-consumption. However, regulatory environments (e.g. rules around metering, collective self-consumption and grid access) strongly shape the viability of energy communities, even when funding is available.

With ever-growing pressure to accelerate decarbonisation and to mitigate impacts of the energy crisis on households and businesses, community-based energy communities can help address numerous challenges faced by power systems, including losses, grid congestion and the need to accommodate growing peak demand. The digital energy transition is not only about smart technologies at home, but also about enabling collective, community-led models of participation in energy systems.  We’ll take a closer look at the role of energy communities in the digital energy transition in our final week of the course Working together for a better world.