Energy Communities and the Role of the Prosumer – Economic and Regulatory Considerations on Different Implementation Options

Energy communities promise new opportunities to engage citizens in the energy transition and to unlock new flexibilities for reducing grid expansion costs. One form of these energy communities, which have come into focus especially due to the emergence of new technologies such as blockchain, are local energy markets. The idea is that generation and consumption are traded directly on site on a local market. In theory, direct peer-to-peer trading among neighbors could also circumvent the markups and inefficiencies created by the marketing chain through the power exchange.

Figure 1: Path of the electricity from the producer to the consumer

And although in the RED II and the IEMD the European Union demands the realization of such energy communities, these projects still face enormous regulatory hurdles in Germany.

With the discussion paper “Energy Communities and the Role of the Prosumer” from the PEAK project (FKZ: 03E16035F), we want to shed light on the necessary processes and obligations that prosumers must fulfil when participating in a local energy market and what costs they incur in the process. By contrasting this with the possible efficiency gains from not using intermediaries, we try to work out the financial attractiveness of such market models for different groups of prosumers.

In addition, we outline a way to exploit the key benefits of energy communities that is already compliant with today’s regulatory framework and provide recommendations for action to significantly improve the regulatory and technical conditions for energy communities in Germany.