**Participatory Experimentation with Energy Law: Digging in a 'Regulatory Sandbox' for Local Energy Initiatives in the Netherlands**

## **Esther C. van der Waal 1,\* , Alexandra M. Das 1 and Tineke van der Schoor 2**

Received: 31 October 2019; Accepted: 8 January 2020; Published: 17 January 2020

**Abstract:** To facilitate energy transition, regulators have devised 'regulatory sandboxes' to create a participatory experimentation environment for exploring revision of energy law in several countries. These sandboxes allow for a two-way regulatory dialogue between an experimenter and an approachable regulator to innovate regulation and enable new socio-technical arrangements. However, these experiments do not take place in a vacuum but need to be formulated and implemented in a multi-actor, polycentric decision-making system through collaboration with the regulator but also energy sector incumbents, such as the distribution system operator. Therefore, we are exploring new roles and power division changes in the energy sector as a result of such a regulatory sandbox. We researched the Dutch executive order 'experiments decentralized, sustainable electricity production' (EDSEP) that invites homeowners' associations and energy cooperatives to propose projects that are prohibited by extant regulation. Local experimenters can, for instance, organise peer-to-peer supply and determine their own tariffs for energy transport in order to localize, democratize, and decentralize energy provision. Theoretically, we rely on Ostrom's concept of polycentricity to study the dynamics between actors that are involved in and engaging with the participatory experiments. Empirically, we examine four approved EDSEP experiments through interviews and document analysis. Our conclusions focus on the potential and limitations of bottom-up, participatory innovation in a polycentric system. The most important lessons are that a more holistic approach to experimentation, inter-actor alignment, providing more incentives, and expert and financial support would benefit bottom-up participatory innovation.

**Keywords:** polycentricity; local energy initiatives; community energy; smart grid; legal innovation; socio-technical innovation; bottom-up

#### **1. Introduction**

Perhaps one of the most critical issues for the energy transition is matching sustainable energy supply and demand, and especially managing the local peak loads and the influx of prosumer energy since many renewables are intermittent resources. For now, the existing grid is used for balancing, but when renewable electricity production and use further increase, the grid capacity will not be sufficient and reinforcement will be very expensive. New options for grid management that have been explored are smart meters, smart grids, demand response, and storage technologies to reduce peak loads and manage congestion. These technological developments create opportunities for new roles in the energy system, such as aggregators [1–3].

New technological developments are also relevant from a prosumer perspective [4,5]. Until recently, project partners in smart grid projects perceived users primarily as a barrier [6], or as passive subscribers to grid services [7]. Planko et al. show that end-users are scarcely represented in the system-building networks that are active in the development of the Dutch smart grid sector [8]. Yet, times are changing with the increase of local energy initiatives [9], which increasingly broaden their activities that aim to further influence the direction and pace of the energy transition [10]. Potentially, local energy initiatives can extend their role from energy generation to performing active functions within the smart grid. They could 'actively offer services that electric utilities, transmission service operators or other prosumers have to bid for' [11] (p.4), such as offering storage capacity for balancing, or avoiding grid reinforcement through flattening the usage profile and increasing real-time use and local storage [12].

Local energy initiatives or other local actors would need to be enabled to organise a more integrated resource management at the local or regional level to extend and optimise such services. For instance, peer-to-peer supply and flexible tariffs could increase local use.

However, the extant law is sometimes a limiting factor for energy management innovation towards a renewable energy (RE)-based system that needs matching demand and supply both in terms of available energy and grid capacity [3]. For instance, for household consumers, law might need to enable pricing of grid services based on actual loads instead of connection capacity.

Several countries' regulators have devised 'regulatory sandboxes' to create a participatory experimentation environment for exploring revision of energy law to overcome such legal obstacles for energy transition. A main characteristic of these sandboxes is that they allow for a two-way regulatory dialogue between an experimenter and a regulator to innovate regulation and enable new socio-technical arrangements. For instance, in the Netherlands, the executive order 'experiments decentralized, sustainable electricity production' (EDSEP) allows for the implementation of innovative energy services at the local level [13,14]. Another example is the UK, where innovators can get a temporary derogation of some rules in order to run a trial if the proposed product or service is considered to be genuinely innovative and able to deliver consumer benefits [15]. Importantly, new actors, such as local energy initiatives, take centre stage in these sandbox experiments, and they are seen as a locus of agency, in contrast with 'business as usual' in smart grid experiments, as described above [6–8].

What is especially interesting about these experiments is that, while experimenters can take on new roles due to exemptions, they do not operate in a vacuum, but experiments need to be designed and implemented in a multi-actor, multi-centered decision-making system. Such a system was coined by V. Ostrom et al. as a polycentric system [16] and was further elaborated by E. Ostrom [17,18]. In the particular polycentric system in this study, the experimenters need to collaborate with the regulator, but also energy sector incumbents, such as the distribution system operator.

Little is known regarding the functioning and innovative potential of local energy initiatives as experimenters in polycentric actor-constellations [19], while they are earmarked as potential providers of new grid services in such a system by governments creating these experimentation environments [11]. Our central question, therefore, is: What can be learnt about local energy initiatives' bottom-up experimentation with smart grids in a polycentric energy system? By answering this question, we aim to provide policy relevant insights regarding the preconditions for and obstacles to using end-user collectives as innovators informing new energy regulation, which is more facilitative of the integration of renewables within the limits of the grid. Furthermore, we would like to introduce the polycentricity concept to the community energy literature and demonstrate its value to better understand the relationality and interdependencies in governing energy.

To research this, we focus on the aforementioned case of the Dutch EDSEP, which invites homeowners' associations and energy cooperatives to propose projects that are prohibited by extant energy regulation. Local experimenters can, for instance, organize peer-to-peer supply and determine their own tariffs for energy transport in order to localize, democratize, and decentralize sustainable energy provision. We further introduce our case in Section 2. Subsequently, we elaborate on our theoretical framework, in particular the concept polycentricity, in Section 3. In Section 4, we describe the used case study methodology and introduce the four EDSEP projects that are analyzed in-depth. Afterwards, we will describe the polycentric configuration under the EDSEP, and the functioning of the experimenters in this configuration in Section 5. Finally, Section 6 concludes the article with a discussion of our findings in a broader context and the value of the polycentricity literature for studying the potential and limitations of bottom-up, participatory innovation in a polycentric system.

#### **2. Policy Background and Introduction EDSEP**

In this section, we introduce the policy developments that led to the EDSEP, and the EDSEP itself.

#### *2.1. Policy Background*

The direct reason for the EDSEP is the 2013 Social and Economic Council (SER) energy agreement for sustainable growth between over 40 Dutch organizations and supported by the Dutch national government [13]. In the text of the energy agreement, it is stated that: "To realize the energy transition the legislation needs to be providing a consistent framework to provide investors with long-term security. In addition, the legislation needs to facilitate innovation. This means that the legislation needs to provide sufficient space to enable desired new developments, specifically when it comes to the production of RE. To this end, the Gas and Electricity Acts will be revised" [20]. For the revision, the Dutch government had established the legislative agenda STROOM (abbreviation of streamlining, optimizing and modernizing, in Dutch: STROomlijnen, Optimaliseren en Moderniseren), which had achieving clearer and simpler rules to reduce bureaucracy, streamlining with European legislation, and being facilitative of a competitive economy and transition towards as sustainable energy system as its goal. This legislative proposal offered a merger of the Electricity Act 1998 and the Gas Act [21].

However, instead of waiting for the new Gas and Electricity Act, the parties in favor of local, sustainable energy lobbied to make use of article 7a sub 1 of the Electricity Act 1998. This article states that, through executive order, in accordance with European Union legislation, the Electricity Act can be derogated from by the experiment [22]. The article intends to enable relatively small-scale, localised, RE experiments for which the strictly regulated separation between the commercial activities production and supply, and the publicly managed distribution side of the energy system can be relaxed, to a certain extent under specified conditions for a particular target group of homeowners associations (HOAs) and cooperatives.

Such derogation has to be laid down in an executive order (in Dutch: Algemene Maatregel van Bestuur) and it has taken the shape as the EDSEP, which entered into force on the 28th of February 2015. The objective of the EDSEP is stated in its explanatory memorandum and it is to observe whether it is necessary to strictly apply the rules of the current Electricity Act for decentrally produced renewable electricity.

#### *2.2. Executive Order 'Decentral, Sustainable Electricity Production Experiments'*

To informedly revise the Electricity Act, the Dutch government strives to obtain more knowledge regarding grid stabilization by prosumers and obstacles that are created by present regulations. For this reason, the Executive order 'Decentral, sustainable electricity production experiments'(in Dutch: Besluit experimenten decentrale duurzame elektriciteitsopwekking) was designed [23]. The goals of the executive order are stimulation of more renewable energy (RE) at the local level, more efficient use of the existing energy infrastructure, and more involvement of energy consumers with their own energy supply.

It provides energy cooperatives or HOAs the opportunity to get an exemption from the Electricity Act and carry out the functions of the grid operator. The cooperatives and HOAs can carry out two main types of experiments:

The size of the experiments is chosen, so that the projects remain manageable and the general security and safety of the electricity provision on the regional grid will be guaranteed. Safeguarding provision within the projects is the responsibility of the participants of the projects. Thus, the protection of the consumer is partly taken care of through the assumed control that the participant can exert in the cooperative or HOA. The members should hold each other accountable for the responsibilities of the local energy initiative regarding production, supply, and transport.

Initiatives that are willing to make use of the EDSEP need to apply at the Netherlands Enterprising Agency (in Dutch: Rijksdienst voor ondernemend Nederland, RVO) for the derogation of the Electricity Act. Yearly, 10 projects of both types could be admitted, but only a total of 18 projects have been approved (see Appendix A), and only few are actually being implemented. The admission started in 2015 and ended in 2018. The experiments will be evaluated in early 2020.

#### **3. EDSEP Experimenters As Decision-Making Unit in a Polycentric System**

The EDSEP is designed to identify the obstacles that the extant Electricity Act presents to the development of local collective solutions to the production of more RE and its more efficient use. When experiments receive derogation under the EDSEP, this means that they become part of a system with decision-making units at several levels, with whom they have to cooperate, or by whom they are supervised or even opposed. These include, amongst others, grid operators, energy companies, the Netherlands Authority for Consumers and Markets (ACM), the Ministry of Economic Affairs and Climate and its executive organization RVO.

A polycentric approach is suitable for analysing the functioning of these experiments as part of such a larger system in which decision-making power is distributed [24], and it has been used for previous work on smart grids [25,26]. Polycentricity means that there are "many centres of decision-making which are formally independent of each other" [16], but which in practice often need to collaborate with others to execute what they are formally allowed to do. For instance, in the case of the EDSEP experiments, experimenters pursuing a project grid only formally need to discuss their plans regarding grid design and distribution with the regional distribution system operator (DSO), as they are allowed to take the role of DSO in their mini-grid, but in practice the approval of the regional DSO is important for obtaining the exemption.

Polycentric systems are characterised in the literature as being multi-level, multi-sectoral, multi-functional, and multi-type, as displayed in Table 1 [26,27]. We will use these concepts to describe the polycentric setting in which the experiments operate in Section 4.1, as the authority of a decision-making centre in energy regulations is defined by these characteristics. For instance, a locally functioning energy initiative is a private sector initiative and has therefore previously been excluded from the function grid management, as it was deemed a public good.

We rely on Ostrom et al. [16] for the analysis of the polycentric system, who propose four criteria to evaluate the well-functioning of a polycentric system: control, political representation, efficiency, and local autonomy. We briefly define these criteria in Table 2.

**Table 2.** Criteria for evaluating the functioning of polycentric decision-making systems [16].

#### **4. Methods**

#### *4.1. Case Study*

We study the EDSEP as a multiple case study. Case study research allows for in depth analysis of a contemporary phenomenon in a real-life context and the combination of various complementary research methods [28]. Our sample of cases includes four projects that were approved under the EDSEP: Schoonschip, Endona, Collegepark Zwijsen, and Aardehuizen. All of these started relatively early (in 2015 or 2016) and their projects have reached an advanced stage. Two of these are so-called large experiments and two are project nets, so both types of experiments that are possible within the EDSEP are equally well represented.

Many (web-)documents that describe the four cases are available, and for each case the project initiators or other participants heavily involved in the development have been interviewed in a semi-structured face-to-face interview. Although these representatives provided us with key information for this research, we acknowledge that other participants to the experiments could have different perspectives. Furthermore, we conducted interviews with other relevant actors in the polycentric system related to the EDSEP, mostly telephonic. Appendix B presents an overview of the interviewees.

This information has been analysed through reflexive thematic analysis, starting with the criteria indicating the functioning of polycentric systems as analytical framework. The coding has been based on the six-step methodology of Braun et al. [29], which consists of the steps: familiarisation, generating codes, constructing themes, revising themes, defining themes, and writing the report. We used the qualitative data analysis software Atlas.ti for our analysis.

#### *4.2. Cases*

Via Tables 3–6, we will shortly introduce all four of our case studies based on their project type, delineation of the experiment, its organization and governance, its energy system, and the use of the EDSEP.

#### **Table 3.** Case study description Endona.

energy system.

#### **Table 4.** Case study description Aardehuizen.

#### **Table 5.** Case study description Collegepark Zwijsen.

#### **Table 6.** Case study description Schoonschip.

#### **5. Results**

In this section, we first discuss the polycentric constellation of actors that EDSEP experimenters need to function in, and thereafter we analyse the well-functioning of the experiments in this context.

#### *5.1. The Polycentric Constellation of Actors Under the EDSEP*

In this section, we will introduce the polycentric energy system that EDSEP experimenters are part of and function within (see Figure 1 for an overview). The selection of the actors that we discuss here is limited to actors that are directly involved in EDSEP experiments, and therefore does not include actors, such as the high voltage system operator.

*Energies* **2020**, *13*, x FOR PEER REVIEW 9 of 23

**Figure 1.** Overview of polycentric energy system under the EDSEP. **Figure 1.** Overview of polycentric energy system under the EDSEP.

#### • Energy supplier • Energy supplier

Dutch energy companies are traditionally large, nationally operating, private companies. In recent years, some cooperative energy companies have been founded that are closely related to local energy initiatives and seek to return at least part of the benefits to the region. Dutch energy companies are traditionally large, nationally operating, private companies. In recent years, some cooperative energy companies have been founded that are closely related to local energy initiatives and seek to return at least part of the benefits to the region.

The functional energy companies receive surplus electricity from the projects and deliver electricity when the projects do not meet demand with their own production. They take care of the administration and billing for the electricity produced and consumed. The functional energy companies receive surplus electricity from the projects and deliver electricity when the projects do not meet demand with their own production. They take care of the administration and billing for the electricity produced and consumed.

Energy suppliers that supply to small scale users, such as households, need a supply permit. This permit is given by ACM when the supplier can show amongst others that supply will be reliable, tariffs are reasonable, and the company is financially, organisationally and technically compliant with the conditions of the Electricity Act. Under these conditions, it is not feasible for local energy Energy suppliers that supply to small scale users, such as households, need a supply permit. This permit is given by ACM when the supplier can show amongst others that supply will be reliable, tariffs are reasonable, and the company is financially, organisationally and technically compliant with the conditions of the Electricity Act. Under these conditions, it is not feasible for local energy initiatives

initiatives to act as the supplier. However, a few cooperative energy suppliers exist that supply

to act as the supplier. However, a few cooperative energy suppliers exist that supply energy that is produced by a growing number of local energy initiatives. These suppliers are cooperatives of cooperatives, of which local energy initiatives producing energy are member.

Furthermore, an energy supplier needs to have balance responsibility (in Dutch: programmaverantwoordelijkheid) or have a contract with a balance responsible party (BRP). The BRPs share the responsibility of balancing and they have to inform grid operators about their planned injections, offtakes, and transports. At the moment, experimenters are not able to take up balance responsibility and they rely on the larger national energy companies to provide this function for them.

## • DSO

The DSOs in the Netherlands are territorially organized, monopolist utility companies that operate regionally. They are specialised in the transport of electricity and the maintenance and extension of the grid.

As utility companies, they are subject to forms of public control and regulation. The Authority for Consumers and Markets yearly determines the tariffs that the DSOs can charge to their clients to connect them, be connected and transport energy, and how much profit they can make on their investments.

In the large projects, the DSO remains the owner and manager of the grid, but, in the project grids, the grid is part of the project, and is built and maintained by the experimenters. The DSOs are asked by RVO to give a reaction on the project grids, and they try to be involved in the design of these grids. They want to be formally involved in the process towards the derogation.

The DSOs have considerable experience and they are well equipped to build and maintain grids. However, as the regulatory focus in the Netherlands is primarily on the public values of affordability and availability of supply, the safeguarding of sustainability is prioritized at a much lower level [4,32]. While DSOs can benefit from the sustainability experiments, they are concerned about the knowledge that is present among the experimenters to perform DSO tasks. After the 10-year-derogation, the project grid has to be potentially handed over to the DSOs, and they wonder whether the quality of these grids will be sufficient, and who must pay the costs if this is not the case.

• ACM

The ACM is a nationally and functionally operating, independent public organization. It is a business regulation agency, which is charged with competition oversight, sector-specific regulation for several sectors, and enforcement of consumer protection laws. In the context of the EDSEP, the ACM checks the calculation method for the energy and transport tariffs if the energy experiment wants to take over the task of the supplier and the DSO.

• Tax authority

The tax authority is a nationally and functionally operating public organization. It is tasked with the tax collection and customs service of the Dutch government and it is part of the Ministry of Finance. It levies and collects the energy tax on electricity (in Dutch: Energiebelasting elektriciteit). This is a type of environmental tax that disincentivizes use. The energy tax per kWh for 0–10,000 kWh electricity was in 2019 € 0.09863 [33]. This is a large share of the average electricity price in the first quarter of 2019 of € 0.203 per kWh for households using 2.5–5 MWh [34]. In the experiments, it is dependent on the circumstances within each project whether energy tax needs to be paid, and no special conditions exist.

Another tax that needs to be paid is for the storage of renewable energy (in Dutch: Opslag duurzame energie), which is € 0.0189 per kWh until 10,000 kWh [33]. In addition, a payment of 21% VAT is charged over supply costs, transport costs, and levies.

• RVO

RVO is an executive organization of the ministry of Economic Affairs and Climate, which operates nationally in the public domain with a functional agenda targeted at executing policies that support Dutch enterprising. RVO provides the derogation to the projects and supervises its implementation.

Once or twice a year it organizes meet-ups for the experiments, together with the national platform organisation for community energy, Hieropgewekt. Here, projects can create a community of practice and share learning experiences.

The types of experiments under the EDSEP are left rather open to see what kind legal changes are required to facilitate energy transition. This meant that some of the problems that the projects encountered were not foreseen, e.g., whether energy tax needed to be paid was first also not clear to RVO.

• Experimenting HOA or cooperative

The experimenters are locally operating, territorial decision-making units. The HOA's and cooperatives themselves are voluntary bodies, but a hybrid sometimes develops where a private party is the main developer and is either founding the HOA or cooperative, or paid by it to take on an important role in the design of the experiment. The functions that an experiment can fulfil under the EDSEP in the energy system can be any type of activity in the domain of energy production, supply, or grid management for projects grids, whereas large experiments are more constrained (see Section 2.2).

• Municipality, provincial government, and European Union

The governmental bodies are, similarly to the previously described departments of the national government, public, territorial bodies, which operate at their respective scales. In the context of the EDSEP, these governments have played various roles in the polycentric energy system, such as subsidizer and provider of permits. This will be discussed in more detail in Section 5.2.4 regarding political representation.

#### *5.2. The Functioning of the Experiments in Their Polycentric Environment*

We will now discuss the functioning of the EDSEP experiments within the afore-described Dutch, polycentric energy system, based on the criteria from our conceptual framework: control, efficiency, local autonomy, and political representation.

#### 5.2.1. Control

Under the EDSEP, experimenters can carry out several tasks that were not permitted under the current Dutch model. Energy transport and grid management are considered to be a public utility, and production and supply are commercial activities. Without the EDSEP, the experiments can only be active in production and supply. However, supply requires a specific permit and it is not feasible for most local energy cooperatives or HOA's due to the required scale of customer base and financial risk. Before 2014, most of the energy cooperatives that acted as supplier sold electricity through energy companies as reseller, while using a so-called white label construction [35]. Others outsource tasks, such as administration and balance responsibility, to a back office of one of these companies while still using their own brand and image [36].

With a derogation, experiments can take over the tasks of both the energy supplier and the DSO, to the extent that they deem to be most beneficial for their projects. Note that derogations only apply to specific articles of the Electricity Act [23]. Other laws and regulations, such as the General Data Protection Regulation, continue to be applicable. In short, the derogation presents the following opportunities to derogate from the Electricity Act

There are regulations that limit the control of the experiment. One of these that poses a particular threat to the experimenters is the European Union (EU) legal obligation to provide third-party access to a network whether it is a public or a private network (see article 32 Third electricity directive, 2003/54/EG. Pb EU L 211/55.). This means that participants need to be able to choose another energy supplier. From the perspective of the experimenters, this third-party access is a threat, because it can undermine the business model, as only as much energy is allowed to be generated as the projected use of the participants [23]. Moreover, collective energy management and storage are at risk when the user group decreases. The installations are dimensioned to supply for the initially projected users, and part of the production capacity can potentially not be used anymore if the user number decreases. A reason for this is that the government wants to keep the experiments as self-contained as possible to minimize the risk of blackouts or safety issues in surrounding areas.

Secondly, the prohibition of a flexible transport tariff limits the control of the experiments. Currently, it is only allowed for the DSO to charge a fixed daily transport tariff that is proportional to the capacity of the grid connection [37]. This limits the attractiveness of balancing, as the DSO cannot vary the costs based on the actual used capacity.

Finally, non-energy legislation can also limit the control of experiments over their project. For instance, project grids are only attractive when there is no existing grid and, therefore, go along with the development of houses or apartments. The experimenters then need to obtain a building permit and might need to obtain permission from an aesthetics committee of the built environment. For instance, for Collegepark Zwijsen it was hard to get the design with solar collectors on the façade approved, as it was first deemed to negatively affect spatial quality.

#### 5.2.2. Efficiency

Having an experiment under the EDSEP can lead to a number of cost savings for the participants. We list the most important below [38]:

• Grid connection and DSO transport costs for project grids: A one-time saving on the grid connection costs can be realized. Experimenters that newly construct a grid can save costs, because one high-volume connection to the regional grid is cheaper than the sum total of connections for individual dwellings to the regional grid. This is a financial incentive to balance the energy on project grids, because, the smaller the connection with the regional grid required, the lower the connection costs. Furthermore, the periodical transport costs that need to be paid to the DSO are also lower when the capacity of the connection is lower. This can result in a rather significant saving as the DSO costs are about 1/3 of the total electricity bill.

To give an example: The total of the DSO tariffs for a household with an average 3 × 25 A connection at the DSO Stedin € 230.36 (other DSOs do not differ much in their tariffs) [39]. Schoonschip annually pays € 6759.74 according to their business model, which comes down to an average of € 225.32 per dwelling. As this is an all-electric neighborhood, where the electricity consumption is higher, the balancing brings these dwellings back to rather average DSO costs).

However, if dwellings do not have their own connection to the grid, they miss out on the annual levy rebate for a part of the energy tax.

• DSO transport costs for large grids: the periodical transport costs on a large grid can be reduced by creating a virtual connection through a shared code for a group of participants that cooperate to create balance. The lower the required peak capacity, the lower the transport costs. Additional costs can be saved by helping the DSO to realize a flat usage profile (using the same capacity of the grid throughout the day), because this has value to the DSO. However, sufficiently adjustable capacity is needed for this.

When the EDSEP started, not all of the decision-making units were familiar with the regulation, because RVO did not prepare them for working with the EDSEP. This led to various instances when the experimenters needed to explain the regulations to the DSOs, ACM, and the tax authority. The compartmentalization of DSOs had a negative impact on the progress of projects, because the functioning of decision-making units within DSOs was not always well aligned. Accordingly, after informing and convincing the civil-servants in one unit, experimenters met with resistance of the executive staff, and had to re-explain their plans. RVO has asked organizations that have dealings with EDSEP-experiments to assign a case-manager with whom the projects can communicate at an early stage to improve this situation.

The scale is another efficiency related factor. It is questionable whether the experiments are an interesting party for the DSO to do business with for grid balancing. Grid operators could for example contract experimenters to make use of their storage capacity, or compensate them for the investment costs of grid reinforcement that are avoided by the experiment. However, some grid operators prefer to deal with larger parties and find projects with a size of up to 10,000 households too small and not very interesting to buy flexibility from. The creation of a legal requirement to buy balancing services through tendering could be a solution here, giving priority to small-scale providers. Or oblige DSOs to buy local balancing services for a price that reflects their value. Historically, such a similar obligation has been embedded in the law for DSOs regarding grid connection to make sure energy production and consumption would be accessible at any location in the country.

Furthermore, energy tax needing to be paid twice for stored energy is a major inefficiency [40] (once when the electricity is uploaded in a battery and once when it is taken out again). As the energy tax is a high proportion of the energy price (see footnote 5), this limits experimentation with storage solutions. Unfortunately, alignment between the Ministry of Economic Affairs and Climate and the Ministry of Finance to avoid this double taxation has been lacking. In the near future, this problem will no longer occur, because the EU has adopted the 'Clean Energy for all Europeans' package, which states that owners of storage facilities should not be subject to any double taxation [41].

Additionally, the interpretation of current energy tax rules makes the experiments less efficient. Energy tax can be saved if the ownership structures make sure that there is no supply to third parties, and the participants make use of their own production and distribution capacity. However, a third party is a party with a different real estate valuation tax object, according to the taxation criteria (REV-object, in Dutch: woz-object). Each house or apartment is a REV tax object, and, therefore, energy tax on electricity needs to be paid when a participant uses energy from the production installation of another participant. A possible solution would be for the municipal government to register the houses as one REV-object (this has no consequences for the REV-tax and the procedure is the same as for other REV-tax objects with multiple owners).

Moreover, whilst DSOs embrace the goal of the EDSEP to keep production and consumption local, they fear that private project grids threaten the socialization model that underlies Dutch grid management. The DSOs have the perception that some experiments are motivated by the evasion of the energy tax, as it appeared at first to some participants that this tax would not apply for the experiments.

Last, but certainly not least, the experimenters need to fully comprehend a whole gamut of complicated energy related regulation to be successful. Misinterpretation can lead to a worsening of the business model and can, ultimately, lead to an inviable project. Experimenters progressed slowly despite some support from RVO and Hieropgewekt due to this complexity. Slow progress even led to the strange situation that the government has decided to draft a follow-up EDSEP without waiting for the formal evaluation of the present experiments.

#### 5.2.3. Local Autonomy

Formally, for experimenters, the two structures to self-organize and function as a decision-making unit in the polycentric energy system are HOA and cooperative.

While HOA and cooperative seem to be structures that are explicitly designed for high commitment of the involved households, these do not, per se, imply a high level of participation of all participants. For example, Endona is a cooperative, but only its board members are members to keep decision-making with the daily management. The organizational structure is primarily set up to run the sub-projects efficiently, it is not geared to involve many local participants. A second example is Collegepark Zwijsen, which was designed without input from its future inhabitants. The derogation was applied for by its project developer, but assigned to the HOA, which was not yet in existence at that time. The HOA only started its regular meetings after the residents started living in the apartments. From then on, the autonomy of the HOA will be larger, as it will decide on topics, such as maintenance and tariffs.

The other two HOA's, Aardehuizen and Schoonschip, functioned from the beginning of the projects as decision-making units run by the future inhabitants. Both outsourced tasks to professional parties, but took the decisions about project design themselves. The working groups prepared proposals about e.g., sustainability, but these decisions were then taken collectively.

All of the projects, except Zwijsen, which is entirely professionally developed, mention that working as a HOA or a cooperative with participation based on the input of volunteers, who are mostly not professionals in the field of energy, has made it harder to function as a local decision-making unit, because they need to invent the wheel by themselves and it was not always easy to acquire all of the required information for informed choices. Additionally, in the communication with other decision-making units such as DSOs, the tax service and ACM, the status as cooperative or HOA was by times a disadvantage and they needed to first convince the other parties of their know-how and professionality.

#### 5.2.4. Political Representation

The municipal government was the political body that was most involved in the projects. Sometimes the relationship with the local government depended on the political tide, but most projects had a productive working relationship with the municipality and felt supported. Two projects got a municipal subsidy: Endona for a feasibility study for its solar park, Schoonschip a contribution per household for the high energy efficiency of the houses.

Additionally, motions at the local council functioned as a mechanism to realise political representation of the interests of projects in local politics. Aardehuizen and Collegepark Zwijsen both benefited from political motions. Aardehuizen benefited from a motion about sustainable building prior to the project, which helped to increase the support for the project. The project developer of Zwijsen successfully lobbied for a motion that would reduce the fee for the building permit, which is proportional to the building costs and was high due to the costs of the energy sustainability measures and techniques. The project developer was also successful in lobbying to overrule the negative advice of the aesthetics committee for the built environment, so Zwijsen could have its solar collectors.

Furthermore, Endona, Aardehuizen, and Schoonschip received a provincial subsidy, e.g., to hire an architect or for feasibility studies. Aardehuizen also received a European subsidy for the community building, although this had to be partly paid back, as the building could not be realised in time.

At the national level, no specific representation of the experiments exists. RVO reports on their progress to the ministry of Economic Affairs and Climate, but only from their position as an executive organisation, not as lobbyists. For this reason, it is unlikely that the experiences of the experimenters will be influential in the revision of energy law, especially because the experimenters were not asked for their input during the consultation for the draft of the follow-up executive order.

#### **6. Conclusions and Discussion**

We studied the EDSEP as an example of a regulatory sandbox, a participatory experimentation environment for exploring the revision of the Electricity Act. When projects receive a derogation under the EDSEP, they can perform new tasks and combine roles that are otherwise legally separated and thereby deliberately unbundled to protect the consumer and safeguard security of supply, affordability, and safety. On the one hand, the project grids can act at the same time as the supplier, producer, and distributor of energy, managing an own mini grid. On the other hand, the large experiments cooperate with the DSO, while the grid remains owned by the grid operator, and are concerned with flattening the usage profile and balancing supply and demand.

By taking on these tasks, experimenters become part of a polycentric energy system with decision-making units at several levels. Interested in their functioning, we asked ourselves the question: What can be learnt about local energy initiatives' bottom-up experimentation with smart grids in a polycentric energy system? In this section, we conclude on our findings and discuss our conceptual framework, and then put these in a broader perspective of legal innovation for energy transition.

#### *6.1. Lessons Learnt from Participative Experimentation under the EDSEP*

For potential experiments, the EDSEP has shown to be a complicated procedure with limited attractiveness for local energy initiatives, which resulted in only 18 experiments of the potential 80 in a four-year period. We want to make four main points, related to the four criteria for the well-functioning of polycentric decision-making structures.

• Efficiency: Combining exemptions with a pro-active nurturing of experimentation

The EDSEP's exemptions should make the integration of RE and grid balancing more attractive, which adds to the overall efficiency of the energy system. The EDSEP enables taking on new roles, but taking on these roles is hardly attractive or facilitated in the polycentric constellation. First, our case studies show that the EDSEP provides only a modest improvement for the business case of smart grids at the project grid level, and that for the large experiments we studied a good business case has not yet been found due to the limited financial attractiveness and the large organizational capacity required for taking on the balancing and supply roles while they come with considerable financial risks.

Second, for developing the experiments, there is no financial support available and, therefore, the experimenters have to rely solely on their own political efficacy and networking capacities to attract subsidies, or partners with knowledge or capital to invest. RVO has an important task to distribute subsidies for energy innovations, especially for innovations in the early stages. Hence, a special fund or subsidy for experiments would fit in seamlessly in the overall aims of the RVO. In addition to this, we suggest that more support should be created to overcome knowledge differences in small-scale volunteer organizations.

Third, alignment between decision-making units, such as the DSOs, ACM, and the experiments, was initially lacking due to poor communication with the other actors about the regulation by RVO, which made it harder to establish a productive collaboration with these decision-making units. This reduced the efficiency of experimentation, as enrolling such established actors in their network is very beneficial for bottom-up technological innovation projects [42].

Hence, our findings suggest that the smart-grid niche that the EDSEP provides lacks sufficient nurturing to function efficiently [43]. Nurturing can take place through assisting learning processes, articulating expectations, and helping networking processes [43]. All of these could be strengthened to increase the efficiency of the polycentric constellation that is created under the EDSEP.

• Control: the benefits and limitations of the new roles

The EDSEP fulfills a need to explore regulation that better facilitates the integration of intermittent resources. By making use of the EDSEP, the experimenters can take on new roles as grid managers (for project grids even the role of grid owners is possible) and as energy suppliers. For project grids, we saw that this incentivizes grid balancing through providing the opportunity to bring down the DSO costs by minimizing the exchange of energy (import or export) between the project grid and the regional grid. Additionally, the exemption from getting a supply permit is used for the project grids, but, in both cases, the administration has been outsourced to either an energy company or a company related to the project developer. These tasks require more time and expertise than the local initiatives could give and, therefore, they chose to outsource the tasks to commercial organizations.

Taking on the roles of supplier and balancing agent is more difficult when it comes to extra control for the large grids. First, when it comes to supply, the customer base is bigger than for the small projects, so the risks of, for instance, late payments are also higher, but the company is still not big enough (or not sure whether it is in the case of Endona) to carry these risks. Second, when it comes to taking the role of grid manager for a larger area, this is complicated due to the fact that for flattening the usage profile, adjustable capacity is required to create a good business case, which is expensive for experimenters, as it has to come largely from storage because they cannot use industrial partners' capacity, as their participants have to be mainly households. Furthermore, as only the local experimenters could experiment with tariff structures and the regional DSOs not, business opportunities regarding balancing are limited. Lastly, the supplier role of the BRP is out of reach for the experimenters, as the software for this is too expensive and the risks too high for the small-scale experiments.

Thus, having the opportunity to take more control over the local energy system from a legal perspective does not always mean that all of this control can be taken over and all new roles can be enacted. Some of the tasks are not (yet) feasible, mostly due to financial, organizational, practical, or sometimes legal constraints. However, despite the fact that experimenters cannot take full control, the EDSEP provides end-user collectives with an incentive to balance their grid, e.g., enabling p-2-p supply without intervention of a DSO.

• Political representation: approach sustainability more holistically in policymaking

Experimentation would have been more effective if the Dutch tax authority was enabled by the ministry of Finance to co-experiment and to, for instance, exempt the experiments from double taxation on storage. However, communication regarding the EDSEP between the ministries of Economic Affairs and Climate and Finance was lacking. Some projects have tried to come up with project designs to pay less energy tax. However, no exceptions or reduced tariffs were granted to these relatively small energy cooperatives, in contrast to the tax rulings for large international companies. Hence, similarly to the work of Kooij et al. on niche–regime interactions between the tax authority and collective PV producers, our case also 'illustrates the political and power-laden nature of sustainability transitions, going beyond the focus on organizational and technological challenges' [44] (p.10). Ultimately, the EDSEP-sandbox shows that an experiment is not always fully a two-way regulatory dialogue between an experimenter and a regulator.

Furthermore, the lack of alignment between ministries shows that the development of policies that affect sustainability evolve in parallel worlds, and a more holistic approach is needed [1]. Stepping away from silo thinking and strengthening inter-ministerial alignment would be helpful in designing effective energy transition policies. Stronger political representation of a lobby organizations or intermediaries [45,46] at the national level would also be useful in this case. For instance, EnergieSamen, a Dutch lobby organization for local energy initiatives, could take on such a role.

• Local autonomy: a legislative balance between self-responsibility and the protection of consumers

The experiments show that, while the HOA and cooperative seem to be structures that are explicitly designed for high commitment of the involved households, these do not, per se, imply a high level of participation by all participants. In the context of smart electricity, energy legislation needs to strike the balance between opportunities for self-responsibility and the protection of consumers [1]. Options for users to shape their own energy system are desirable in the context of energy democracy [26], but consumer protection against high prices could be threatened, e.g., when making tariffs flexible. Therefore, further experimentation with legal innovation should not only explore how legalislation can be facilitative of technological innovation, but also of social innovations to create an energy system that represents the interests of its users and is acceptable to them. Involving local energy initiatives or users cannot function as the sole mechanism of user involvement, because our cases show that such a characteristic does not always guarantee high participation. Furthermore, adequate insight of end users in the experiment necessary to protect their interests might be lacking.

#### *6.2. Theoretical Reflection on Polycentricity*

The advantage of the concept of polycentricity is that an actor constellation can be described by four different actor-characteristics (level, type, sector, and function), which provide helpful tools for understanding the context of experimentation. We find that this concept provides more guidance for our study in defining actor roles and their position in the energy system than e.g., the multi-level perspective (MLP), which predominantly focuses on levels and rather general dimensions, such as science, market preferences, technology, socio-cultural, and policy [47]. With the concept of polycentricity, it is easy to see what a nested system of decision-making units looks like and in which ways it is layered, whereas MLP puts more focus on which sectors (market, science, policy, etc.) are represented in a system.

Furthermore, the concepts for evaluating the role of actors in polycentric systems (local autonomy, control, efficiency, and political representation) help to understand what is necessary for a decision-making unit in such a system to function well. They were especially helpful when studying legal innovations due to the inclusion of the concepts of control and political representation. The same goes for studying participative bottom-up innovation due to the inclusion of local autonomy. Lastly, the concept efficiency helps to understand whether the decision-making unit can provide added value to the system, which is a useful indicator in assessing whether sustainability experiments contribute to an efficient progress towards a more sustainable energy system.

However, it needs to be realised that, while using these concepts, the success of the experimenters in the polycentric context does not equal the value of the experiment for legal innovation. When evaluating the experiments, the question should also be whether the experiment has resulted in new insights for guiding energy transition, in this case study for revising energy law, and not only whether the experimentation constellation itself is efficient in providing added value. Learning potential, instead of replication potential, should be central in evaluating experimentation for legal innovation.

Furthermore, the analytical framework is focused on the functioning of the polycentric system, but does not give theoretical guidance on what actors can do to nurture experimentation, or how they can better work together and create alignment in the system. Strategic niche management and actor-network theory may be helpful frameworks to further explore these aspects of innovation management.

#### *6.3. Final Remarks*

For the Dutch legislators, learning from the EDSEP experiences is important, because the EDSEP is only the start of experimentation informing revisions of energy law. A follow-up of the EDSEP has already been drafted, being based on the 2018 Law Progress Energy Transition. This executive order expands the size of experiments, experimenting actors, and also enables experiments under the Gas Act. The new regulation has been presented to the parliament in May 2019 and new experiments can apply once the new executive order has received positive advice of the Council of State, which is expected early 2020.

We would like to briefly summarize the conclusions of this study, so they can be taken into account for the evaluation of the EDSEP as well as for future experimentation. Experimentation under the EDSEP shows us that inter-actor alignment was initially lacking and pro-active nurturing would have smoothened the implementation. Furthermore, EDSEP experimenters faced significant constraints, had very limited political representation, and varying representation of the users within the experiment.

As a starting point to improve both the well-functioning of the experiments and the quality of the learning process, an intermediary could be more of a bridge between national and regional actors and the locally operating experimenters, and take a more active role in developing a knowledge base, providing project development support, spreading knowledge in the polycentric experimentation system, and extending the learning community. A first option for this could be an extension of the role of the executive organization, RVO, as it is already involved in the derogation process. In the Scottish context, Community Energy Scotland, which provides such support, also grew from a governmental initiative. Alternatively, the national community energy platform Hieropgewekt could take on this role, or even the regional umbrella organizations for energy cooperatives. Yet, to realize this, such intermediaries should pro-actively follow developments in energy legislation relevant for local energy initiatives and attract or train expert staff that can assist experimenters with their project development. As many of such organizations do not have the financial means for this, a government that truly wants to support inclusive innovation and transition processes should allocate budget to them for staff time.

Thus far, a lot has been expected from the experimenters without much active facilitation. Resultantly, the distribution between the risks of and incentives for experimentation is rather uneven and, therefore, it could have been expected that experimenters' progress was relatively slow and interest in new roles limited. This decreased the potential of the sandbox for generating lessons for revising energy regulation to facilitate energy transition. A more holistic approach, inter-actor alignment, the availability of expert support by an intermediary, and facilitation of a more close-knit learning community would bring benefits to the bottom-up participatory innovation.

**Author Contributions:** Conceptualization, A.M.D., T.v.d.S. and E.C.v.d.W.; Methodology, A.M.D. and E.C.v.d.W.; Formal Analysis, A.M.D.; Investigation, A.M.D. and E.C.v.d.W.; Data Curation, E.C.v.d.W.; Writing – Original Draft Preparation, V.d. S., T. and V.d. W., E.C.; Writing – Review & Editing, T.v.d.S. and E.C.v.d.W.; Project Administration, E.C.v.d.W. All authors have read and agreed to the published version of the manuscript.

**Funding:** This research and the APC were funded by The Netherlands Organisation for Scientific Research (NWO) grant number [313-99-304].

**Acknowledgments:** We would like to thank all the interviewees for generously sharing their time, experiences, and knowledge. We would also like to thank Henny van der Windt for his constructive feedback. Furthermore, we are grateful for the constructive feedback of two anonymous reviewers during the publication process.

**Conflicts of Interest:** The authors declare no conflict of interest. The funders had no role in the design of the study; in the collection, analyses, or interpretation of data; in the writing of the manuscript; or in the decision to publish the results.

#### **Appendix A**

Table A1 displays an overview of EDSEP projects.

#### **Table A1.** Overview of EDSEP experiments.

#### **Appendix B**

Table A2 displays an overview of interviewed actors.

#### **References**

© 2020 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (http://creativecommons.org/licenses/by/4.0/).

## *Article* **Collective Renewable Energy Prosumers and the Promises of the Energy Union: Taking Stock**

**Lanka Horstink 1,2,\* , Julia M. Wittmayer 3 , Kiat Ng 1,4 , Guilherme Pontes Luz 5 , Esther Marín-González 5 , Swantje Gährs 6 , Inês Campos 5 , Lars Holstenkamp 7 , Sem Oxenaar 3 and Donal Brown 8**

Received: 1 November 2019; Accepted: 30 December 2019; Published: 15 January 2020

**Abstract:** A key strategy in the European Union's ambition to establish an 'Energy Union' that is not just clean, but also fair, consists of empowering citizens to actively interact with the energy market as self-consumers or prosumers. Although renewable energy sources (RES) prosumerism has been growing for at least a decade, two new EU directives are intended to legitimise and facilitate its expansion. However, little is known about the full range of prosumers against which to measure policy effectiveness. We carried out a documentary study and an online survey in nine EU countries to shed light on the demographics, use of technology, organisation, financing, and motivation as well as perceived hindering and facilitating factors for collective prosumers. We identified several internal and external obstacles to the successful mainstreaming of RES prosumerism, among them a mismatch of policies with the needs of different RES prosumer types, potential organisational weaknesses as well as slow progress in essential reforms such as decentralising energy infrastructures. Our baseline results offer recommendations for the transposition of EU directives into national legislations and suggest avenues for future research in the fields of social, governance, policy, technology, and business models.

**Keywords:** renewable energy prosumer; energy transition; collective prosumer; energy union; community energy

#### **1. Introduction**

The European Commission (EC) is spearheading the EU's plan to 'lead the clean energy transition, not only adapt to it' [1]. In 2016, the EC started developing a 'Clean Energy Package' that has now been finalised (the eight legislative acts that compose the Clean Energy package were recently concluded

with the adoption of the recast of the Renewables Directive (RED II), the new Governance Regulation of the Energy Union and Climate Action, the new Energy Efficiency Directive as well as the recast of the Electricity Directive [2]), completely overhauling the EU's energy policy framework, with the objectives of reducing CO2 emissions by 40%, increasing the share of renewable energy sources to 32%, and improving energy efficiency by 32.5% by 2030. The vision of an 'Energy Union'—providing all EU consumers with secure, sustainable, competitive, and affordable energy—includes an appropriate regulatory framework, strategic investments to innovate the EU's energy system, and an integrated multi-level energy governance framework. Having promised safe, viable, and accessible energy supply for all, the EC and EU countries are keen on embedding fairness, inclusiveness, local economy stimuli, and job growth in the transition toward a climate-neutral energy system [3].

The Energy Union aims to stimulate the involvement of energy consumers in the energy market 'to generate electricity for their own consumption, store it, share it, consume it or sell it back to the market' [4]. At the very least, citizens are expected to be 'active customers' (i.e., not merely buying electricity, but participating either in energy production, demand-response, or energy efficiency schemes: see the new recast EU Electricity Directive [3]), at best they will become what the EC is now calling 'renewables self-consumers', who generate, store, and/or sell self-generated electricity from renewable energy sources (RES) as per the RED II Directive [5], and which in the scientific literature is also referred to as an 'energy prosumer' [6]. By placing citizens at the centre of the Energy Union, and giving them the right to produce, store, or sell their own energy, whether individually or collectively, EU institutions are betting on a more rapid take-up of renewables in the energy system [2,5].

With EU countries being encouraged to support decentralised renewable energy through the relaxing of rules and/or the offering of incentives for RES self-consumption, the development of energy cooperatives and energy communities is accelerating all across Europe [7]. Representing approximately one million citizens, the European Federation of renewable energy cooperatives (REScoop.eu), established as recently as 2013, has rapidly grown to a network of 1500 renewable energy cooperatives and energy communities [8]. The pace at which the adoption of renewable energy has spread through Europe, additionally facilitated by the unexpected drop in prices of a number of RES technologies [9], has taken legislators and policy-makers by surprise, creating a fertile ground for ad hoc rather than strategic responses [10]. Important dimensions of prosumerism, such as the development of technology, the choice of organisational models, and innovation in funding solutions are still a long way from stabilising [7].

A number of promising case studies on community energy initiatives (e.g., [11–13]) as well as helpful analyses of the mitigating factors at work (see for instance [14–16]) support the claim that placing citizens at the core of a clean and fair energy transition is key to its success. There are, however, no reviews of the full range of collective prosumers (i.e., non-household) beyond the better-known energy cooperatives: who are they, what are their characteristics, behaviour, needs, and socio-economic impact? How does one collective prosumer initiative differ from others? Which of these initiatives should be incentivised and how? This gap in our knowledge makes it difficult to assess RES prosumerism's contribution to an energy transition that is expected to meet ambitious social, economic, and ecological objectives as well as measure the effectiveness of the policies being put in place to stimulate the prosumer phenomenon. These issues are especially salient when considering the accelerated timeframe of the Energy Union and the expected growth-spurt in prosumer initiatives once the Clean Energy Package is in place. This article aims to address this gap in the literature by providing a much-needed overview of the diversity of collective RES prosumer initiatives as well as a stock-take of the demographic, technological, organisational, financial, motivational, and hindering/facilitating factors that characterise them, and assess how the state of the art aligns with current energy policies and incentives. Our research, part of a larger project aiming to provide a framework of incentive structures for collective prosumers, is guided by the following question:

What is the current state of play for collective forms of RES prosumerism in Europe considering the demands and promises of the Energy Union?

The article is structured as follows: in Section 2, we will embed our research within its scope. We will then, in Section 3, present the methodology employed to survey a diversity of RES prosumer initiatives in nine countries in Europe: Belgium (BE), Croatia (HR), France (FR), Germany (DE), Italy (IT), the Netherlands (NL), Portugal (PT), Spain (ES), and the United Kingdom (UK). In Section 4, we present the results of our collective RES prosumer characterisation, the most significant of which are subsequently discussed in light of their policy implications in Section 5. In Section 6, we sum up our key conclusions and make some policy recommendations to support the continued growth of RES prosumerism in the EU, while safeguarding the vision of the Energy Union.

#### **2. Background Review of Renewable Energy Sources (RES) Prosumerism**

Reviewing nine EU countries as well as the EU as a whole, we found that differences in the take-up of RES prosumerism can be attributed among others to the varying investment in RES [17], energy path dependencies related to the natural resources available in the different countries (see for example [18]), as well as cultural factors (e.g., [19,20]). Of the countries studied by us, only Portugal and Croatia approached the mark of a 30% share of renewable energy sources in gross final consumption of energy, while France, Spain, and Germany scored around the EU average (17.53%), and the United Kingdom, Italy, the Netherlands, and Belgium scored closer to the 9% mark [21]. Each country's context is reflected in the overall energy forms that it consumes (i.e., countries with good hydric conditions have a high production of hydro-electricity, countries that (historically) have access to natural gas (NL, UK), have gas-driven heating systems, France is largely dependent on its nuclear energy production, etc). Overall, in the EU at the RES level, hydro continues as a leading energy technology, with wind energy coming in either in first or in second place in terms of production capacity. Solar-powered electricity, meanwhile, is growing fast in most countries including the more northern countries [21].

Despite the advances made in restructuring the legislative and policy framework to prepare the EU's clean energy transition, Campos et al. [22] highlighted considerable disparities in legislative and policy support for RES prosumerism in different EU countries, resulting in varying levels of prosumer development. The Clean Energy Package is intended to homogenise the attitude of EU countries toward prosumerism, but it presents several challenges. A key challenge is the imposition of new definitions and rules for individuals as well as collective forms of RES prosumerism that, besides falling short of representing the full diversity of prosumer initiatives sprouting up [10,23–25], is prone to different interpretations in the subsequent transposition to national legislations, a process that must mandatorily be concluded in 2021.

Several reports, reviews, and case studies have tried to produce insight into the drivers, facilitating factors as well as barriers for energy cooperatives and communities. In the sub-sections below, we aim to summarise the most recent and relevant conclusions available from the literature.

#### *2.1. Sociocultural and Socio-Economic Factors of Prosumerism*

## *2.2. Technical Factors*

## *2.3. Financial Factors*

## *2.4. Political Factors*

Our review reveals several opportunities for the thriving of RES prosumerism, but also an alarming number of barriers and legal/policy contradictions. One concern raised by a number of scientists, policy-makers, as well as representatives of energy communities and cooperatives themselves [31] is how to ensure a more inclusive and democratically-run energy transition such as that being promoted by the EC as a cornerstone of the Energy Union [13,37,39]. For example, should civic-focussed renewable energy initiatives be treated differently than self-interest/profit-focussed initiatives, and who should run the transmission and distribution networks [31]? These are sensitive and under-discussed topics that will influence the pathway of collective RES prosumerism.

In the next section, we present the methodology of our study of collective forms of RES prosumerism.

#### **3. Methodology**

To elucidate the current state of play for collective (i.e., non-household) prosumer initiatives in Europe, we drew upon an interdisciplinary mix of qualitative and quantitative methods, used in different iterations. Our review was conducted for the whole of the EU as well as zooming in on nine EU countries: BE, HR, FR, DE, IT, NL, PT, ES, and UK. Our survey process included: (i) content preparation; (ii) sampling strategy; (iii) survey administration; (iv) data processing; and (v) data analysis. Our main objective was to obtain an overall picture of the profiles of collective RES prosumer initiatives and the context(s) in which they are developing.

The survey form was designed using a collaborative and iterative approach, drawing on the pooled information needs from the multi-disciplinary research team as well as the knowledge acquired in previous, similar surveys. The survey questionnaire was designed and programmed by us to be answered online and covered six categories, each corresponding to a different information need, with a total of 32 questions (see Appendix A for a full list of the questions).

The main categories were:

Due to the ambitious nature of our information needs—implying a longer questionnaire—the survey was set up as a multiple case-study. The online, user-friendly survey form was made available in the respondent's own language (a total of eight languages), and its launch was, for most countries, combined with a soft-push approach in two or three steps (telephone calls to leaders of the initiatives, an explanatory email with a link to the survey, and a follow-up email or phone call, as needed).

The final questionnaire is publicly available [23] (pp. 90–116), and has also been submitted as Supplementary Material (Document S1), while examples of questions can be found in Appendix B.

The sample for our self-administered survey was drawn from the nine countries. We included countries with fertile environments for RES prosumerism (DE, UK, NL); two countries with a long history of self-consumption either at an industry or at the regional level but where new prosumer initiatives encounter significant challenges (BE, IT); and four countries where RES prosumerism has only just been legalised: two small countries (HR, PT), and two large ones (FR, ES).

Since there is no established overview of RES prosumer initiatives across Europe, we took an iterative approach to respondent identification. Research teams in the different countries were asked to build exploratory databases of collective RES prosumers in several steps, each being subjected to database analysis to improve these exploratory actor types. In the first iteration, it became clear that our collective forms of RES prosumers were not easily categorised, with attribute overlaps existing between the exploratory types found. In a next step, we decided to distinguish between those actors actually prosuming (i.e., producing and consuming energy from renewable energy sources, as an entity or through its members) and those actors influencing RES prosumerism (i.e., facilitating, promoting, financing, supporting, benefitting from, or even hindering) (see Table 1).

**Table 1.** Working definitions of collective renewable energy sources (RES) prosumers and RES prosumer stakeholders. Source: [23] (pp. 24–25).

After a few iterations, our exploratory database analysis identified six broad categories of collective RES prosumer actors capable of describing the RES prosumer initiatives and stakeholders that were collected in our databases across nine EU Member States (Table 2).

**Table 2.** Key categories of collective RES prosumer actors. Source: [23] (pp. 25–27).

Our final sample population included close to 1000 RES prosumer initiatives. Each country research team had an objective according to the size of their prosumer population (i.e., countries such as Germany, the Netherlands, and the UK contacted hundreds of prosumer initiatives, whereas countries such as Croatia and Portugal did not have a population larger than 20 to 30 initiatives). Sampling was adjusted dynamically according to the type of respondents that answered our survey. A snowball technique was attempted to capture initiatives beyond our sample and countries of focus, but the

lack of a personalised approach proved to be less successful, and only two additional initiatives, from Denmark and Finland, respectively, responded to this method.

Upon conclusion of the survey, we reclassified the dataset considering the distribution of respondents across countries and the high diversity of legal forms of the initiatives surveyed (see Section 4.1), after which the data were cleaned, tested, treated, plotted, and analysed, using the computational programme MATLAB, complemented with Excel, for our statistical analysis and generating graphs. The full details of how we proceeded can be found in [23]. Our dataset has not been made publicly available, since it contains sensitive information that would identify the initiatives that participated, to which we have promised full anonymity.

In the next section, we present and discuss our main results grouped as follows: distribution of the final dataset; general demographics and operational information; organisational structure; and the key drivers as well as perceived hindering/facilitating factors for developing a RES prosumer initiative.

#### **4. Results**

#### *4.1. Distribution of the Final Dataset*

Despite the challenges of an online questionnaire and indirect contact with respondents, the average response rate was 21.8%, corresponding to 198 initiatives that concluded our questionnaire. The number of respondents per country followed the anticipated trend and contacting strategies, with countries with longer histories of prosumerism achieving higher numbers (NL, DE, UK, FR, respectively). Smaller countries and/or countries where RES prosumerism is a more recent phenomenon achieved smaller numbers. With respondents from several countries (UK, NL, DE) warning us about survey fatigue, especially among energy cooperatives, Belgium provided less respondents than would have been expected when looking at the history of prosumerism in that country, while the Netherlands provided more.

We plotted all the answers for the whole dataset, for each of the countries, as well as for the top four legal forms encountered. Overall, and as expected, most of our respondents were energy cooperatives (60%, *n* = 119). Their spread across countries more or less followed the trends documented by the few statistical overviews that are available of energy cooperatives, which state that countries like Denmark lead with over 1,000 cooperatives and other northern European countries such as Germany, the UK, and Austria each count hundreds [40], whereas in the south of Europe, the numbers tend not to exceed two dozen [41,42]. There were three other main organisational forms: the for-profit company (14.5%); the public institution (9%); and the private not-for-profit organisation (8%). The prevalence of other legal forms was too residual to draw conclusions on correlations.

We also found and included in our analysis three types of initiatives that come close to a more direct form of energy community: public–private partnerships, partnerships between organisations and/or collectives, and informal civil society initiatives or collectives. Finally, we found RES prosumer initiatives that were run as projects by organisations or collectives (for example, a store that puts a RES installation on its roof as a stand-alone project, or when RES production is just one activity within an organisation promoting sustainable development). In total, we registered around 50 legal forms in the nine countries—of which many were similar, such as the legal form of the association or NGO as well as limited companies and corporations, but some were also quite different, such as the many 'sociétés' in France and the community societies in the UK. In consultation with the research teams in the different countries, we reclassified the legal forms, which resulted in a more manageable list of 10 legal forms (Table 3).

**Table 3.** Reclassification of 50+ legal and organisational forms reported by survey respondents. Source: [23] (p. 54).

#### *4.2. Key Demographics and Operational Information on Collective RES Prosumers*

Figure 1 presents the distribution of the top four legal forms across the top four countries in terms of sample size as well as the average distribution for the remaining countries.

**Figure 1.** Distribution of legal forms.

While the cooperative was clearly the preferred form for prosumer initiatives in our dataset, nevertheless, in some countries the balance was different than expected, such as in France, which had a higher percentage of initiatives opting for the for-profit/company form, or Croatia, where prosuming initiatives were almost exclusively companies, and finally Spain, where almost half of the respondents

were public institutions. Even though a considerable number of informal prosumer collectives were contacted, the response rate was low.

Since respondents had space to comment in most of the questions of the survey, we analysed the additional information, which provided more evidence of the apparent mismatch between the legal form and organisational mission:

The growth trend of RES prosumer initiatives (Figure 2) shows a slow growth period until 2010, a period of acceleration followed by a slowing down of growth in the period that the Energy Union and its pillars were debated as well as questioned, a period that starts in 2014, and a possible new growth spurt starting from 2017, with new countries joining the RES prosumerism phenomenon. However, over 12% of our dataset had not started producing yet, with quite a few initiatives complaining of excessive and complex bureaucracy and/or strict urban planning regulations, some even stating that they had given up on producing due to the above-mentioned barriers compounded with high investment requirements for some of the RES technologies (in particular, wind energy). These initiatives are now focussing on energy advice services and promoting energy efficiency or (e.g., in the UK) considering developing their own RES-ready housing.

**Figure 2.** Starting dates of the initiatives and of production.

In terms of the scale of the initiatives in our dataset, we found 80% to have a local focus (i.e., town, city, municipality), with 16% having a regional focus, while a residual percentage had a national focus (3%). Of those that operated locally, 12% also reported on regional engagement.

We inquired as to the energy needs addressed by the RES prosumer initiatives in our dataset, and found that RES-powered electricity significantly took the lead, followed by heating and mobility, with cooling appearing in last place (Figure 3). Practically half of our respondents only focussed on producing electricity, while a bit less than half addressed several energy needs simultaneously, the combination of electricity and heating being most popular. The only legal form that did not follow this trend was that of the public institution, where cooling came in third place, and mobility in last. This may be linked to the fact that public institutions most often manage large(r) buildings. In terms of country trends, Germany stood out, with initiatives attributing almost equal importance to electricity and heating, which practically shared first place. The initiatives from the other countries followed the main trend and appeared to have heating trailing significantly behind electricity. This is despite the fact that half of the countries surveyed had a considerable share of heating and cooling from RES sources as a percentage of their total RES consumption: HR (36.6%); PT (34.4%); FR (21.4%); and IT (20.1%), with Spain (17.5%) and Germany (13.4%) scoring in the mid-range, and all remaining countries having a negligible share of RES in their heating and cooling energy use [21].

**Figure 3.** Energy needs addressed by initiative including combined needs.

The overwhelming majority (90%) of our respondents were producing energy from, or planning to install, solar PV (Figure 4). Nevertheless, one third of respondents were producing energy from wind, which came second in terms of popularity, followed by biomass, storage in batteries, biogas, and solar thermal, respectively. More than half of the prosumer initiatives invested in more than two technologies, with a considerable percentage (20%) investing in more than four technologies.

Country differences were quite relevant: Belgian respondents reported wind energy as their leading technology, while Croatian respondents focussed on biogas, biomass, and co-generation. The Italian initiatives invested in the highest number of different technologies, each reporting that they were using on average about five to six technologies. The 'big four' from our sample (NL, DE, UK, and FR) as well as Spain reported solar PV as their main technology, but choices for secondary technologies varied significantly: biomass and storage in Germany, wind and storage in the UK, whereas in our French dataset, we found almost no experimentation with energy storage. Even though few initiatives were actively investing in mobility options, several mentioned that they were planning to invest in storage in future. From the trend observed in our dataset, we expect both storage and clean mobility to become more significant.

**Figure 4.** Renewable energy technologies used.

To gauge the different sizes of the RES prosumer initiatives in our dataset, we inquired about the number of members, and client base as well as the number of staff. Our dataset had a predominance of middle-sized initiatives (more than half of the respondents reported having between 51 and 500 members) (Figure 5). Having members, mandatory in most cases, was the norm for cooperatives and the not-for-profit sector (NGOs, associations, foundations, and informal collectives). About half of the cooperatives and the not-for-profit initiatives reported having direct clients besides members. A surprisingly high number of companies reported not having direct clients, but when verifying their websites, we concluded that there may have been a miscommunication due to our use of the term 'direct client', since they did report having clients on their websites. In terms of staff size, while the average number of staff members was low (13, with a median of eight), when compared to the member sizes of the initiatives, there were extreme outliers (an overall range from 1 to 150 staff members) as well as differences between companies, cooperatives, and the not-for-profit sector, not to mention between countries. Unsurprisingly perhaps, considering their for-profit nature, private companies had the highest average number of staff (although they have the same median), while cooperatives on average had a little over half as many. The not-for-profit sector reports the lowest number of total staff, which may reflect their size and/or limited financing options, while their focus may also not be exclusively on producing RES. The public sector's sample size was too small to make a definitive observation. Initiatives from NL, UK, and ES (and to a certain extent IT) reported the highest average number of staff.

We also collected information on the financing strategies of the RES prosumer initiatives in our dataset, which we correlated with their legal form and country of origin. Most respondents indicated more than one form of financing. The top choice in terms of financing (Figure 6), whether correlated by country or by legal form, was through member contributions and/or the founders of the initiative (reflecting the high representation of cooperatives in our dataset). This was followed by public funding, whether regional, national, or from the EU, and then by bank loans, whether traditional or ethical/non-traditional. The latter was a financing form par excellence for those investing in (typically expensive) wind energy projects. More alternative forms of financing, such as collecting single donations from individual citizens and crowdfunding, tended to be residual choices, as reported by less than 10% of our dataset, while these forms of financing were completely absent from the German sample. Almost half of the initiatives stated that they had to borrow more than €150,000 to kick-start their initiative, with another significant number (27%) claiming that they did not need to borrow any money. Most of the 'larger' investors were cooperatives, including all of the wind cooperatives, a few homeowner associations and other initiatives that invested in a heating system, and half of the Croatian companies. Among those that did not borrow any capital were most of the public institutions in our dataset, several local cooperatives, associations with a local focus (32 initiatives), and all the informal collectives.

**Figure 5.** Number of members and/or direct clients of initiatives.

**Figure 6.** Financing strategies of the initiatives.

Regardless of the initial form of financing, two-thirds of the RES prosumer initiatives from our survey ended up owning their RES installation. In half of the remaining initiatives, the founding or supporting organisation owned the installation. This was the case of the initiatives founded by another cooperative or by an NGO, or that varied their partnerships according to each project (letting the partner own the equipment). The remaining options (such as co-owning with a utility or even the possibility of each member owning an installation) were very residual.

#### *4.3. Organisational Structure of Collective RES Prosumers*

As stated earlier, most of the initiatives with members in our dataset were mid-sized, with an average staff of 13, and a median staff of eight, meaning that the teams responsible for running these operations are generally on the smaller side (146 initiatives had less than 15 people involved in running the initiative, and half of those that have members reported between 50–150 members).

There was a significant gender imbalance in most of the surveyed initiatives, as illustrated by Figure 7. Most people working in the prosumer initiatives were male (72% overall), with the biggest imbalance found in German initiatives, where 80% of staff was reportedly male. Only in 17% of the 153 initiatives that answered these questions were there more women active in the initiative than men. Overall, these numbers resemble the gender distribution reported in the literature [44,45]. There were also three examples in the sample that were run by women only and 23 examples that were run by men only. The picture improves slightly when we move from management staff to non-management staff, especially in the public sector; however, on average, the change was only ~10%.

**Figure 7.** Balance of female vs male staff according to the type of position and top four legal forms.

The differences between legal forms and between countries when it comes to the balance between paid staff and volunteer staff were even more significant (Figure 8). On average, cooperatives depend on volunteers for more than two-thirds of their staff positions, the not-for-profit sector is almost exclusively dependent on volunteers (82% on average), whereas this balance inverts when we look at the other top legal forms. Looking at the different countries, we found that the Belgian and Dutch initiatives were the most dependent on volunteers (89% and 81%, respectively), with German, UK, and French initiatives also showing a high dependence (between 72–75%). The Spanish, Italian, and Croatian initiatives showed the opposite trend: they paid between 71% to 100% of their staff (Croatian initiatives reported 100%, but as mentioned, these were practically all companies), while the Italian cooperatives had been in general established much earlier and often functioned as utilities for their region [19], which may explain their ability to pay their staff. The Spanish initiatives that responded to our survey were highly diverse, with no obvious factor explaining why these were outliers. We will discuss the implications of the dependence on volunteering in the next section.

**Figure 8.** Balance of paid staff vs volunteers overall and for to the top four legal forms.

In terms of governance models, our survey measured how major (strategic) decisions were taken by the initiatives as an indicator of the degree of participation and inclusiveness [46]. Figure 9 presents the decision-making style at three levels of decision-making (founders, core team, and general assembly) as well as the level of involvement of staff in strategic decision-making, ranging from not informing staff, offering lip service to involvement (i.e., simply informing of decisions), asking for opinions, asking for actual input, and involvement in the discussion and analysis resulting in decisions, to fully including those that will be impacted or have the relevant experience in decision-making, and, finally, taking all strategic decisions together with all staff. We offered three forms of decision-making to choose from: majority vote, consensus, and consent, where we defined consensus as a decision on which everyone, without exception, agrees; whereas consent is a decision that not everyone may agree with but that all can live with.

**Figure 9.** Strategic decision-making at the initiative: (**a**) at three levels of decision-making; (**b**) according to degree of involvement of staff.

About half of the cooperatives and not-for-profits reported that they decided by majority vote at the level of the general assembly. This is a common finding for the functioning of cooperatives and associations at this level, since they are legally obliged to hold at least one general assembly a year. About a quarter of cooperative and not-for-profit initiatives use the consent form of decision-making, with consensus (the most demanding form of decision-making) coming in last place. In contrast, the picture was inverted when it came to making important decisions at the level of the management team/core team and/or the founders. The favoured form here was decision-making by consensus (reported by 76 initiatives at the level of management), followed by a shared second place between consent and majority vote. These results point to issues of trust: in smaller, self-selected groups (i.e., founders, core

teams), trust tends to be higher and consensus becomes a non-threatening decision-making tool to use. There were some relevant outliers, which could be further investigated: French initiatives on average reported that they did not use consensus in decision-making at the assembly level, whereas, in contrast, proportionally more of them opted for consent-based decision-making in the core team than the overall average. Other outliers were the initiatives from the UK, which tended to make major decisions primarily at the core-team level by consensus, and those from the Netherlands, where the use of consensus in assemblies was higher than that of consent (but still lower than the majority vote), compared to the overall average.

In terms of involving staff, the RES prosumer initiatives in our dataset clearly appear to favour the more participative/inclusive forms of decision-making. The top most participative forms of staff involvement were also the most reported by our respondents (close to 60% chose these). Importantly, most initiatives that reported the more participative forms of decision-making were cooperatives, thus staying true to the spirit of this organisational form. Of our 'big four' prosumer countries, only the UK initiatives deviated from the trend, converging on less participatory forms. The public sector initiatives, albeit a small sample, showed a clear trend in their answers: they either did not know if staff were involved, or stated that these were not informed. Since public sector organisations tend to follow stricter and multi-levelled hierarchies, this was not a surprising outcome.

Another measure we used to gauge inclusiveness in RES prosumer initiatives was the type of criteria for joining the initiative (Figure 10). The most popular answer was the absence of criteria for joining, followed by the need to be a local resident, and by the impossibility of joining (mostly the case of public institutions and companies). Although small in number (15), it is worth mentioning that some initiatives stated that a mandatory investment was their main criterium. This category would be larger if initiatives had not been forced to choose one answer option, since it is quite likely that most of the prosumer initiatives with members will require them to contribute upon joining. Finally, several initiatives made a point of mentioning that newcomers should agree with the initiative's principles and/or goals, highlighting a desire to create a sense of community. Again, the exact number could be higher if initiatives had not been forced to only choose one answer. The UK initiatives once again represented an outlier, with mandatory investment coming up as the second most important criterium, after 'no criteria'.

**Figure 10.** Criteria for joining the initiative.

We further asked respondents to indicate with which stakeholders (of a list of 15) they tended to collaborate and for what purposes (of a total of five types of relationships: 'knowledge sharing', 'self-promotion', 'access to funding', 'access to human resources', and 'access to material resources'). Their answers are shown in Figure 11 for the cooperatives, our largest sub-set, whereas answers for the

top legal forms can be found in the Supplementary Materials (Document S2). Overall, the most popular stakeholder group with which prosumer initiatives engaged was that of communities/collectives and/or cooperatives for the purpose of knowledge sharing, followed by engagement with citizens/households for purposes of self-promotion, and finally, contact with civil society organisations and other prosumers, again for the purpose of knowledge sharing. All legal forms, except for public institutions, additionally showed an interest in engaging with local and regional government for the purpose of self-promotion. For-profit companies differed from other forms in that they engaged more with regional and national government for purposes of fund raising than any of the other forms of relationships. Public institutions slightly favoured self-promotion over knowledge sharing with citizens/households and civil society organisations, which is unsurprising considering their function is often to regulate and mediate, while outright cooperation with citizens and civic organisations is a more recent phenomenon. Nevertheless, although the sample was small, public institutions were the only legal form to almost equitably try to engage with all other stakeholders, reinforcing the idea of public authorities as mediators or hubs for energy transition. The for-profit sector also tended to favour self-promotion over knowledge sharing, a trait common to the business sector. Finally, all legal forms, except for the for-profit sector, showed considerable interest in engaging with national networks, interest organisations, or social movements. The opportunities mentioned by some respondents included the building of synergies between RES prosumerism and other climate-friendly activities, such as energy efficiency measures and awareness creation.

**Figure 11.** Key networking relationships cultivated by initiatives (please consult Document S2 for plots of top legal forms).

#### *4.4. Key Drivers and Perceived Hindering and Success Factors*

One of our main objectives was to understand the diversity of drivers behind the development of collective RES prosumer initiatives as well as hear from them what they perceive to be the key success factors and barriers to their development.

We asked respondents to grade, on a Likert scale, the degree to which certain drivers motivated them to start the initiative (spider graph in Figure 12). The outcome was quite unequivocal. Over 60% attributed the highest score to the driver 'tackling the climate change problem', followed by 'being part of the clean and low carbon transition', 'decentralising production', and finally the possibility to 'create a sense of community', closely followed by 'taking advantage of new RES technologies'. This overall trend was mirrored by the energy cooperatives in our dataset, except for the latter motivation, which was replaced by 'reducing the environmental impact of existing activities of the organisation/collective/community'. The for-profit sector appeared to be divided about their key motivation between 'responding to local demand/needs' and 'tackling the climate change problem', with the second place also divided, this time between 'being part of the low-carbon energy transition' and 'decentralising energy production'. The public sector differed from the previously mentioned legal forms by electing 'reducing the environmental impact of existing activities of the organisation/collective/community' as their second choice, while it did not appear to value 'creating a sense of community'. Finally, the not-for-profit sector placed 'reducing energy costs' in second place, before 'being part of the clean and low carbon transition', and relegated 'decentralising production' to fifth place.

**Figure 12.** Main reasons for starting a prosumer initiative.

As an indirect measure of motivation, we asked RES prosumer initiatives about any additional services they might offer (Figure 13) and obtained mixed results. A third of initiatives focussed exclusively on self-production and consumption, and offered no other services. About half of these were cooperatives, while the other half was made up of public institutions, some smaller associations, and two of the Croatian aggregator companies. When additional services were offered, energy efficiency advice took first place, followed by community-focussed services, such as community organising. Energy storage appeared here as an upcoming technology as much as an additional service, with several initiatives contemplating offering this service in the near future.

**Figure 13.** Additional services offered by prosumer initiatives.

Besides the key drivers, the key facilitating and hindering factors as perceived by our respondents were among our most elucidating results. Respondents were asked to choose the top three factors that most facilitated as well as those that most slowed down the development of their initiative, in their opinion. The results are presented in the spider graph in Figure 14 below.

**Figure 14.** Main hindering (slowing down) and facilitating factors for the development of a prosumer initiative.

We found that the top four factors perceived as most facilitating by our respondents were:

These factors were consistent across the countries as well as the legal forms, except for initiatives in France and other countries newer to RES prosumerism (PT, ES). These tended to rank the factor of 'ability to use RES technology' above that of 'renewable energy technology options available'.

The top four factors perceived as most hindering by our survey respondents were:

These 'negative' factors were equally consistent across the countries as well as the legal forms. Curiously, there were a couple of factors that received a high classification in both categories, meaning that, depending on whether the initiative can harness the factor in question, it will be either a facilitating factor or a barrier. Such is the case for 'access to finance, subsidies or grants', which is considered to be critical to the initiative's development as well as a contributor to its potential failure. This was also true for 'knowledge of policies and legislation in RES production', which was considered as important for both the successful development (rated in fifth place) as for its failure when absent. It is illustrative of the importance of networking that the socio-political factor of 'collaborating and networking with others' was deemed as important as having the appropriate RES technology.

Several specific complaints were volunteered by respondents from different countries. German, Dutch, and Belgian respondents complained about complex bureaucracies amidst inconsistent laws and rules, and about the contradictory attitudes of authorities at different levels (regional vs national). French initiatives complained that they were not allowed to consume what they produced, while UK initiatives expressed their apprehension about the end of FiT. In smaller countries such as the Netherlands and Belgium, a lack of space for RES installations was reported as another barrier.

#### **5. Discussion**

Taking stock of the survey results and comparing them to our review of the context for RES prosumerism, we found that true collective prosumers (in the sense of simultaneous self-production and -consumption in a collective context) were hard to find. In some countries, of which France is an example, energy may be produced and sold, but not self-consumed. In other countries (Croatia and Germany), it is quite easy to self-consume, but very hard to sell (a license is needed). The nine countries under study, as explained in detail in [10], varied significantly as to whether they recognised energy communities, allowed neighbours in the same building or apartment block to self-consume collectively, allowed energy communities to share electricity among members, or whether a supplier license was needed, to name but a few legislative features.

Our results open up several avenues for future research. Concerning legal forms, given the variety of forms that prosumer initiatives can choose from (see Table 3), we were expecting to find a high number of energy cooperatives, a legal form that allows for the hybridisation of socio-ecological objectives and the ability to make profit as well as share the latter among 'shareholders' (i.e., the members of the cooperatives). We were not expecting to find so many other hybrid forms such as public–private partnerships, other formal and informal partnerships, and the choice of the Ltd. or associative form to represent energy communities, which the EC so far does not recognise as a legal entity in itself (see Clean Energy Package Directives [3,5]). The occurrence and implications of hybrid organisational forms in the field of energy, particularly the cases of energy cooperatives and social enterprises, is becoming a topic in itself, and has been discussed by a number of researchers: Raven [47], Huybrechts and Haugh [8], and Bauwens et al. [48]. Although the cooperative form appears to offer initiatives that identify as energy communities a satisfying legal entity, it is also patent in our survey results that this choice is not always possible or ideal. In the Netherlands, to qualify for the so-called 'PostCodeRoos' incentive, you need to be a cooperative, whereas in France, you can run a for-profit organisation such as a SAS (Société par actions simplifiée) as a cooperative, reaping benefits from both organisational forms. More qualitative or in-depth research among RES prosumer initiatives operating under different legal forms may explain better what is happening.

As for the energy needs addressed by RES prosumer initiatives, electricity clearly stands out. Factors influencing the choice of energy needs that prosumer initiatives wish to address still require further research. Among these are the fact that many RES subsidies are for electricity production and that RES electricity is easier to share collectively, whereas a heating system requires very specific conditions (e.g., the need to refit entire blocks, neighbourhoods, or districts, a higher entry barrier, a significant change in basic grid infrastructure).

Although we showed earlier (in Section 2) that official country numbers for the shares of renewable energy in gross final energy consumption maintain wind energy as the leading RES technology, the trend encountered in our results—with photovoltaic PV leading the RES technology choices—may be explained by the fact that the growth of wind energy has occurred largely independently from prosumerism, with projects mostly developed by energy companies [49]. Additionally, wind energy projects are very costly [31]. On the other hand, solar-powered technology is growing fast, and it has proven easier to build and set up. It is therefore expected to take the lead from wind energy in the upcoming years [50].

Gender is without a doubt an important crosscutting topic for research on RES prosumers. The extremely low overall involvement of women in energy initiatives has already been mentioned in a number of studies and reviews [34,35]. Some explanations for this, in the case of Germany, can be found in [44], whereas French data indicate that gender differences are not just linked to individual preferences and investment attitudes, but also significantly influenced by cultural, social, and political factors [33]. There were interesting country differences regarding the gender balance between our initiatives. Whereas the average percentage of women in the initiatives in our dataset did not exceed 30%, Portuguese and Spanish initiatives reported on average close to 50% women in management positions, and 60% in non-management positions. Spain and Portugal happen to be countries that have been flagged for low levels of overall volunteer participation, which is why, despite the small sample size for these countries, finding more female than male volunteers merits further investigation [51]. Between the legal forms, no significant differences can be reported as to the female/male balance, apart from the public sector, the only type of organisation with high numbers of female staff, albeit mostly in non-management positions.

Regarding the financing choices of our respondents, we found that most of those that did not borrow any capital were public institutions, aside from several local cooperatives, associations with a local focus (32 initiatives), and all of the informal collectives. These patterns closely resembled those obtained for community energy in Germany [52]. Kahla, for instance, reported an 'inverted leverage effect' that has been observed for social enterprises in general: high equity ratios may be explained by lower costs of equity for some initiatives compared with costs of debt (for more also see [53,54]). Another observation that we can make is that the United Kingdom, one of the countries with the broadest mix of financing in our dataset, is also the country with the least initiatives opting for a traditional bank loan (9%), whereas Germany and France have quite a high share (46 and 78%, respectively), reflecting different banking cultures and/or systems in these countries. UK initiatives appeared on average to be more professional and better financed, but the recent abolishment of the Feed-in-Tariff may turn this panorama upside down [23].

The extreme dependence of cooperatives on volunteer labour constitutes one of their key weaknesses, as reported by our respondents: one representative from a Dutch cooperative put it this way: 'We need to move from hobby to lobby, from volunteer organisation to professionalisation' (translated from the original Dutch). This fragility is also something Brummer discusses in his comparative review of community energy in the USA, UK, and Germany [30]. He found that a reliance on volunteers was a barrier in the USA and Germany, but not in the UK. Although volunteers are generally highly motivated, their lack of expertise in certain areas, and possible limitations in terms of dedication, means that cooperatives and energy communities will need to spend money on qualified consultants. Research on non-profit organisations highlights professionalisation as a stage of development in the life-cycle of non-profits [55,56], which respond to external pressures—'isomorphism' [57]—or rely on government grants and trading [58,59]. As a reaction, non-profits have taken different paths [60]. However, research into not-for-profit organisations also documents some flipsides of professionalisation: the danger of 'mission drift', less engagement by volunteers, or diminishing capacity of social capital production [61–63]. In part, these negative effects seem to rest on whether members or external staff are employed [59–61]. Against this background, current EU policy and transposition of directives into national law may create space for the professionalisation of some collective prosumer initiatives, but will most probably also lead to hybridisation and organisational differentiation in this subsector. The heavy reliance on volunteers in the largest sub-sector of collective RES prosumerism may constitute an underappreciated barrier that current EU policy is not addressing.

Our study confirmed the predominance of social drivers over financial and more inward-focussed motivations for collective forms of RES prosumer initiatives. Over 60% of respondents attributed the highest importance to tackling the climate change problem and being part of the clean and low carbon transition, while about half also attached importance to the decentralisation of production and to creating a sense of community. While the nuanced differences in terms of motivation found in the for-profit sector and public institutions can be explained by their respective missions (see Section 4.4.), it remains unexplained—but does not speak to a favourable policy landscape—why over 20% of all legal forms, except for the for-profit sector, had a surprisingly negative view of the possibility of 'taking advantage of policy incentives' or 'subsidy schemes'. Whether this is a result of the difficulty in obtaining said support or whether they find this an unsound reason to start an initiative, is not clear. In contrast, the Croatian initiatives gave high scores to taking advantage of policy incentives as well as subsidy schemes, while 'reducing energy costs' and 'improving revenues of their organisation' also received high votes. Since the legislation in Croatia favours larger, profit-oriented set-ups [10], there is a lack of incentive and support for other forms of prosumer initiatives, particularly more decentralised ones.

Among our strongest findings was the perceived hindering vs facilitating factors reported by our dataset. Consistent across countries as well as legal forms (with the exception of France and recent prosumer countries such as Portugal and Spain, which were more concerned with the ability to be able to use RES technology), we found that initiatives listed as their top four facilitating factors the knowledge of renewable energy technologies, access to finance/subsidies/grants, collaborating and networking with others, and the availability of renewable energy technology options. However, initiatives in our survey felt that having good RES technology options was not sufficient if relevant energy infrastructures were not in place. In an overwhelming first place, existing public policies and legislation for RES initiatives were perceived as a key barrier. This reinforces our findings that the fact that legislation in the surveyed nine countries is currently either being revised, or likely to be revised after the new EU directives come into effect, creates an unstable and uncertain environment for RES prosumerism to flourish. Around 60% of our respondents signalled RES public policies and legislation as the top hindering factor to their development. Indicative of a potential crucial barrier to prosumerism development, access to finance appears as both a facilitating and a hindering factor. Furthermore, the importance attributed to collaboration speaks to its multi-functional aspect, allowing initiatives to join others (strength in numbers), learn from others as well as learn together, promote themselves and their common cause, and share resources. Cooperation of different sorts allows the prosumer initiatives to build up know-how beyond what they would have achieved alone, a function that has also been observed for cooperation among municipal utilities [64,65]. Free knowledge sharing and the use of open source tools are characteristic of the cooperation between collectives that do not have profit as their primary objective, and can jumpstart collaborative economies.

Finally, the initiatives in our dataset showed considerable interest in engaging with national networks, interest organisations, or social movements, a finding that illuminates patterns of cooperation in a sub-sector that shares some similarities with the ones found among (local) municipal utilities [66].

#### **6. Conclusions**

This paper examined a wide spectrum of collective prosumers beyond the better-known forms of energy cooperatives. The aim was to establish the current state of play for collective forms of RES prosumerism in Europe considering the demands and promises of the Energy Union. Our documentary review and survey across nine EU countries revealed key differences, challenges, and needs across different types of collective prosumers and across national contexts, and can therefore inform the design of an incentive system supporting clean, fair, and sustainable energy transition pathways. Our research established a comprehensive baseline and a broad cross-section of the diverse profiles

of the RES prosumer energy actors, raising several red flags, such as the persistence of an uncertain political and legislative setting; the challenges of volunteer-run structures; the lack of tailor-made policies for collective RES prosumer initiatives—namely those with a civic focus; slow progress in terms of the democratisation of critical energy infrastructures—in particular, the digital infrastructure; the difficulties of accessing finance for RES prosumer initiatives; and the need to more widely share knowledge of RES technology options as well as of how to implement and run RES installations. It also pointed out opportunities and new pathways including the chance to create synergies between RES prosumerism and other climate friendly activities (e.g., complementing prosumerism with energy efficiency measures or awareness creation); the possibility to improve collaborations and knowledge-building between different stakeholders; or the ability for RES prosumers to also become energy suppliers.

Based on these results, we highlight in the following a number of dilemmas for RES prosumer collectives and provide recommendations for national legislators in the transposition of EU directives as well as for future research.

The first dilemma relates to the way the collectives are internally organised: two main types can be distinguished, those collectives relying on volunteer work and thus civic activism, and those relying on paid staff and thus a more commercial and/or bureaucratic attitude. With regard to making energy transitions more inclusive, the—on the surface more accessible—civic activism holds a risk of exclusion as it means that only those who have the time and resources can afford to volunteer. A related concern in this dilemma is the chronic under-representation of women in energy initiatives.

The second dilemma relates to the choice of an appropriate legal form/organisational structure for a RES prosumer initiative: this is a less straightforward choice than one would expect since it is tied to a number of conditions and factors, such as the availability of different legal forms in different countries, or how specific legal forms are tied to specific support and subsidy schemes, and whether there is an obligation to apply for a production license. The reality of legal forms leads to potential conflicts when it presupposes a certain value orientation (such as a for-profit orientation), while the collective may be aspiring to combine such for-profit goals with social goals and thus a more civic-oriented role in the energy transition.

A third dilemma relates to the further formalisation of prosumer initiatives through the advent of the Clean Energy Package. While this promises clarity and support, it also forces such initiatives to formalise. The fact that the newly coined EU concepts for collective RES prosumers—'renewable energy community' and 'jointly acting renewables self-consumers'—imply that the collective must choose one or other legal form to run the community rather than being able to register as such, could limit rather than stimulate the expansion of the more civic-inspired prosumer initiatives. Informal groups or partnerships will not be able to qualify as an energy community. With this limitation comes the risk of hindering the decentralisation of the energy system and the uptake of RES. It is now up to national governments to pick up this challenge as they implement the new EU Directives, a challenge that implies more diverse interpretations and treatment of prosumers of different types in different EU countries, to the benefit of an inclusive, clean, fair, democratic, but also rapid energy transition.

We propose several recommendations for policy-makers from Member States involved in the transposition of the Directives from the Clean Energy package:

• Ensure and support fair, open, and inclusive participation in the prosumer energy transition; especially for marginalised groups, such as women, ethnic minorities, and those with limited material resources.

Within the methodological limitations of a survey study, we have achieved a broad range of cross-cutting aspects of the collective forms of RES prosumers and provided a baseline overview of 'what is'. Now, ongoing and future avenues of research can build on these exploratory findings and examine them more in-depth, across different types of prosumer collectives as well as across cultures and countries in Europe. The most relevant avenues to further explore, in our view, are:

**Supplementary Materials:** The following are available online at http://www.mdpi.com/1996-1073/13/2/421/s1, Document S1: Survey form 'New Energy for Europe'; Document S2: Key networking relationships for key RES prosumer legal forms.

**Author Contributions:** Conceptualisation, L.H. (Lanka Horstink), J.M.W., K.N. and I.C.; methodology: L.H. (Lanka Horstink), J.M.W., K.N., G.P.L., E.M.-G., S.G., I.C. and L.H. (Lars Holstenkamp); software, G.P.L.; validation, E.M.-G., S.G. and G.P.L.; formal analysis, E.M.-G., G.P.L., S.G. and L.H. (Lanka Horstink); investigation, L.H. (Lanka Horstink), J.M.W., G.P.L., E.M.-G., S.G., I.C., S.O., D.B. and K.N.; data curation, E.M.-G., S.G. and G.P.L.; writing—original draft preparation, L.H. (Lanka Horstink), and J.M.W.; writing—review and editing, J.M.W., K.N., I.C., S.O., L.H. (Lars Holstenkamp), E.M.-G., S.G. and D.B.; visualisation, E.M.-G., S.G. and G.P.L.; supervision, K.N., L.H. (Lanka Horstink); project administration, I.C. and L.H. (Lanka Horstink). All authors have read and agreed to the published version of the manuscript.

**Funding:** The research leading to the results presented in this article has received funding from the European Union's Horizon 2020 research and innovation programme under grant agreement Nº 764056. K.N. was supported by the Fundação para a Ciência e a Tecnologia (FCT) postdoctoral fellowship grant (SFRH/BPD/120394/2016).

**Acknowledgments:** The authors wish to thank the following researchers for their contribution to the data collection and to the discussion that formed the basis of the present analysis: Mark Soares (UPORTO); Jeremie Fosse (ECO-UNION); Kristian Petrick (ECO-UNION); Mireia Reus (ECO-UNION); Thijs Scholten (CE DELFT); Bettina Kampman (CE DELFT); Mark Davis (ULeeds); Stephen Hall (ULeeds); Arthur Hinsch (ICLEI); Marta Toporek (CLIENTEARTH); Michele Zuin (ICLEI); Moritz Ehrtmann (LEUPHANA); Tomislav Novosel (UNIZAG); Tomislav Puksec (UNIZAG); and Ana Lovrak (UNIZAG).

**Conflicts of Interest:** The authors declare no conflicts of interest. The funders had no role in the design of the study; in the collection, analyses, or interpretation of data; in the writing of the manuscript; or in the decision to publish the results.

#### **Appendix A**

**Table A1.** Survey questionnaire: distribution of questions according to category. Adapted from: [23] (pp. 56–57).

**1. Control questions** Q1 (name of initiative) Q2 (consume RES yes/no) Q4 (job title of respondent) Q32 (additional information the initiative might want to give) **2. General demographics of collective RES prosumers** Q3 (legal form) Q5 (starting date) Q6 (location) Q7 (scale) Q8 (energy needs addressed)

Q31 (which 3 factors have most slowed down and which 3 factors have most facilitated the development of the initiative)

#### **Appendix B**

Excerpts from the survey form for collective RES prosumers.

**Figure A1.** Front page of the survey form.

**Figure A2.** Question 9 of the survey form.

**Figure A3.** Questions 15–19 of the survey form.

**Figure A4.** Question 23 of the survey form.

#### **References**

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