A new blog series begins! – Energy communities in a nutshell

The Council of Tampere Region is taking part in an Interreg Europe funded project called REC4EU (Renewable Energy Communities for EU regions) that aims to increase the number of renewable energy communities and to support them through networking and information sharing. Now that the last year of the project has taken off, a new blog series called “The developers of energy communities” begins. This blog series shares useful information about energy communities, starting with key information about the topic so that everyone can become familiar with energy communities! 

What are renewable energy communities? 

Renewable energy communities are a form of sharing economy, where the members of the community share renewable energy that they have produced together. An energy community (EC) can be created around different forms of energy, such as electricity, heat, or gas. There are several different ways energy communities can be organized, but the following text will focus on single-property energy communities, since they are the most common type of EC in Finland. These types of communities use compensation calculation to monitor their electricity production and to share the produced electricity among their members. Creation of a single-property energy community can take as little as a few weeks in Finland. 

The process of setting up a new energy community begins when the housing cooperative meeting decides to purchase shared solar panels and comes to an agreement on how to share the produced electricity amongst the people who wish to join the new EC. Next, the energy community must be registered with the local distribution system operator (DSO/network company), which is responsible for the measurement of the energy community's electricity production. The potential surplus energy can be stored in batteries or sold to the electricity markets.  

Why should you create an energy community? 

Energy communities offer consumers a way to participate in the energy markets and produce some of the energy they use in a way they choose. Energy communities make the production and use of renewable energy available to new groups of people – also to those groups, who otherwise couldn’t produce energy independently because of where they live or because of their financial situation. 

In 2022, the housing company/cooperation As Oy Koivistontien rintamamiestalot in Koivistonkylä, Tampere, created three new energy communities in nine apartment buildings. The chairman of the housing cooperation Cristian Seres says that the creation of the energy communities was relatively easy.

– No one was against it at the housing cooperative meeting. Solar panels had already been purchased so it was only a question of making better use of the electricity they produce on site, he says.

– Only, we were such trailblazers that we had to ask our questions directly from the local network company Tampereen Sähköverkko and Tampere region’s branch of the Finnish Real Estate Federation. Some problems arose along the way, because at that time the energy communities were not yet centrally located in Fingrid's Datahub (Editor’s note: Fingrid is Finland’s transmission system operator, and Datahub is a centralised data exchange system for the electricity retail market). Therefore, Tampereen Sähköverkko had to handle everything, and the software wasn’t very flexible yet. Now the processes are much more tested.

Despite some challenges, everything went smoothly with Tampereen sähköverkko, and Seres praises how well the cooperation went with the network company. 

Energy communities increase self-sufficiency and security of supply when there’s a power outage, for example. They can also be economical: a shared investment to a big power generation equipment and potentially a battery can decrease the unit cost and therefore make solar panels more accessible. 

Without establishing an energy community, an apartment building could only use the produced solar energy in public spaces, such as the laundry room, elevator, or to power the lamps in the stairways. Thanks to the energy community, the electricity can also be used in apartments, which decreases the electricity bill of the energy community’s members and makes the investment more profitable. Especially buildings that are connected to district heating, benefit from joining an energy community, because they use very little electricity in the shared spaces to begin with. Using their self-produced energy in the place of production will also free the energy community’s members from paying electricity transfer fees and, if the rated power of the power plant is 100 kilovolt-amperes (kVA) or under, exempt them from the electricity tax. 

According to Seres, there can be other types of benefits in creating an energy community as well.

– Creating an energy community has surely had an impact on the image of our housing cooperative, because I have been interviewed by many people about this. The members, however, don’t discuss it as much since being part of an energy community is a rather an invisible thing to them, he explains. Discussing the benefits of energy communities could make more people excited about creating them. 

– Unfortunately, the members of an energy community still can’t see from their electricity bills how many kilowatt-hours or euros they have saved by being part of an energy community, Seres says.

He also acknowledges that the local energy communities and network companies have different interests, which is likely why the benefits of energy communities are not made visible on the bills.

–Technically you can get information from Datahub about how many kilowatt-hours you’ve saved but it's not simple in any way. Few people have the interest to log in there and compare the statistics.

Energy communities in the Tampere region 

The Tampere region currently has at least 41 energy communities - based on a questionnaire made for the REC4EU project. Three of them are in the aforementioned As Oy Koivistontien rintamamiestalot housing company. Originally, each of the nine apartment buildings had their own connection to the grid. Based on the Finnish legislation, only properties that are connected to the grid with the same connection point can create an energy community. This would have led to the creation of nine separate energy communities. The buildings needed new connections to the grid anyways because of the new heating system so all of the apartment buildings that were on the same lot were connected to the grid with a shared connection. Since there were three lots, the housing cooperative was able to create three energy communities. 

The old district heating system of the housing cooperative was no longer energy efficient, so ground-source heat pumps were installed to the buildings in 2021. They now produce almost all of the heat that is used in the buildings within a year. The housing cooperative decided to produce the electricity needed by the heat pumps with solar panels. The purchasing of the solar panels made the creation of energy communities possible. The Finnish Housing Finance and Development Centre ARA subsidized 24 percent of the expenses of the solar panels. 

The chairman of the housing cooperative, Seres, recommends using heat pumps and solar panels together to everyone who is considering starting an energy community. – I would like to highlight how well heat pumps go together with solar panels. A heat pump can usually produce 3 kilowatt-hours of heat with one kilowatt-hour of electricity. If you can produce even some of that needed electricity locally with solar panels, the cost of heat will drop very significantly. This way a heating pump can act as a triple lever arm. 

The combination of solar panels and heat pumps also enabled the properties at Koivistontie to move to a lower tax bracket regarding the electricity used by the heat pumps. The lower tax bracket can be reached with heat pumps, when the pumps are connected to a district heating network or have a nominal output power of at least 0.5 megawatts. The power of the pumps on the same property can be added together when determining the tax, as was done in Koivistontie. If necessary, one can apply for a refund of the electricity tax afterwards, by reporting the amount of electricity consumed by the heat pumps to the Tax Administration of Finland. Thanks to its heat pumps, the housing cooperative As Oy Koivistontien rintamamiestalot has received approximately EUR 10,000 in electricity tax refund per year. 

Seres finds energy communities beneficial to housing cooperatives and would like them to be better advertised. – Energy communities are a great thing, and they should be promoted considerably in Finland. I’m sure there are a lot of housing cooperatives whose roofs would have space for solar panels and whose residents would be able to take advantage of local electricity. Based on my understanding, however, local energy communities have remained quite rare - perhaps they should be advertised more? he asks. 

Seres believes that housing cooperatives will be able to increase the security of Finland’s electricity grid during disturbances in the future and simultaneously utilize batteries in storing self-produced solar electricity at night. This would also create opportunities for companies offering batteries. – Batteries will likely become more widely used in upcoming years, although it’s not yet economically viable to store electricity within a 24-hour cycle. However, Fingrid is currently paying considerable compensation for participation in the frequency-controlled operation and disturbance reserve of the electricity network. Because of this, many companies offering batteries can offer contracts where the costs of the battery will be covered by Fingrid’s compensations. 

Energy communities could therefore increase local renewable energy production in the Tampere region, reduce electricity bills and secure the operation of the electricity network in the event of disturbances. Energy communities are an important part of the emission-free and stable energy system of the future, and many can easily promote them from their own housing cooperatives! 

Here is how to establish an energy community in Finland: 

There are six stages to establishing an energy community in a housing cooperative in Finland. First, the decision to create an EC is made based on a proposal presented in the general meeting of the housing cooperative. The people who wish to join the energy community need to decide how to allocate the surplus of their upcoming small-scale production at this point. The decision to establish an energy community is usually followed by the acquisition of the power generation equipment (typically solar panels). The installing contractor informs the local distribution system operator of connecting new electricity production to the distribution network. 

After this, the new energy community needs to make an electricity sales contract. The distribution of the electricity generated by an energy community can be accomplished in two ways (SMA or SMB). In both modes of distribution, the produced energy is first used for communal electricity demand, after which the surplus is shared as agreed by the community. 

Once everything is in order within the energy community, its representative (for example, the chairman of the board of the housing cooperative) notifies the local distribution system operator of the establishment of a new energy community. The needed form can usually be found on the website of the DSO.  

After receiving the notification, the DSO verifies that all required information for the establishment of a new EC is in order. Once all the necessary information has been submitted, the energy community will be formally established within two weeks of the notification. 

Project Coordinator Oona Lintunen,
REC4EU (Renewable Energy Communities for EU regions)
The Council of Tampere Region
oona.lintunen (at) pirkanmaa.fi