The European energy transition is marked by the rapid spread of renewable energy sources, electrification of end uses, decentralisation of generation and increasing system stress driven by climate change. These transformations expose the limits of traditional, centralised electricity system architectures and require new organisational and governance models capable of coordinating distributed resources while preserving reliability, efficiency and social legitimacy. Scientific literature and recent European policy frameworks converge on the role of energy communities (ECs) as a key socioeconomic and technical innovation to address these challenges. The report “The Evolution of Energy Communities: new business models for a citizen-centric energy transition” published by the European Commission provides living examples classified as use cases for reference.
The report discusses ECs, encompassing renewable ECs (RECs) and citizen ECs (CECs) and energy sharing, combining physical assets, digital platforms, market participation and collective governance. When properly integrated, they align technological innovation with citizen participation, local investment, and system-level value creation. Various business models, regulatory and DSO facilitations and financial incentives for ECs have been developed around EU Member States, in some cases with resounding success, and in others, with mixed results. It is evident that ECs are not expected to be integrated through a one-size-fits-all DSO framework.
In Member States, where small and local DSOs operate distribution grids with fewer connection points, EC integration requires proportionate regulatory obligations, shared digital infrastructures, standardised interfaces and cost-recovery mechanisms that reflect the real operational burden of enabling data exchange, allocation, flexibility coordination and facilities enabling local grid observability. Obligations and duties between DSOs and ECs should be detailed for every type of configuration that could be envisaged between them. Smooth integration meeting the flexibility needs of the interconnected system from distribution level to higher levels through DSOs is becoming a fundamental need and that is the direction that innovation thinking is diverted to.
Access the report here