Renewable energy communities (REC) are key to the sustainable energy transition. However, sustainable business models (SBM) and ecosystems must be developed to ensure the growth and flourishing of REC. This paper presents 16 SBM patterns around the REC ecosystem, describing their sustainability benefits and contribution to sustainable development.
Keywords
Energy Community, Clean Energy, Ecosystem, Business Model Patterns, Sustainable Development Goals (SDG)
Introduction
Renewable energy communities (REC) are emerging as key players for sustainable energy transitions, with citizens playing an active role in sustainable energy self-sufficiency towards the European Union’s (EU) 2050 climate neutrality targets (Lowitzsch et al., 2020; Reis et al., 2021). Recently, the EU Clean Energy for all Europeans Package (2019) has accelerated REC deployment by providing the first regulatory framework for collective self-consumption and community-driven energy projects (Reis et al., 2021). Thus, it is estimated that by 2030, REC could generate more than 50 GW of wind power and 50 GW of solar power, representing 17% and 21% of installed capacity respectively (Vernay and Sebi, 2020). Accordingly, by 2050, almost half of European households are expected to participate in renewable energy generation, 37% of them in collective projects (Kampman et al., 2016; REScoop, 2018).
Renewable energy communities (REC) are defined as non-commercial legal entities, based on open and voluntary participation of their members (e.g. natural persons, SMEs or local authorities) that are autonomous and effectively controlled by their members, with the primary objective of providing environmental, economic and social benefits for local communities (European Parlament, 2018, 2019).
Nonetheless, REC remain vulnerable and do not reach their full potential, playing a marginal role in the energy sector (Vernay and Sebi, 2020). Moreover, REC still face multiple legal, economic, financial and organizational barriers that can hinder their deployment (IDAE, 2022). Moreover, community members such as municipalities, SMEs and civil society, often have little or no knowledge of renewable energy technology alternatives, business practices, legal issues and governance models (Herbes et al., 2021). Therefore, training and experimenting with new business models (BM) becomes critical for the successful deployment of REC projects (Bocken et al., 2019).
Academic studies presenting BM typologies for RECs have recently increased (e.g. Braunholtz-Speight et al., 2021; de São José et al., 2021; Neska and Kowalska-Pyzalska, 2022; Reis et al., 2021). However, little attention has been paid so far to the applicability of Sustainable Business Models (SBM) (Lüdeke-Freund et al., 2018), to analyse the potential of REC, and related BM, to address environmental and social challenges beyond a profit-based approach. Furthermore, as the sustainability of REC’s business model is often dependent on external support (e.g. legal, technical and economic advice), an ecosystem perspective should be adopted to explore SBM for REC identifying key stakeholders across the value network (Giehl et al., 2020; Vernay and Sebi, 2020).
This short paper addresses this gap by providing a holistic view of SBM around REC, describing ecosystem actors, potential sustainability benefits and contribution to the Sustainable Development Goals (SDG).
Sustainable business models for renewable energy communities
Building on previous research approaches for the identification and characterisation of SBM in the energy sector (Mendoza et al., 2022; Mendoza and Ibarra, 2023), a systematic literature review on REC related BM was conducted wich led to the identification of ten journal articles (Braunholtz-Speight et al., 2021; Brown et al., 2019; Bryant et al., 2018; Ehrtmann et al., 2021; Herbes et al., 2021; Karlsson et al., 2019; Plewnia and Guenther, 2021; Reis et al., 2021; Specht and Madlener, 2019; Strupeit and Palm, 2016). The results showed a total of 48 BM patterns defined with different nomenclatures. From the analysis and comparison between the ten studies to identify semantic similarities (Pieroni et al., 2020), a consolidated version of 16 SBM patterns was developed (Table 1).
Table 2 describes the sustainability benefits and contribution to the SDG of each SBM. This data was drawn from the results of the review and interviews with experts and REC members conducted by the authors of this article. As shown in Table 3, community driven SBM, in particular energy cooperatives and e-mobility SBM, have a greater positive impact on sustainability than supply driven SBM.
The results of the review show that REC can provide several sustainability benefits impacting in six SDG. By promoting local renewable sources, REC become more autonomous and less dependent on external energy, replacing fossil fuels with clean energy sources, and helping to reduce greenhouse gas emissions (SDG 7, 11 and 13). REC encourage job creation, business development and new investments in the community, which has a positive impact on the development of the local economy (SDG 8 and 9). They increase citizens' empowerment, social cohesion, and social equity, as community members take control of their energy needs, and can contribute to reducing energy poverty (SDG 7), favoring lower prices for the most vulnerable and improving living conditions in urban and rural areas. In addition, REC based on cooperative values often promote formulas to ensure gender equity (SDG 4), for example, by ensuring a 50% participation of women on the board of directors.
Conventional companies of the energy sector can also benefit from REC, through their participation in community-driven initiatives as an individual member, as co-owners or through service provision (Brown et al., 2019; Bryant et al., 2018; Strupeit and Palm, 2016). REC also promote diversification, new business opportunities and cross-sector coupling (SDG 8 and 9). For instance, advances in digitalisation are giving rise to new business models based on platforms such as aggregators and Virtual Power Plants (Brown et al., 2019). On the other hand, REC can install charging points for electric vehicles (EV) providing new sustainable mobility solutions (e.g. car sharing). Furthermore, EV batteries can be (re)used as energy storage systems, and so REC can provide flexibility services to the grid and system operators under vehicle-to-grid and grid-to-vehicle logics (Brown et al., 2019; Reis et al., 2021), promoting the development of more sustainable cities and communities (SDG 11).
This paper systematise sustainable business model patterns for REC and their ecosystem based on a systematic literature review. 16 patterns are presented classified as supply-driven, demand-driven and community-driven patterns. The article discusses the social, economic, and environmental benefits and the potential contribution to the SDG of each SBM. It also defines the key actors (public and private entities) in the REC ecosystem that can support SBM deployment by providing legal, financial and technical assistance.
The results show that the greater the decentralisation of energy ownership and distribution, the greater the number of actors, which emphasises the relevance of understanding how different stakeholders (e.g. OEM, prosumers, community members, service providers, grid operators and policy makers) interact within collaborative networks to accelerate the deployment of REC. Moreover, new actors (e.g. aggregators) are expected to emerge in the future, which will require the development and provision of new technologies in the local environment. Similarly, the coupling between sectors (e.g. power-to-gas, power-to-mobility charging infrastructure) is seen as key to the long-term energy transition.
Thus, further research should focus on understanding the interdependencies and impacts between business models within and accross value chains in the REC ecosystem. Additonally, quantitative approaches providing metrics and indicators to assess the circular and sustainable impact of different business models within the REC ecosystem should be developed.
This research was funded by the Provincial Council of Gipuzkoa (Nº EZAGUTZA-19).
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