Energy communities: from neighbourhood initiative to a key link in the energy transition
Big changes often start small. For example, local neighbourhood initiatives to become more sustainable or generate energy themselves. There are now around 800 energy co-operatives and at least 700 resident initiatives contributing to the energy transition.
The Energy Act
Part of the neighbourhood initiatives will evolve into energy communities when the new Energy Act enters into force on 1 January 2026. This Act recognises energy communities as official actors in the energy system. As such, they can play an even greater role in the energy transition, provided all parties invest energy and support together.
Movement from society
In the energy transition, both centrally led energy projects and the decentralised movement from society are needed. Energy communities, set up by residents and entrepreneurs, encourage energy savings and renewable energy production. They offer social and economic benefits to their members and the local community.
They can also speed up innovation, create jobs, and play a role in simultaneous generation and use of energy. How do they create impact within the energy system, and how will the new Energy Act and the Collective Heat Act change the role of energy communities? To explore these questions, the Ministry of Climate and Green Growth (KGG) commissioned TNO.
‘We see enormous ambition among energy communities to contribute to climate goals.’
Positive expectations
Julia Jansen and Annemarie Mink are members of the research team working on the Ministry’s request. Together with the Ministry, the team organised dialogue sessions with stakeholders and conducted 21 expert interviews.
Annemarie: ‘This study looks at the role of energy communities today, but especially at their future expectations.’ Julia adds: ‘With the new Energy Act, they will be able to share energy and supply energy to members. That new role can have a lot of positive impact, but only with targeted support and collaboration.’
What is an energy community?
An energy community is an organisation of residents and small enterprises that, with or without local government, undertakes activities in the energy market, such as producing energy, saving energy, and using locally produced energy. The energy community is not profit-driven; it focuses on sustainability and on social and economic benefits for members and the immediate area.
Control lies with the members, who can join and leave at will. If there is a surplus, members jointly decide how it is spent. For example, via a dividend, investment in further sustainability, lowering members’ energy bills, or social initiatives in the neighbourhood.
What do energy communities do, now and in future?
There are many activities that energy communities and co-operatives have carried out for decades, and many new activities they will be able to undertake under the Energy Act and the Collective Heat Act. A large number of these were described by Winters & van der Veen (2023). In this study, we looked at a selection of activities based on the expected system impact when conducted collectively.
Develop joint energy projects and sell the generated energy into the market.
Provide advice, offer financial services, and organise collective procurement to help residents and businesses save energy and make buildings more sustainable.
Spend proceeds on local needs, for example a car-share scheme, community bus, or playground.
From 1 January 2026: supply produced or purchased energy to members and enable local energy sharing between members. Without a supplier’s licence, under specific conditions.
Match local supply and demand, contributing to grid capacity and stable prices. Offer flexibility services to other parties, such as grid operators, via the market.
Develop, manage and operate collective heat infrastructure, such as district heating networks, once the Collective Heat Act enters into force.
Impact already visible at local level
What is the current impact of energy communities on the eight public values central to the National Energy System Plan? That was the first question in the study.
These values are: reliability, sustainability, affordability, safety, quality of living environment, participation, fairness, and economic strength. The findings: in their current role, energy communities already create local impact on sustainability, participation, quality of the living environment, and economic strength.
- Sustainability: through renewable projects they directly contribute to more renewable energy. With advice on savings and building upgrades, they also foster awareness and reduce energy consumption.
- Participation and quality of the living environment: they engage citizens and entrepreneurs in the energy transition and strengthen social cohesion. Participants invest in sustainable energy, can lower their energy bills, and jointly contribute to a greener, healthier environment. A point of attention is ensuring that a broad group of residents share in these benefits; not all neighbourhoods currently have access to an energy initiative.
- Economic strength: communities also create jobs, for example by training energy coaches and energy fixers, and contribute to knowledge development within innovation projects.
‘Energy communities arise from residents and entrepreneurs themselves—this builds trust. Energy coaches help people save energy and costs at home, and proceeds from generation flow back to members. In this way, energy communities truly involve people in the energy transition.’
Opportunities ahead
The new Energy Act gives energy communities a clear place in the Dutch energy system. The experts consulted see strong value in matching local supply and demand because energy communities know their members, raise awareness, and can agree on how and at what price energy is shared. New activities that support this are still at an early stage. These include:
- Supplying energy to members and energy sharing: most communities do not aim to become energy suppliers themselves, but they do want their members to use energy from their own renewable sources.
- Flexibility and system integration: energy communities can offer flexibility services, such as shifting consumption to periods with high generation. Integrating production, use and storage of electricity and heat can help reduce grid congestion.
- Heat networks: energy communities are seen as valuable partners in engaging residents to take part in a district heating network, but the business case is not yet conclusive, making the impact on, for example, affordability uncertain.
If energy communities truly embark on these new activities, they can also have positive impact on other public values, such as affordability and reliability, and on societal challenges such as grid capacity and energy independence.
There is an expectation that local matching of supply and demand will lead to more stable energy tariffs. However, how well that matching can be achieved and what its impact will be is still uncertain.
‘TNO’s research shows that energy communities help shape decentralised developments in the energy system. They do so through a range of activities, both societal and technical. Under the right conditions, the potential impact of energy communities can increase.’
Conditions for success
Energy communities already play a role and could expand that role, but this depends on several factors. The key conditions for success are:
Communities need to evolve into robust organisations, becoming reliable partners. Important here are knowledge sharing, financial support, collaboration, and the development of a service market that can support communities cost-effectively, so not every community has to reinvent the wheel.
Current generation projects are becoming less profitable. And with short-term subsidies for savings activities, such as energy coaches, accumulated knowledge quickly dissipates. Communities need structural funding from start-up through operational phase, better financing options for storage, and loan guarantees, especially for heat networks.
Working together, as a regional co-operative, is essential for professionalisation, risk sharing, knowledge exchange, and to jointly offer a mix of, for example, solar, wind and energy storage.
Direction is needed to ensure energy communities are accessible to everyone, and to ensure established parties, grid operators and suppliers, see and work with them as full partners. Government can also steer desired developments, for instance through financial incentives such as lower network tariffs or tax reductions for locally shared energy, making local matching of supply and demand more attractive.
Support is needed for administration, billing and other processes, and for data-driven insights using information from members, grid operators and energy suppliers.
Want to know more?
Download the report: 'The potential role of energy communities in the energy system'.
Increasing impact together
To further develop the role of energy communities and accelerate the energy transition, we must remove barriers, provide structural support, and work together. Although much remains uncertain, TNO advises supporting energy communities and evaluating step by step what works well and where adjustment is needed.
Would you like to contribute with TNO? Or do you have questions about other aspects of energy communities, such as governance and legislation? Get in touch.
Meet our expert
Contact us
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Annemarie Mink
Functie:Social Innovation Designer-
Standplaats:Amsterdam - Radarweg
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Email:Email Annemarie
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Julia Jansen
Functie:Researcher Social Innovation energy transition-
Standplaats:Amsterdam - Radarweg
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Email:Email Julia
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