‘We like sharing energy but currently there's no advantage’: Transformative opportunities and challenges of local energy communities in Europe

Rising energy costs expose the instability of our energy system and underline the urgency of transitioning towards decentralized renewable energy provision. Many European countries have tasked municipalities with driving this transition and the European Union has designated local energy communities to receive stronger support. Energy communities involve public, private or community actors in co-producing and distributing renewable energy. They are often praised for helping democratize, decentralize and socially embed the energy system, but remain constrained by economic and legal barriers. To what extent they can contribute to transforming the energy system thus depends on their ability to scale beyond their niche.This article identifies opportunities and challenges encountered by energy communities, especially regarding legislation, municipal governance, and stakeholder participation. Drawing on 'foundational economy' concepts, it explains to what extent energy communities are governed and scaled by public, private or community actors, and discusses the transferability, social cohesion, and democratizing potential of energy innovations. The article compares qualitative findings from four energy community pilot projects in the Netherlands, Belgium, Sweden and the UK, based on interviews, observation and document analysis. It finds that while many cities are wellpositioned to launch energy communities, they lack the authority and means to scale up innovations, thus having to rely on other actors. While private companies are often hesitant about adopting innovations, municipal companies are more willing to do so, yet citizen participation is lacking across cases. Findings thus underline a need for legislation to remove barriers to energy innovation and enable democratic participation.