INESC: The path to energy self-sufficiency starts next door

1999. We live in an ecologically sustainable nation. Environment and humans live in perfect harmony, there is zero-tolerance pollution control and energy-efficient communities abound, with the active participation of citizens in decentralised solutions for energy production. Yes, you read that right: 1999. The visionary idea is by the writer Ernest Callenbach, in his novel Ecotopia, published in 1975.

From utopia to reality, we return to 2024 and look to the future, at the same time distance between the writer and the novel, with a very similar vision when it comes to sustainability. 2050 is the target for a world where energy production will be virtually carbon-free, with the complete transition to renewable energy sources – and where communities and individuals will play an active role in energy production and management. To this, we add energy storage, widespread electrification in all sectors (from transportation to industry), and the significant increase in energy literacy. Are we being too ambitious?

The citizen as the main agent of change

Let’s go back to Ecotopia, for a moment. The novel places the citizen at the centre of all transformations: local communities can make decisions and implement sustainable practices, demonstrate a keen environmental awareness, adopt energy-responsible lifestyles, and exploit renewable energy sources (and even eco-friendly agricultural methods). In the style of a science fiction storyline, decarbonisation will depend on the role that each of us will play, namely through individual and collective self-consumption and energy communities. Shall we find out more?

We are in Guimarães. According to E-Redes data, this is the leading region in the installation of self-consumption production units (UPAC), i.e., aimed at the direct self-supply (industrial or residential).  Any Portuguese citizen can become a self-consumer, simply by installing a UPAC and producing their own energy through renewable sources, for their own consumption, but also for storage or sale. But beware: there are rules to follow, defined in the Diário da República.

Individual self-consumption is the first step in a long path in which energy generation and consumption try to make the perfect match. José Villar, INESC TEC researcher in energy systems, explained that, as individual consumers, we may have to inject surplus electricity (unconsumed) into the grid, or to resort to external supply when we cannot produce enough to meet our needs. However, the price paid for consumption is always higher than the amount charged for injection. The solution could be collective self-consumption (ACC), through energy sharing with one or more neighbours. “Regarding ACC, consumers share energy with each other, thus avoiding using the network, whether for injection or energy supply. What begins as a purely financial agreement can evolve into a reality in which people try to adjust their consumption to adapt to local supply, or to manage surplus energy through batteries – to be more self-sufficient, either individually or collectively at the local level”, exemplified José Villar. Ideally, in terms of ACC, members share energy behaviours and complementary profiles: there is no point in producing a surplus if no one consumes it.

The concept of ACC is at the basis of energy communities: several members coming together to share energy with each other. The big difference lies in the fact that energy communities must act as legal entities (cooperatives or participatory societies). And why is energy cheaper under these conditions? According to José Villar, “the members of said communities connect via internal networks or the Public Power Grid. In the second case, the UPACs cannot be too far from the usage facilities (e.g., in the case of facilities connected to the low-voltage distribution network, two kilometres, or alternatively, a connection to the same transformation substation). The idea is to only pay tariffs for the used distribution network, saving on tariffs of networks with higher voltage levels”.

So, take note: at least for now, if you want to belong to an energy community, physical or electrical proximity is vital.

The “million-dollar question”, according to José Villar, is: should we opt for a collective self-consumption solution or an energy community? For example, the Tools4AgriEnergy initiative, coordinated by INESC TEC (now starting), will explore the establishment of ACCs in the agricultural, livestock and agri-food sectors, benefiting from locally produced energy to reduce energy costs; however, the decision to establish a Renewable Energy Community (REC) is yet to be made. “We believe that the ACC is more designed for buildings, condominiums, and simpler collective self-consumption structures. For example, and considering an industrial centre, an energy community will make more sense, since they are more complex and heterogeneous systems. Nevertheless, the regulation is not completely clear”, he mentioned.

Portugal requires energy literacy

The potential of energy communities is quite significant, but information is scarce. According to Tiago Soares, a researcher at INESC TEC, there is a great lack of energy and financial literacy, which contributes to a certain “fear of change”. “There is a lot of talk about energy communities, but no one says how to implement them and what their real benefits are. There is no aggregating element of information that reaches people, as the Energy Bureaus of the municipalities should be. In addition, the energy literacy of the Portuguese population is very low, and many people are not willing to make an initial investment, because they seek immediate return without thinking about the medium and long-term future. This is blatant in the case of photovoltaic panels: our acceptance levels increased as we began to see more equipped homes. Unfortunately, others cannot make the initial investment without financial aid, often difficult to obtain due to existing requirements and bureaucracies”.

In 2021, the DECARBONIZE project sought to involve the citizens as end-users, towards encouraging them to take an active role in the management and use of energy resources, and raising their awareness of the social impact associated with their individual behaviours.

But this is not enough.  Being part of an energy community means to acquire new knowledge, as one must be aware of new investments, savings and energy efficiency solutions. “There is no point in investing in megalomaniac photovoltaic and wind power plants if people’s consumption is not yet adapted to the available energy resources. For instance, people only started to become aware of the importance of adequate isolation after 2010, with the application of European standards. We must be aware that energy communities are not going to solve all the problems. We must be realistic. The most important step is individual self-consumption, and adapting our consumption to our production”, mentioned Tiago Soares.

In M. Night Shyamalan’s “The Village”, a group of people decide to form a community, living in isolation from the outside world to protect themselves. Spoiler alert: it didn’t work. We are far from perfect examples, and we must be prepared to embrace the changes that lie ahead.

Reaching the finish line, with many barriers along the way

Energy communities face real challenges that go far beyond people’s will. Licensing applications for collective self-consumption and energy communities in 2023 reached almost 700. Certain entities have been waiting for a decision from the Directorate-General for Energy and Geology (DGEG) for more than two years. Even with some support from ADENE – Energy Agency, the process drags on, due to the inability to reply to all submissions. But this is not a problem limited to Portugal.

“Portuguese regulation is one of the most ambitious and flexible. But in terms of implementation, it’s quite slow, due to the bureaucratic and administrative issues. However, this also happens in other countries, like Spain, France, or Italy. At INESC TEC, we are involved in the various stages required to form RECs: from the study of regulations and proposals for improvements, to the development of technology for their operation, e.g., the energy community management platform RECreation, stemming from the DigitalCER  project – which is serving as a basis for new projects. Therefore, we have a very comprehensive view of the process and its difficulties”, stated José Villar.

But there’s more. The distribution network operators (DSOs) should implement procedures and share mechanisms to make energy communities viable. The DGEG is also responsible for developing a digital platform to facilitate all procedures related to the interactions of sector agents with the administrations, as indicated in the electric sector decree. According to Tiago Soares “while building a new house, obtaining a minimum energy rate of B- is mandatory – which leads to the need for consumption of energy from renewable sources, in an individual self-consumption logic”. When dealing with surpluses in photovoltaic production, especially when talking about a community, the DSOs are not prepared for everyone to inject energy into the grid. This adaptation takes time and costs money, and we will end up paying it on the electricity bill”.

The future is self-sufficient

There is a strong desire, at European level, to promote and encourage renewable energy communities as an integral part of the transition to more sustainable energy and the active involvement of end-users. According to José Villar, there is not only a single future; “all experts involved in decarbonisation know that there are many solutions, and that they are all complementary, to a greater or lesser extent”.

According to Tiago Soares, exploring [1] people’s energy self-sufficiency can be an interesting path. But there are small actions and habits that could make a difference. “It is vital to focus on energy efficiency. The less we consume, the more efficient we become. And more support and funding lines are also needed for people to embrace change and meet the EU’s goals for 2050”.

Feldheim is a small German town that is totally self-sufficient in terms of energy. We’re talking about a local grid, with solar panels, wind turbines and storage batteries that allow this community to have the lowest electricity tariffs in all of Germany. But there are more examples, with almost 9K operational energy communities in the European Union. In the Netherlands alone, there are close to 700!

The InterConnect project, the largest ever led by a Portuguese institution – in this case, INESC TEC – aims to develop advanced tools for the digitalisation of the European power grid, connecting houses and buildings regardless of brands and manufacturers, following an interoperable logic. More than €36M and 50 partners are involved to achieve these goals. In one of the open calls of the project, encouraging companies to present digital solutions for buildings and networks, one of the winning projects focuses precisely on energy communities. Through the use and improvement of a platform, called IoT-DRACO, energy communities in Slovenia will be actively monitored and controlled in real-time, based on concrete data.

2050. Portugal emerges as a model of sustainability and environmental awareness and stands out for its eco-friendly practices. There are extensive networks of bike paths that connect the country from end to end, all houses are equipped with solar panels, the buildings are energy-efficient, incorporating sustainable materials and environmentally friendly designs. All means of transportation are electric. (Regrettably, we don’t have flying cars yet, so we apologise to Ridley Scott, Luc Besson, and Robert Zemeckis.) There are multiple green spaces, with a growing biodiversity, and the air is pure. All garbage is recycled, and zero-waste policies are in place. We live in communities that have been (and are) catalysts of this revolution.

This sounds like science fiction; but if we start taking leading roles, we can be the heroes and heroines of the energy transition.

[1] Energy self-sufficiency refers to the capacity of a system (residential, industrial, urban) to produce all the energy necessary for its operation, using renewable sources, without depending on external sources.

This article was first published on 31 January by INESC TEC.