The Social Climate Fund (SCF) exemplifies a new commitment to allocating resources and providing concrete tools to ensure no one is left behind on the journey to net-zero emissions. It aims to provide temporary direct income support and facilitate measures and investments to enhance the energy efficiency of buildings, decarbonize heating and cooling systems, integrate renewable energy generation and storage in buildings, and improve access to zero- and low-emission mobility and transport.

The Regulation underscores the significance of grassroots efforts and local knowledge, recognizing the potential of energy communities to achieve the Fund's objectives. The inclusion of investments in energy communities as eligible measures under the SCF marks a significant achievement, highlighting their role in promoting empowerment and a just transition. This is in line with Directive 2018/2001 (Recast Renewable Energy Directive, or RED II), which acknowledges that RECs add value in many different ways, including enhancing local acceptance of new renewables projects, increasing the amount of capital available for local investment, choice for consumers, and greater participation by citizens in the energy transition. The RED II also notes that RECs help address socio-economic issues such as energy poverty, and allow groups like vulnerable consumers and tenants to actively participate in the energy transition.

In addition, the RED II acknowledges the unique characteristics of RECs and the need to mitigate challenges they face in operating in the market. Recital 71 notes that the specific characteristics of RECs, including their small size, ownership structure, and their number of projects “can hamper their competition on an equal footing with large-scale players.” In early 2024, the Energy Communities Repository, on behalf of the European Commission, released a report which demonstrates the systematic challenges that energy communities face.

As such, the RED II calls for measures to offset disadvantages relating to specific characteristics of local RECs including enabling RECs to operate in the energy system and easing their market integration. Furthermore, under Article 22 paragraph 4, Member States must put in place an enabling framework to ensure, inter alia, that unjustified regulatory and administrative barriers to RECs are removed, and that RECs are subject to fair, proportionate, and transparent procedures.

In this DNSH consultation response, we emphasise the critical role energy communities can play in achieving the SCF’s objectives:

  • With the case study examples, we demonstrate concrete evidence of their added value and the multidimensionality of their potential role in achieving these objectives.
  • We offer recommendations on how the SCF can further promote and enhance energy communities’ value by addressing and removing (existing) barriers.