Iván Aranda Garoz combines a solid technical background in Chemistry and Materials Engineering, with extensive international experience in R&D, and planning and project management. With a master's degree in science, Technology and Society studies, he spent five years living in Scotland, working on applied energy storage research. He moved to Bolivia to work as a strategic consultant on the industrialisation project for the evaporite resources (lithium) of the Salar de Uyuni (Bolivia). Since 2014, he has focused on supporting innovation projects for European companies and public bodies. Mr Aranda is currently Head of Energy at R2M Solution and is involved in several H2020 projects related to deploying technologies for smart grids and testing new business models, such as storage, demand response or aggregation. At the national level, Iván has been promoting the energy communities' model through the articulation of different stakeholders and the development of pilot projects, being involved in more than 10 projects related to the development of energy communities.
BUILD UP (BUP): Could you briefly describe the EC typologies you consider are becoming more popular?
IVAN ARANDA (IA): As a brief introduction, just to mention that EC showed up formally in two EU Directives, the Renewable Energy Directive (RED II) – Directive (EU) 2018/2001, this directive introduces the concept of Renewable Energy Communities (RECs) and the Electricity Market Directive (EMD) – Directive (EU) 2019/944, this directive defines Citizen Energy Communities (CECs). Without entering into too much detail on the differences, RECs are more focused on renewable energy and sustainability, with a strong emphasis on local governance and citizen participation, while CECs offer a broader range of energy-related activities, including fossil fuels and are unlinked to local governance. Through this interview, I will focus on the REC, as this is further developed from both the regulatory and the implementation perspective, at least in Spain, which is the reference country I will mainly refer to in this conversation.
Among the multiple forms that an REC could take, i.e., depending on technology, legal form, etc, the leading model is based on shared self-consumption by using PV generation plants. Of course, we can find other models based on shared mobility, energy efficiency auctions or shared thermal generation units (i.e. shared biomass boiler and a district heating system). Nevertheless, within the archetype based on solar energy, we can still find different models in terms of governance and business models.
BUP: How do you perceive the governance model across the archetypes you mention? Are we moving towards a ‘dominant model’ or, on the contrary, do we see different types?
IA: Beginning from the very end, we cannot yet talk about a ‘dominant model’. The governance of an EC needs to be tailored to the specific project. Even though we can find projects with very similar characteristics, an apparently slight difference makes the whole project change. For instance, let's take one of the current EC dominant models, consisting of a PV plant installed on the rooftop of a municipality which is used to supply green energy to both municipal buildings and neighbours. This general model, in order to become reality, needs to tackle many specificities which can turn into a blocking step.
We can talk about the variety of stakeholders, who respond to different interests (i.e., presence or not of industry as participants, families in vulnerability conditions, investors, ESEs, etc.), we can also talk about ownership of assets and projects: Is the municipality the owner of the plant? or, instead, the owners are the neighbours or a third company such as an ESE or an investor. These conditions, among quite a few others, make projects completely different from each other. Therefore, in the real implementation, we cannot talk about dominant but tailored made solutions within a ‘high-level’ EC archetype.
BUP: How does this variety affect the business model?
IA: The role and typology of EC members and forms of ownership and the mission, values, culture of the EC lead to different business models. We could maybe differentiate between the business model and sustainability model, depending on what actor you are focusing on. Let's consider, maybe the most accurate and authoritative EC model, in the sense of the way energy directives define EC, in terms of democratic governance and decision-making processes, for instance, in which EC members are the owners of the generation assets.
In this case, we can find examples that only seek sustainability (i.e., to operate and maintain the assets and the administrative aspects of the legal entity, in order to self-consume energy). In other words, no business is sought by this type of EC. On the contrary, we can find the same ownership, but the purpose could be different; to make an investment on a collective plant for selling electricity to the grid and get revenues for the EC. In this case, there is a business model behind it. Also, we can talk about an EC in which the owner of the asset is a third company (i.e., investor, ESE, etc.). However, in this case the concept itself of EC could lead to inconsistencies.
BUP: Considering these different business model approaches, could we talk about energy communities in all cases?
IA: In the case of shared ownership, in general, I would say that all are indeed EC, because if the governance and decision making is approximately evenly distributed across EC members, the spirit of the EC is kept. However, when either a small group of members or an external stakeholder in the community has control over the decisions, in this case, we cannot talk about an EC. This is as simple as the definition of the EC emphasises this aspect, the need for democratic governance. This aspect gets more complex and interesting when there is a third-party investor involved. Here the challenge is to combine the fair business interest of the investor with the design and deployment of a real democratic governance. This is a key aspect that we see in many projects ongoing.
While some, unfortunately not many, EC promoters take special care in keeping the spirit of the EC concept, promoting participation, accompanying the process for transferring knowledge to the community, encouraging democratic internal process, etc, many other EC promoters mainly respond to their private interests. These kind of approaches in general empty the concept of EC, turning it into a ‘shell’. The legal entity is just a shell which does not allow participants in the community to exercise democratic processes. Typically, they are obliged to contract specific electricity suppliers, there is no room for participation and no decisions are allowed because the operational framework is very tight, because it is designed only under the investor business model approach. In these cases, maybe it is not correct to talk about energy communities. And this is something important to keep in mind.
BUP: Why do you think it is so important to clearly identify what is an EC and what is not?
IA: It is important because ECs are one of the tools designed and regulated by the EU with the purpose of contributing to the energy transition. If we accept the high-level claim of EU energy policies, to put the citizens in the centre of the energy system, then we need to pay attention to whether a specific EC model contributes to this principle or not.
Underneath that claim, there are ingredients such as: opening up citizen participation in the energy sector, promoting the integration of new stakeholders beyond the electricity oligopoly, facilitating democratic governance and processes, emphasising transparency, bringing to front social and environmental issues, among others. Many of these underlying principles are not fulfilled within certain EC models. Therefore, it is important to point that out because, otherwise, we will be using a contingent powerful tool for the energy transition, which are the energy communities, to achieve exactly the contrary.
This is the appropriation of the incipient EC concept by something which is not an EC, because it does not contribute to the objectives for what it was designed for and will detract from the potential of real ECs. Therefore, we should try to avoid perverting the concept of EC. Recognising the legitimate right of companies to make business in the way they wish, if they follow the rules. When certain self-proclaimed ECs do not follow the principles, maybe we should name them differently. For instance, such as the cases I mentioned before, instead of ‘ECs’ they are just shared self-consumption products offered by a utility.
