20. 12. 2023
The amendment to the Energy Act, Energy Communities Act (ECA), passed the Chamber of Deputies on Friday, December 1, 2023, and is heading to the Senate. What specific provisions does it bring for community energy? We explain the basic points of the amendment.
Energy sharing through a public distribution system represents a cornerstone of community energy. For the Czech electricity market, the opening of this possibility signifies a significant positive change, benefiting a much broader group of consumers from renewable energy sources (RES) - for example, those who cannot afford or have no place to install their own electricity generating facility.
In practice, the sharing of electricity will be facilitated by the Electro-Energetic Data Center (EDC) starting from July 1, 2024. The Ministry of Industry and Trade (MIT) and the Energy Regulatory Office (ERO), in collaboration with industry experts, have already begun preparing technical details for both provisional and final solutions for electricity sharing, starting in the fall.
Provisional solutions are not particularly advantageous for energy communities because they only allow for a static method of electricity distribution. However, more advanced methods, such as dynamic and hybrid approaches, already exist in Europe, enabling communities to utilize 20–50% more of their own electricity. For instance, in Austria, communities have the flexibility to choose the method they want to use.
However, the provisional solution is set to be replaced by the final version from July 1, 2026, coinciding with the full functionality of the EDC. According to an informal agreement, the final solution is expected to allow for both dynamic and hybrid electricity distribution from July 1, 2026. These rules will be incorporated into the amendment of the decree on electricity market rules, which is expected to come into effect no later than July 1, 2024.
The proposed amendment, which would anchor more advanced sharing methods directly in the law, was not approved by the lawmakers. In UKEN, we consider this an imperfect solution as it opens the door to preserving the provisional approach.
Energy communities will be required to pay the full distribution fee. The law did not establish a discount on the distribution fee for electricity sharing, nor did it explicitly prohibit it. ERO may introduce it in the new tariff structure planned for low-voltage levels starting in 2026. The key will be the assessment of costs and benefits of local electricity sharing, which member states are obligated to carry out under European law.
The amendment partially takes the Czech context into account, where many municipalities and cities are interested in becoming leaders in community energy. In the original version of the amendment, there was a risk that contributory organizations, such as schools, hospitals, or retirement homes, would not be able to become members of energy communities. However, lawmakers adopted an amendment that eliminates this risk, allowing contributory organizations to be community members.
On the other hand, lawmakers did not support an amendment for an exception for municipalities from the restriction on voting rights to 10%. In practice, this may limit the motivation of municipalities to involve citizens and local businesses in their projects, as they would lose control over their investment, which is not in line with the duty of a prudent manager.
However, if municipalities involve their contributory organizations in energy communities, they can practically achieve a majority of voting rights.
Several seemingly minor but practically significant details contribute to the shaping of functional rules for community energy. These include the free installation of smart meters, the removal of the trader's right to unilaterally change the electricity supply contract for community members, the notice period for membership termination, and the rules of the EDC.
Distribution system operators (DSOs) are obliged to install smart meters free of charge to all members of energy communities without generating facilities, and to members with generating facilities (up to 50 kW) within 3 months of submitting the request to the DSO. This is crucial because without smart metering, electricity sharing cannot be implemented at all.
From the draft law, the provision allowing the trader to unilaterally change the electricity supply contract for consumers participating in sharing, such as increasing the price without the consumer being able to reject the change and terminate the original contract, has been removed. In practice, this would complicate the situation for community members and might completely discourage some interested parties. We raised the issue immediately after the draft was published. MIT ultimately removed this passage from the draft law, and lawmakers approved a version that protects consumers from such unfair practices by traders.
The notice period for membership termination in the community was extended from the original one month to three months through an amendment proposal. This aligns with the standard notice period used in the energy sector, ensuring that energy communities do not have worse conditions in this regard than large electricity traders.
The rules of EDC can be seen as the terms and conditions of the data center, without which, according to the amendment, electricity sharing cannot begin. It is therefore crucial that lawmakers approved an amendment specifying a deadline for the submission and approval of the EDC Rules. This eliminated the risk of delays in the start of electricity sharing.
Is the transposition of European law nearing completion?
ECA introduces most of the requirements of European directives regarding community energy. Remaining activities, such as the accumulation and aggregation of flexibility, are being implemented in the subsequent amendment to the energy law, which is awaiting approval by the government and consecutive discussion in Parliament.
The amendment does not allow participation in multiple sharing groups. Why is this important? To fulfill the potential of shared use of renewable resources.
Until July 1, 2026, a sharing group can have a maximum of 1000 members (or EANs), and all of them must be located within the territory of three neighboring municipalities with extended competence or within the territory of the capital city of Prague. From July 2026 onwards, territorial restrictions on membership in energy communities come to an end.
For an active customer, there are no territorial restrictions even now. However, within one sharing group, there can only be one generating station and up to 10 additional consumption points.
A persistent restriction is that no consumption point or generating station can be involved in more than one sharing group. This limitation can potentially be addressed only by another amendment to the energy law, not by implementing regulations.
In addition to the Senate's deliberation, which is expected to take place on December 20, 2023, we will focus on preparing EDC, which is intended to enable more advanced methods of electricity sharing from July 1, 2026. We have previously formulated the needs of energy communities and, together with IT experts, proposed specific solutions, which we presented at a press briefing in mid-November.
We consider three points crucial:
Anna Michalčáková
+420 605 038 162
anna.michalcakova@uken.cz
