Local Energy Initiatives: IEA Study Explores Local Communities’ Impact on Clean Energy Transitions

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Representational image. Credit: Canva

In the pursuit of cleaner and more sustainable energy solutions, the pivotal role of local energy communities is gaining global recognition. These community-based energy projects are not only transforming how we generate and consume power but are also redefining the way societies engage with clean energy transitions. By placing individuals at the forefront, these initiatives are proving to be catalysts for positive change, propelling us towards more equitable and resilient energy systems while strengthening energy efficiency.


From renewable technology deployment to enhanced efficiency, reliable power supply, reduced bills, and job creation, local energy communities are showcasing a multitude of benefits on a worldwide scale. At the heart of their success lies a commitment to inclusivity and a people-centered approach that amplifies the impact of energy and climate policies.

Revolutionary digital platforms and tools are paving the way for the seamless establishment of cooperatives, stakeholder engagement, investment facilitation, and electricity exchange within these communities. Governments across the globe are increasingly recognizing the potential of community-based clean projects, evidenced by substantial allocations of funds. Notably, Italy’s National Recovery and Resilience Plan has earmarked a significant EUR 2.2 billion to support energy communities and self-consumption. Similarly, the United States Inflation Reduction Act of 2022 has introduced substantial financial incentives, amounting to USD 370 billion, for community-based clean energy endeavors.


Boosting Energy Efficiency and Community Advantages via Local Generation and Sharing
As the imperative to decarbonize and address energy crises intensifies community-based energy initiatives are stepping up to address various challenges faced by power systems. The International Energy Agency (IEA) estimates that nearly 3% of global energy-related CO2 emissions result from grid losses. Local energy communities offer a solution by facilitating the generation, sharing, and consumption of electricity within neighborhoods, dramatically reducing these losses and bolstering energy efficiency.

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A case in point is the northern Perth community in Australia, where a shared battery resource among 119 households led to substantial collective savings exceeding AUD 81,000 over five years. Furthermore, this battery alleviated strain on the grid, resulting in an impressive 85% reduction in electricity consumption during peak hours. Similarly, the community of Magliano Alpi in the Italian Alps harnessed energy forecasting tools and shared electricity to cover 35% of their energy needs, relieving grid stress and deferring costly infrastructure upgrades.

Digital Tools: Unleashing the Potential of Local Energy Communities
Crucial to the triumph of energy communities is the provision of customer access to energy production and consumption data. This transparency not only raises awareness about individual energy behavior but also underscores the economic benefits of community participation. Leveraging machine-learning software enhances energy efficiency and unlocks substantial financial savings. Pioneering initiatives like peer-to-peer digital trading on blockchain platforms empower citizens to exchange energy within their community, fostering collaboration and trust among producers and consumers.

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In the Indian city of Lucknow, residents realized a 43% reduction in rooftop electricity costs through digital tools, while simultaneously bolstering local clean energy availability.

Citizen Empowerment: The Driving Force Behind Community Initiatives
At their core, local energy communities are vehicles of socio-economic empowerment, democratizing clean energy transitions and providing agency to those previously excluded or passive. These systems are built on trust, both within and beyond the community, engaging and educating individuals to actively contribute to clean energy transformation. Notably, the RevoluSolar initiative in a Brazilian favela marked a significant milestone, providing renewable energy access to 30 families. Profits from the project were reinvested into charities and job training, addressing local unemployment rates and shielding citizens from escalating energy costs.

Cultivating Local Value-Chains and Skills
Energy communities are not only fostering cleaner energy systems but also nurturing local value chains, jobs, and skills. A noteworthy example is South Africa’s Lyndoch residential community microgrid project, which interconnected over 30 homes through a tiered grid system. This project, co-owned by the utility Eskom and the community, empowered community members to assume active roles in the development, installation, maintenance, and ownership of the energy system. By incorporating local expertise, these initiatives ensure project sustainability while showcasing the value of citizen engagement in localized clean energy endeavors.

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Charting the Path Forward: Citizen Engagement as the Cornerstone
Energy communities offer a dynamic blueprint for achieving clean energy transitions, emphasizing not only the merits of location-specific interventions but also the intrinsic value of inclusive people-centric strategies. Enabling better access to financing, regulatory reforms, and knowledge sharing could extend these benefits to communities worldwide, providing them with local, affordable, and clean energy solutions.

Recent developments, such as the European Parliament’s funding for an advisory hub and support service, underscore the commitment to amplifying community initiatives within the European Union. Additionally, the IEA’s People-Centred Clean Energy Transitions Programme and the Digital Demand-Driven Electricity Networks Initiative (3DEN) are poised to further map out initiatives and advantages, underscoring the resounding potential of local energy communities in driving a sustainable future.

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