An energy community is a group of households, housing companies, businesses, or other entities that come together to produce and share energy. The community may aim for partial or full self-sufficiency in energy production. An energy community typically invests in devices such as solar panels, heat pumps, smart energy solutions, and energy upgrades for buildings.
Shifting from fossil fuels to renewable ones is a matter that concerns everyone. Finnish households can play a key role in the energy transition, because they consume about a fourth of all energy generated in the country. Self-generated electricity that covers even part of that is not only financially beneficial for households but also good for the environment. Energy communities enable communal decision-making in energy-related matters. This makes the energy system more democratic and gives citizens agency as electricity market actors.
Energy communities are considered to be one of the most important promoters of clean energy. The European Union's energy policy programmes support energy communities, and their establishment in Finland has been possible since late 2021.
Three types of energy communities in Finland
In Finland, nearly anyone can establish or join an energy community. The energy communities in the country can be divided into three types: single-property, cross-property, and dispersed.
Finland has enormous potential for single-property energy communities, because roughly one fourth of all buildings compose housing companies where decisions are made collectively.
An example of a cross-property energy community is when solar panels on one land plot or more are connected to the neighbourhood's shared electricity network, and the generated electricity is distributed among the members of the community in a pre-agreed manner.
Dispersed energy community solutions are well-suited for summer residences, for example. The surplus electricity generated at a summer house can be sold to the distribution network operator or used at home. This can be done by concluding an agreement with the energy company directly or by joining a virtual energy community.
In a fully dispersed system based on renewable energy, electricity is produced and consumed at different locations and distributed along a public network. A dispersed energy community, much like a centralised one, can operate as a collective model when end-users and communities are the owners of the energy production. Denmark and Germany are European pioneers in democratic energy generation, because citizens and communities own half of all wind turbines and other renewable energy production plants.
In 2023, the Finnish Ministry of Trade and Industry published a report stating that dispersed energy communities would significantly promote local, sustainable energy production also in Finland.
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Lower electricity bills, higher resilience
According to Assistant Professor Eeva-Lotta Apajalahti, there are financial, social, and environmental advantages to energy communities.
Energy communities can lower their members’ electricity bills and provide additional income. The communities do not need to pay electricity tax for their electricity generation if it remains below 800 megawatt hours (MWh) annually. In addition, energy communities are not subject to value added tax (VAT) if they produce electricity solely for their own use and surplus sales are minor.
Energy communities can foster a sense of community and empower people to make energy-related decisions. Apajalahti believes that as energy-related knowledge and skills increase, passive electricity consumers may be inspired to become actively engaged energy citizens.
Local energy production improves energy efficiency and is environmentally friendly. Moreover, it boosts resilience, as energy communities can generate energy for their own use and even provide a power reserve when disturbances occur in the electricity distribution system.
Energy communities thrive in both rural and urban areas
Ample information is available on how to establish an energy community in Finland, such as the energy community handbook published by Elenia and VTT, updated in 2024.
Apajalahti points out that planning an energy community should start by finding out about renewable energy sources suitable for collective energy generation in the area. For example, a neighbour's fallow land could be an ideal place for solar panels if your own plot is in the shade.
Energy communities can also be set up in urban areas, because solar panels and geothermal heating are suitable for apartment buildings. For example, in Helsinki, geothermal wells can be drilled under sidewalks and parks if other conditions are met.
The Finnish climate and energy strategy proposes further investigation of new energy community models to enhance their appeal. Finland needs more distributed energy generation, microgeneration, and energy efficient solutions.
LUT University provides research-based information on energy
- LUT is a leading university in energy research. Every other year, it publishes a report called the LUT Energy Outlook. The first one was published in 2022 and the second one in 2024.
- The LUT Energy Outlook is based on scientific research and provides reliable information on the state and development trends of the energy system. In addition, the report describes different energy production methods.
- The authors of the report are energy system researchers at LUT University.
- The LUT Energy Outlook is targeted for experts and decision-makers as well as regular citizens.
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