Competition Law and Renewable Energy Communities

1. Introduction

Renewable Energy Communities (RECs) are arrangements in which households, businesses, municipalities, cooperatives, or other participants jointly produce, consume, store, share, or otherwise manage renewable electricity. They are intended to decentralise energy production and allow consumers to participate actively in electricity markets.

From a competition-law perspective, RECs create a distinctive regulatory problem. Cooperation among participants can increase competition against incumbent energy suppliers, but the same cooperation can also facilitate collusion, exclusion, market foreclosure, or discriminatory access.

The principal competition-law questions therefore concern:

• whether an REC constitutes an undertaking or association of undertakings;
• whether members are actual or potential competitors;
• information exchange between members;
• joint purchasing and collective generation;
• access to electricity networks;
• collective ownership of storage or charging infrastructure;
• exclusion of competing generators or suppliers;
• local market power;
• public subsidies and state aid;
• data sharing and digital energy-management platforms;
• interoperability and access to smart-grid infrastructure.

In the European Union, the concept is particularly important because EU energy legislation expressly facilitates citizen energy communities and renewable energy communities, while EU competition law continues to apply to their commercial activities.

2. Legal Framework

A. Article 101 TFEU

Article 101 prohibits agreements, decisions of associations of undertakings, and concerted practices that have as their object or effect the prevention, restriction, or distortion of competition.

For RECs, Article 101 may become relevant where members:

• jointly determine prices;
• divide customers or geographic areas;
• coordinate bids;
• exchange competitively sensitive information;
• agree not to compete with one another;
• collectively exclude outside suppliers;
• coordinate purchases or sales beyond what is reasonably necessary for the REC.

However, cooperation that produces efficiencies may potentially qualify under Article 101(3), provided the statutory conditions are satisfied.

B. Article 102 TFEU

Article 102 concerns abuse of a dominant position.

An REC could potentially raise Article 102 issues if, for example, a community becomes the dominant provider of electricity-generation capacity or controls an essential local infrastructure and then:

• refuses access;
• imposes discriminatory access conditions;
• engages in tying;
• applies exclusionary pricing;
• forecloses competing suppliers;
• uses control over data or infrastructure to disadvantage rivals.

Dominance itself is not prohibited; abuse of dominance is.

C. Merger Control

An REC may involve the joint ownership or control of:

• solar farms;
• wind projects;
• battery storage;
• electricity networks;
• charging infrastructure;
• energy-management platforms.

Where the arrangement constitutes a concentration and applicable jurisdictional thresholds are met, merger-control rules may apply.

Joint ventures are particularly important because a formally cooperative community can sometimes function economically as an independent market operator.

3. Why Renewable Energy Communities Create Competition Issues

3.1 Collective purchasing

Members may jointly purchase:

• solar panels;
• batteries;
• electricity;
• grid services;
• balancing services;
• energy-management software.

Joint purchasing can create purchasing efficiencies but may also create buyer power.

If a community controls a substantial portion of local demand, it could potentially disadvantage suppliers or reduce competition among upstream providers.

3.2 Collective generation

Several participants may jointly own a renewable-generation facility.

This generally promotes investment and may create efficiencies.

Competition concerns can arise where competing generators are excluded from the relevant local market or where community members coordinate their independent commercial strategies beyond what is necessary for the project.

3.3 Information exchange

RECs frequently require information concerning:

• electricity consumption;
• expected generation;
• battery capacity;
• energy demand;
• prices;
• bidding strategies;
• production forecasts.

Sharing technical information necessary for operating the community may be legitimate.

Sharing future prices, individual bidding strategies, output intentions, or commercially sensitive information among competing undertakings can create competition risks.

4. Renewable Energy Communities and Local Market Power

RECs often operate on a geographically limited basis.

A community may therefore acquire significant importance in a:

• village;
• municipality;
• industrial park;
• housing development;
• island;
• rural distribution network.

Local market power may arise because electricity networks exhibit significant infrastructure constraints.

The relevant question is not merely:

"How many members does the community have?"

It is also:

"Can customers realistically switch to competing electricity suppliers or alternative sources?"

5. Network Access and Essential Facilities

One of the most important competition issues concerns access to electricity infrastructure.

A renewable community generally depends upon:

• distribution networks;
• transmission networks;
• substations;
• meters;
• balancing systems;
• interconnection facilities.

If an incumbent network operator controls infrastructure necessary for competing renewable projects, refusal or discriminatory access may raise competition-law concerns.

The analysis may involve the principles developed in the essential-facilities doctrine.

6. Subsidies and Competition

Renewable communities frequently receive:

• grants;
• tax incentives;
• feed-in support;
• investment subsidies;
• preferential financing;
• public guarantees.

These measures can affect competitive conditions between:

1. community-owned renewable projects;
2. commercial renewable generators;
3. incumbent utilities;
4. independent energy suppliers.

In the EU, state-aid rules may therefore intersect with competition policy.

The policy challenge is to distinguish legitimate environmental support from support that unnecessarily distorts competition.

7. Six Important Case Laws

1. Case C-393/92, Almelo and Others v Energiebedrijf IJsselmij

The Court of Justice examined electricity distribution and the relationship between electricity undertakings and territorial supply arrangements.

Importance

The case demonstrates that electricity markets are subject to EU competition principles even where the sector has traditionally been characterised by public-service obligations and regulated monopolies.

Relevance to RECs

The case is useful for analysing:

• electricity-market liberalisation;
• exclusive supply arrangements;
• network access;
• public-service obligations;
• competition between electricity suppliers.

For renewable communities, it illustrates the tension between local electricity arrangements and competitive market access.

2. Case C-280/00, Altmark Trans

The Court established the famous Altmark criteria for determining when compensation for public-service obligations falls outside Article 107(1) state-aid classification.

Importance

The case is central to understanding the relationship between public funding and competition.

Relevance to RECs

Where governments support renewable communities through public compensation or public-service mechanisms, the Altmark framework can become relevant.

It helps distinguish:

• legitimate compensation for defined public-service obligations; from
• economic advantages capable of distorting competition.

3. Case C-205/17 P, Spain v Commission

This case concerned the interaction between renewable-energy support mechanisms and EU state-aid law.

Importance

The Court addressed the legal assessment of renewable-energy support within the state-aid framework.

Relevance to RECs

Renewable communities frequently depend on financial support to overcome:

• high initial capital expenditure;
• grid-connection costs;
• storage costs;
• financing constraints.

Consequently, the case provides useful principles for analysing whether renewable-support mechanisms confer selective economic advantages.

4. Case C-379/98, PreussenElektra AG v Schleswag AG

PreussenElektra concerned Germany's system requiring electricity distributors to purchase electricity generated from renewable sources at prescribed prices.

Importance

The Court considered the relationship between renewable-energy promotion and state-aid rules.

Relevance to RECs

The case is highly relevant to the basic competition-policy problem surrounding renewable energy:

Can governments favour renewable generation without creating impermissible distortions of competition?

It demonstrates that environmental objectives and competition rules can intersect in complex ways.

5. Case C-262/17, Viasat Broadcasting UK Ltd v TV2/Danmark

Although not an energy case, Viasat is important for the broader analysis of public-service compensation and competitive neutrality.

Importance

The judgment illustrates how public financing of services must be assessed under EU state-aid principles.

Relevance to RECs

Public authorities frequently participate in renewable communities.

A municipality may:

• contribute land;
• provide financing;
• guarantee loans;
• purchase electricity;
• participate as a member.

Such involvement can raise questions concerning whether public resources provide an economic advantage to the community.

6. Case C-280/08 P, Deutsche Telekom AG v Commission

The Court addressed exclusionary conduct involving access conditions and pricing in a network industry.

Importance

The case is significant for understanding competition problems arising from control over infrastructure.

Relevance to RECs

Renewable-energy communities depend heavily on network access.

The principles surrounding:

• discriminatory access;
• margin squeeze;
• network control;
• downstream competition;

can be relevant where a vertically integrated energy undertaking controls infrastructure needed by renewable-community competitors.

8. Additional Relevant Authorities

Several additional EU competition cases provide useful analytical principles for REC disputes.

Bronner — Case C-7/97

Bronner established important principles concerning refusal of access to infrastructure and the exceptional circumstances in which compulsory access may be required.

REC relevance: useful where a renewable community seeks access to infrastructure controlled by another undertaking.

IMS Health — Case C-418/01

IMS Health examined refusal to license intellectual property and the circumstances under which compulsory licensing may be justified.

REC relevance: increasingly relevant where community energy systems depend on proprietary software, data systems, smart-grid technologies, or energy-management platforms.

MOTOE — Case C-49/07

MOTOE addressed the dual role of an organisation exercising regulatory functions while also participating in an economic activity.

REC relevance: potentially important where a community organisation combines governance, infrastructure control, certification, and commercial activities.

Deutsche Bahn — Case C-482/15 P

The case concerns competition-law principles relating to infrastructure and potentially exclusionary conduct.

REC relevance: useful by analogy for analysing access to infrastructure controlled by vertically integrated operators.

9. Information Exchange Within Renewable Communities

This is one of the most significant modern competition issues.

Suppose five competing electricity suppliers participate in a community energy platform.

The platform collects:

• future electricity prices;
• expected production;
• customer demand;
• bidding strategies.

The platform could unintentionally become a mechanism through which competitors obtain information about one another.

Competition risk

The greater the sensitivity, frequency, individualisation, and forward-looking character of the information, the greater the competition concern.

Compliance approach

An REC should consider:

• aggregating data;
• anonymising commercially sensitive information;
• limiting access;
• using independent administrators;
• establishing information barriers;
• restricting forward-looking strategic information.

10. Algorithmic Coordination

Modern RECs increasingly employ algorithms to optimise:

• solar generation;
• battery charging;
• electricity purchases;
• peer-to-peer trading;
• demand response.

Algorithms can produce efficiencies.

However, if competing members use the same pricing algorithm, the system could potentially facilitate parallel pricing or coordinated conduct.

Competition law should therefore examine:

1. who controls the algorithm;
2. what data it receives;
3. whether competitors can observe each other's strategies;
4. whether the algorithm recommends prices;
5. whether members retain independent decision-making;
6. whether coordination is technically necessary.

11. Peer-to-Peer Energy Trading

Blockchain and smart-contract systems can allow community members to trade electricity directly.

This creates several competition questions.

Potential benefits

• lower transaction costs;
• increased consumer participation;
• greater transparency;
• decentralised generation;
• reduced dependence on traditional intermediaries.

Potential risks

• platform dominance;
• discriminatory platform access;
• exclusionary technical standards;
• algorithmic coordination;
• data concentration;
• interoperability restrictions.

A community-controlled platform should therefore avoid becoming a closed ecosystem without objective justification.

12. Interoperability

Competition may be restricted where a community energy platform refuses to interoperate with:

• rival batteries;
• third-party solar installations;
• competing energy-management systems;
• independent charging networks;
• alternative smart meters.

Interoperability can be particularly important because energy markets increasingly depend upon digital infrastructure.

Competition authorities may examine whether interoperability restrictions are:

• technically necessary;
• proportionate;
• objectively justified;
• discriminatory;
• exclusionary.

13. Collective Purchasing and Article 101(3)

Collective purchasing can generate legitimate efficiencies.

For example, an REC may collectively purchase 1,000 solar panels rather than each household purchasing separately.

Possible efficiencies include:

• economies of scale;
• reduced transaction costs;
• improved bargaining power;
• lower installation costs;
• improved access to renewable technology.

The competition analysis becomes more difficult if the collective purchasing arrangement:

• excludes competing suppliers;
• fixes resale prices;
• allocates customers;
• covers an excessive proportion of demand;
• exchanges sensitive information.

14. Exclusive Community Membership

An REC may attempt to require members to purchase all electricity from the community.

Such exclusivity may have legitimate commercial justifications.

But competition concerns increase if:

• the community has significant market power;
• customers cannot reasonably switch;
• membership is effectively compulsory;
• rival suppliers are excluded;
• the exclusivity is long-term;
• the community controls essential infrastructure.

The legal assessment therefore depends heavily on market power and foreclosure effects.

15. Renewable Energy Communities and Merger Control

Two communities may combine their assets.

Alternatively, an energy company may acquire control over a community.

Competition authorities could consider:

• generation capacity;
• geographic concentration;
• local electricity markets;
• storage capacity;
• network access;
• customer numbers;
• vertical relationships;
• digital energy platforms.

A transaction that appears small in terms of revenue may nevertheless have strategic importance where it controls a scarce local renewable resource or infrastructure.

16. State-Owned or Municipal Renewable Communities

Municipalities frequently participate in community energy projects.

Competition concerns may arise if the municipality:

• owns electricity networks;
• controls land;
• provides financing;
• awards exclusive contracts;
• participates in electricity supply.

The municipality could therefore occupy several roles simultaneously:

regulator + infrastructure owner + market participant.

This creates potential competitive-neutrality concerns.

Transparent procurement and objective access criteria can reduce these risks.

17. Essential-Facility Issues

Consider a hypothetical island where one undertaking controls the only technically viable grid connection.

A renewable community seeks connection to the grid.

If access is refused without adequate justification, competition law may become relevant.

The analysis may consider:

1. whether the infrastructure is indispensable;
2. whether duplication is realistically possible;
3. whether refusal eliminates effective competition;
4. whether access is technically feasible;
5. whether objective justification exists.

The Bronner principles are particularly useful in this context.

18. Competition Between RECs and Incumbent Utilities

RECs can introduce new competitive pressure against vertically integrated utilities.

They may compete through:

• lower electricity costs;
• local generation;
• flexibility services;
• battery storage;
• demand response;
• community ownership;
• peer-to-peer trading.

Incumbent utilities may respond through:

• loyalty arrangements;
• bundling;
• discriminatory connection terms;
• restrictive contracts;
• interoperability restrictions.

Each practice must be analysed according to the applicable competition-law framework rather than assuming that competition law automatically favours either side.

19. Competition Compliance Framework for RECs

A renewable energy community should consider adopting a formal competition-compliance programme.

Step 1 — Identify competitors

Determine which members are independent economic competitors.

Step 2 — Define the relevant market

Consider:

• electricity generation;
• electricity supply;
• balancing;
• storage;
• flexibility;
• charging;
• energy-management software.

Step 3 — Control information flows

Restrict access to competitively sensitive information.

Step 4 — Establish objective membership rules

Membership should not be used unnecessarily to exclude competing undertakings.

Step 5 — Establish transparent access rules

Grid and platform access should be based on objective criteria.

Step 6 — Review collective purchasing

Determine whether purchasing arrangements create excessive buyer power or foreclosure.

Step 7 — Review subsidies

Assess public financing under applicable state-aid rules.

Step 8 — Audit algorithms

Check whether automated systems facilitate coordination.

20. Key Competition-Law Risks

21. Overall Legal Assessment

Renewable Energy Communities occupy an unusual position in competition law.

Their pro-competitive potential includes:

• introducing new suppliers;
• decentralising generation;
• increasing consumer participation;
• reducing dependence on incumbent utilities;
• stimulating innovation;
• increasing renewable-generation capacity;
• creating alternative energy platforms.

Their competition risks include:

• collusion among members;
• collective market power;
• discriminatory access;
• foreclosure of competitors;
• information exchange;
• algorithmic coordination;
• infrastructure bottlenecks;
• exclusionary interoperability practices;
• distortive public subsidies.

The central principle is therefore that the cooperative nature of an REC does not automatically exempt it from competition law. The legal assessment should focus on the economic activities involved, the relevant market, market power, the necessity and proportionality of the cooperation, and the effects on competition.

22. Conclusion

Competition law and renewable energy communities are complementary rather than inherently contradictory.

RECs can strengthen competition by creating decentralised alternatives to traditional electricity suppliers. At the same time, once a community acquires substantial market power or controls scarce infrastructure, ordinary competition-law principles become increasingly important.

The most significant areas for future enforcement are likely to involve grid access, collective purchasing, information exchange, digital energy platforms, algorithmic pricing, interoperability, storage, peer-to-peer trading, and public subsidies.

The principal cases discussed—Almelo, Altmark, PreussenElektra, Spain v Commission, Bronner, IMS Health, Deutsche Telekom and MOTOE—provide useful legal principles for analysing these issues, even though several concern adjacent electricity, infrastructure, state-aid, or access questions rather than renewable-energy communities themselves.