Implementing a Just Renewable Energy Transition: Policy Advice for Transposing the New European Rules for Renewable Energy Communities

The recast of the Renewable Energy Directive (RED II) provides an enabling framework for “Renewable Energy Communities” (RECs) that is being transposed into law by the 27 European Union Member States by June 2021. RECs are majority owned by local members or shareholders who are authorized to share energy within the community, offering the potential to unlock private investment and financing for renewable energy sources and provide social benefits. However, successful implementation and a just energy transition requires the coupling of technological solutions with good governance, based on sound analysis, and knowledge of engineering, spatial planning, and social science. We argue that financing and ownership models that address renewable energy complementarity, spatial organization of resource potential, demographics, pushback from incumbents, and inclusion of traditionally marginalized groups, are common issues across all Member States that are crucial for the transposition of RED II and a just energy transition. This paper highlights the benefits and challenges of widespread development of RECs, and using examples from the pending transposition process provides policy advice for effective implementation of the RED II with respect to RECs.


Introduction
Renewable energy sources (RES) must achieve at least 63% share of the energy system by 2040 to meet both the 2030 Agenda for Sustainable Development, and Paris Agreement targets (United Nations, 2017). Within the electricity system, moving past the current technical observed maximum 20 to 40% RES (Martinot, 2016) on the grid requires 1) a new energy system logic and architecture, and 2) measures to increase social acceptance of system changes across widespread geographies and different types of stakeholders (Seidl et al., 2019). The recast of the Renewable Energy Directive -RED II (European Parliament and Council of the European Union, 2018) as part of the new European Clean Energy Package for all Europeans (European Commission and Directorate-General for Energy, 2019) was passed in 2018/19 at the EU level. It has the potential to address these requirements if effectively implemented and transposed into national law. One promising aspect of the RED II is that, if effectively transposed into national law, it is an enabling framework for the widespread implementation of "Renewable Energy Communities" (RECs). RECs are majority owned by local members or shareholders, entitled to produce, store and/or distribute energy, supported by an "enabling framework" to be transposed into national law, and authorized to share energy within the community. The 27 Member States of the European Union have until June 2021 to transpose the new rules of the RED II into national law. This paper highlights the benefits and challenges of widespread development of RECs, and provides policy advice for effective implementation of the RED II with respect to RECs.
RECs have emerged as a small but important part of the current energy transition. They are part of the rapidly evolving sector of locally-focused distributed energy ownership often referred to as "community energy". The sector is diverse with various interpretations of what a "community" is, how decision-making power is distributed , who receives project benefits (i.e. in the form of direct electricity benefits, financial returns), and the motivations for the project (Hicks and Ison, 2018). In general, to be defined as community energy, initiatives have some form of inclusive, participatory decision-making, a "local" focus, and motivations for operation that go beyond profit maximisation. Community energy is of interest because it represents a fundamental departure from the centralised, profit maximisation-focused model of electricity generation and distribution that exists in most advanced economies (Burke and Stephens, 2018).
Research has shown that community energy has the potential to unlock private investment and financing for RES (de Brauwer and Cohen, 2020), provide social benefits (Burke and Stephens, 2018), and maximize efficient use of the grid (Koirala et al., 2016). It can increase public acceptance and installation rates of RES, while creating diversified revenue streams and green jobs (Hoch et al., 2019). By enabling community participation in RES development, as well as redistributing the financial and political benefits of energy asset ownership, RECs have the potential to contribute to the democratization of RE access and benefits. Research also increasingly suggests that achieving social acceptance of an energy transition on the time scale required to prevent catastrophic climate change will depend upon the extent to which the transition is perceived as "just" (Devine-Wright, 2019). This requires careful attention to who can participate in, and benefit from, the energy transition (Jenkins et al., 2018).
However, RECs are not the only possible form of "energy communities". European energy law does allow other private law initiatives (Jasiak, 2018). More commercially driven models that do not confer voting rights to retail investors like limited partnerships or silent partnerships compete with RECs. Of course, as such business models do not qualify as RECs they do not benefit from the "enabling framework" or the privilege of energy sharing. In this way European law does not hinder incumbents, usually defined as those with central roles in existing, centralised energy systems, from setting up their own energy "communities" to enable the technical benefits of distributed energy siting. However, such projects, led for example by energy services companies or large energy suppliers, do not provide the benefits of democratic participation and decision-making or a redistribution of the profits. To qualify as a REC, new governance criteria must be met. For incumbents, this often comes at the price of control. Therefore, the scale at which RECs are deployed in practice will depend upon (i) the attractiveness and coherence of the RED II "enabling framework" and (ii) the flexibility of the underlying business model to allow for the participation of, or cooperation with, professional actors from the energy sector. This article is organised to first clearly outline RECs and the enabling framework from a legal perspective, and then to describe important common elements for policy makers responsible for transposing the new rules to consider. These elements recognise that individual Member States have their own path dependent traditions of RE and social economies. Against this context, we outline technical, legal, and social considerations for transposing the rules for RECs in ways that facilitate security of supply, while considering emerging social and technical developments. We address five key socio-technical issues necessary to capture the benefits of RECs: to (1) encourage RE "clusters" that support resource complementarity between RES amongst a range of actors to minimize costs and maximize benefits of RES integration ; (2) consider relationships between the spatial distribution of RES potential, community density and demand, and demographics with the aim to maximize both social acceptance and investments in RECs; (3) anticipate input and pushback from incumbents to ensure effective implementation of new policies (Brisbois, 2020a); (4) encourage inclusion of gender diversity, vulnerable consumers and low-income households to ensure a just, and socially accepted, energy transition, and, (5) develop financing and ownership models that address these complexities while being sufficiently flexible (Roby and Dibb, 2019).
The selection of these key issues stems from the current discussion on the subject of the pending RED II transposition at the EU level as reflected by a workshop for policy makers hosted by EUFORES, the European Parliament's bipartisan group supporting RES in October 2020 (EUFORES Academy, 2020). As Member States are currently transposing and revising laws, and the revision process will continue beyond the June 2021 deadline, we provide relevant examples from first adopters.

Renewable Energy Communities, Definition and Enabling Framework
To qualify as a REC and benefit from the RED II enabling framework, the new governance criteria of the RED II must be met. A fundamental component of the new legislation is the "active consumer", embracing both consumption and production of RE (i.e. "prosumership"). Pursuant to Articles 21 and 22 RED II, "renewable self-consumers" have the right to consume, sell or store RE generated on their premises (i.e. "prosumage" when prosumption includes storage). The new EU Clean Energy Package legal frame, alongside individual basic energy rights of European citizens, also introduces the above rights for citizens collectively organised in energy communities with a separate and distinct legal personality, i.e., in RECs. Members of RECs have the privilege of sharing electricity, and other forms of energy, between members or shareholders, even when using the public grid. Key aspects to qualify as a REC (outlined in Table 1) include geographic proximity of the members controlling the REC to the RE installations and the heterogeneity of members, whereby no single shareholder owns a controlling stake. Geographic proximity of controlling members ensures that local stakeholders are beneficiaries, while the heterogeneity of members upholds the autonomy of the REC collective from individual members.  Lowitzsch et al. (2020)).

Criteria
Renewable Energy Communities pursuant to Art. 2 (16) RED II Eligibility · Natural persons, · Small and medium sized enterprises, · local authorities, incl. municipalities; Primary Purpose "Environmental, economic or social community benefits for its shareholders / members or for local areas where it operates, rather than financial profits";

Membership
Voluntary participation open to all potential local members based on non-discriminatory criteria; Ownership and control · Effectively controlled by shareholders or members that are located in the proximity of the RE projects that are owned and developed by the REC; · Is autonomous (no individual shareholder may own more than 33% of the stock).
Additional to the mentioned basic energy rights as prosumers, RECs benefit from a specific "enabling framework to promote and facilitate their development" with a catalogue of core principles defined in Art. 22 para 4 RED II. Key to understanding this new "enabling framework" is recital 71 RED II stressing that "(t)he specific characteristics of local renewable energy communities in terms of size, ownership structure and the number of projects can hamper their competition on equal footing with large-scale players, namely competitors with larger projects or portfolios" (European Parliament and Council of the European Union, 2018). RED II calls for measures to compensate for these limitations. Art. 22 para 4 (h) RED II includes in this context that "regulatory and capacity-building support is provided to public authorities in enabling and setting up RECs, and in helping authorities to participate directly" (European Parliament and Council of the European Union, 2018). Art. 22 para. 7 RED II stipulates that Member States shall "take into account specificities of renewable energy communities when designing support schemes in order to allow them to compete for support on an equal footing with other market participants" (European Parliament and Council of the European Union, 2018). This provides clear direction to legislators on what they must do, but not how to best achieve the required outcomes.
RECs will directly benefit from the "Just Transition Fund" of the "European Green Deal" (European Commission, 2019) explicitly geared towards smaller-scale RE projects (European Commission, 2020), as well as from the European Structural and Investment Funds (European Commission, 2014). However, when clarifying and transposing the "enabling framework" for RECs and the corresponding programs of the European Structural and Investment funds dedicated to RE projects, national and regional legislators need to respect the rules for admissible State Aid (European Commission, 2016;Schön, 2016). To avoid conflicts with these rules, in analogy to the established principles for fiscal and tax incentives for cooperatives (European Commission, 2016), preferential treatment should be tied to the following requisites with respect to a REC's local controlling shareholders or members: (a) the REC acts in their economic interest; (b) their relations are not purely commercial, but are linked to their local individual RE energy supply; (c) they are actively involved as prosumers in the local RE project; and, (d) they are entitled to equitable distribution of the results of economic performance.
3. Key issues for the transposition of RED II with regard to RECs 3.1. Address complementarity, heterogeneity and proximity simultaneously Successful uptake of RES requires technological innovation and interventions that, due to the nature of RES, depend upon space, time, contrast and complementarity. Even considering that the area unit density of RE is low compared to fossil fuels (e.g. producing a kW from oil requires less space than a kW from wind) (Smil, 2016), the generation potential of solar and wind power is several times larger than the societal need for electricity. For instance, in Europe, 100% of electricity demand could technically be satisfied if PV and wind power are installed in an area equivalent to 1% of the continent (Ruiz et al., 2019). The main technological challenge to the exploitation of these energy sources is that of balancing geographicallydispersed, intermittent RES with demand.
Sociotechnical innovation in RES can be implemented alongside RECs to maximise both grid and social benefits. RECs can be deployed with "RE clusters" (Figure 1) that address the technical challenges to RES uptake . RE clusters are composed of bi-directional energy flows, interconnectivity amongst a range of actors on a system, elements of flexibility (e.g. storage, demand response), as well as complementarity of RES . The EU Clean Energy Package encourages interconnectivity, bidirectionality and flexibility, but it does not explicitly encourage complementarity amongst RES.
Complementarity, the asynchronicity of power production amongst RES, is an optimal technical and economic solution for the integration of RES onto the grid (Hoicka and Rowlands, 2011). Complementarity means using a variety of different variable RES at the same time to smooth out power production. Low power production from one source can be compensated by power production from other sources. Its many benefits include improved grid stability (Xinshuo Zhang et al., 2018), increased network capacity to integrate variable renewable power (Sun and Harrison, 2019), and reduced system costs for energy storage (Ramirez Camargo et al., 2019a). Prioritizing complementarity serves to decrease not only required RE generation capacity, but also the storage and backup requirements. This holds for clusters scaled at residential levels (Ramirez Camargo et al., 2019a), for industrial consumers with a constant demand (Ramirez Camargo et al., 2019b), and for entire countries (Schmidt et al., 2016). Further optimization can occur when energy systems address heat, cooling, transport and electricity demand jointly. For example, heat pumps that input electricity and output heat can be an optimal complement for electricity surplus from variable renewables, and they can be combined with district heating networks, or heat and power installations (Lund et al., 2014). Integrated spatial and energy planning at the local scale should therefore help exploit complementarity between multiple sources and technologies (Ramirez Camargo and Stoeglehner, 2018) for RECs. It is not yet clear how to encourage complementarity of RES by multiple actors in a RE cluster in policies that promote RES, including RED II. Although complementarity has been studied extensively with regards to energy system optimization and RES integration, there has been little to no analysis of policies that encourage complementarity (Haley, 2014). While there is an emerging literature on multi-actor grids and decentralization (Ghadi et al., 2019;Grosspietsch et al., 2019), there is limited knowledge about how to encourage multiple actors as prosumers and producers on a localized grid to provide complementary RES (Wolsink, 2012). This literature recognises that social actors should be involved in the co-governance of shared, small scale RE systems. It promotes adaptive governance and flexibility, but does not specifically address complementarity (Brisbois, 2020b). Despite the lack of research into enabling policy, legislators still need to consider how to build capacity for and incentivize complementarity among actors who produce and consume renewable power in a REC, in order to capture techno-economic benefits.
The initial Italian transposition of REC rules of RED II (Italian Republic, 2019) highlights these issues, as the present incentive design unintentionally hinders complementarity among RES and there, inhibits RE clusters. This is because in Italy, legal entities established as RECs are limited by size and by date of operation. The size limit of 200kW of RES limits the combination of RES, for example the integration of wind power, and restricts heating systems (Borroni, Lowitzsch, Tartaglia 2020). By restricting projects to those entering into operation after March 1, 2020, potential RECs are inhibited from adding onto existing RES installations implemented prior to this timeframe. This applies in particular to existing photovoltaic systems that allow on-site exchange ("scambio sul posto", a net metering arrangement) but will not have access to the new collective incentives provided for RECs. This may result in the RECs not including older installations that however would complement the new RES, and potentially reduce overall system costs and increase benefits. The incentive system puts existing energy communities with RE plants already in operation before March 2020 at a disadvantage and a resulting REC will lose various incentives provided over time for its individual members. Although the rationale of the legislator to avoid cross subsidies is understandable, the Italian example demonstrates the importance of specifically allowing for RE clusters that include complementarity, and the benefits they confer.

Proximity
How the proximity criterion for RECs is transposed requires careful calibration as it affects both heterogeneity of ownership (i.e. the number of potential financial investors (see Table 1)) as well as the RE cluster configuration (i.e. type of RES, complementarity, and use of the grid). Due to geography, RECs in urban areas can specifically benefit from their high energy demand density and the demographics of potential investing members. The aggregation of a high number of individual demands in a relatively small area enables the creation of efficient multi-carrier (i.e. heat, cooling and electricity) district energy systems that use waste heat capture and provide flexibility services, such as demand side management. RECs in rural areas with low energy demand and with available space for the installation of RE plants can become net energy producers. The EU is one of the most densely urbanized regions globally ( UN Habitat, 2016), and urban areas house most of the opportunity for financing and investment compared to rural areas. This is important since consumer co-ownership of RES tends to be financed both by communities of placepeople bound together by their common location like a village or neighbourhood -and by communities of interest -people who might be geographically distant but who coalesce due to common energy interests (Baigorrotegui and Lowitzsch, 2019). Projects funded by communities of interest tend to adopt RE technologies that are chosen based on market or incentives, are grid connected, and often installed by international, large-scale companies and therefore standardized and scalable (Baigorrotegui and Lowitzsch, 2019), i.e. mainly singular RES. Projects funded by communities of place tend to be off-grid or micro-grid, and tailor made to the local RES potential and energy needs (Baigorrotegui and Lowitzsch, 2019).
Defining proximity too narrowly during transposition could disqualify urban or rural projects that spread over a large territory comprising various RES. Large single-sourced RE projects like a community-owned wind park may also require financial and organisational participation beyond a single municipality . In both cases, members too far away from individual RE installations would be excluded from the circle of controlling shareholders affecting both the heterogeneity criteria of membership and complementarity of RES. Therefore, legislators should define the proximity criterion so as to ensure ownership and governance criteria are met, but that installation types are not unduly limited.
Regarding complementarity, both urban and rural projects involving more than one RES, will not necessarily be built close to each other due to planning law requirements and availability of suitable sites. For example, minimum distance rules for wind power means it will be far from roof-top solar. Under narrowly defined proximity, these projects could be disqualified as RECs, denied substantial funding as RECs, and deprived of the privilege of energy sharing, a requisite to tap the potential of RES complementarity. These projects could also be discouraged by high network fees that are not calibrated for energy sharing when using the public grid in proportion to the actual distances. Legislators must consider how to maintain the ability of REC members to sell electricity to each other or make use of offsetting mechanisms of the electricity meters through the mechanism of prosumership. Therefore, a flexible definition of proximity, depending on the spatial organisation of a REC, can help to balance motivations with geographies of energy supply and demand, urbanization trends, and demographics of investment with heterogeneity of REC membership.
The terms "proximity" and "local area" should be contextualised, adapting them to what is nationally and regionally appropriate.

Powershifts-Anticipate Pushback from Incumbents
Successful implementation of the EU Clean Energy Package will disrupt ownership patterns in energy markets. At least some fraction of market share will be distributed amongst large numbers of new REC members. This is a significant shift from the status quo. At present, electricity market ownership across the EU is largely centralised in the hands of a relatively small number of public or private generation companies. This shift in market ownership is both politically and economically significant. It represents a reorganisation of control over energy systems, any associated financial benefits, and the political influence that comes from controlling societally essential resources (Burke and Stephens, 2018).
Many incumbent policy and regulatory actors now recognise the potential of an energy system characterised by a non-trivial contribution from RECs -as evidenced by the approval of the RED II at the EU level. However, they have concerns related to the technical and financial capacity of new actors, the infrastructure investment required to enable decentralisation of the grid, equality of opportunity for citizen participation in RECs, and general provision of secure energy supplies (Johnson and Hall, 2014). In contrast, many incumbent commercial actors have, to date, actively opposed the diversification of electricity ownership that the REC definition embodies because it will undermine profitability (Brisbois, 2020a;Hess, 2016;Lee and Hess, 2019). A key challenge for REC diffusion is that it requires cooperation between incumbent actors with knowledge, resources and professional skills related to the energy system.
There is widespread evidence that many incumbent generators and grid companies continue to resist policies that open up energy markets to more decentralised ownership, like RECs (Burke and Stephens, 2018;Hess, 2016;Stokes, 2013). Political pushback can take many forms. It includes easily visible activities such as direct lobbying (Brisbois, 2020a), attempts to influence public opinion through the media (Lee and Hess, 2019; Rosenbloom et al., 2016), and legal challenges against enabling policies (Hess, 2016). The central role of incumbent companies in energy systems also means that they are able to influence the transposition of the RED II in ways that can be hidden or invisible. For example, influence over technical regulatory code panels can be used to set rules detrimental to RECs (e.g. Lockwood et al. (2017)). Control over data on grid capacity has also been used to limit both RE and REC penetration by claiming grid constraints where there are later shown to be none (Stokes, 2013). Policy makers seeking to reap the benefits of RECs will need to proactively develop plans that support and defend these initiatives.
The ability of RECs themselves to defend their interests and engage politically is growing (Brisbois, 2020a). However, there is real potential for cooptation or perversion of the intent of the RED II by those with an interest in maintaining the political and economic status quo. To prevent this, it will be important for policy makers to commit to technical, political and institutional capacity building for REC members (Berka and Creamer, 2018). REC members and other new actors will need this capacity to effectively engage in code panels -which should be opened up to them -and in other technical and policy fora (Lockwood et al., 2017). These actors should also be empowered to participate in local energy planning processes to help enable complementarity of RES in and amongst RECs. To ensure a level playing field for RECs, there is a need for disclosure rules ensuring open, transparent and accessible grid data from operators who may make false arguments that this data is proprietary (Brisbois, 2020b;Stokes, 2013).
New approaches to governance that are inclusive of the wide range of energy actors are necessary. There is a need to shift from top down decision making on energy to multi-level and participatory approaches with clear allocation of roles and responsibilities, and sufficient funding (Gastil and Richards, 2013). It may also be appropriate to consider direct democratic mechanisms like citizens' assemblies that attempt to compensate for political power imbalances when making major infrastructure and governance decisions (e.g. grid modifications, creation of regional energy system coordination bodies) (Ferejohn, 2008;Gastil and Richards, 2013;MacArthur, 2016)

Energy Justice -Design for Inclusion
Factors beyond spatial proximity and ensuring equal opportunities also affect participation in RECs. For example, communal energy actions are often a strategy for tackling energy poverty -understood as inadequate levels of access to essential services like heating and lighting (Bomberg and McEwen, 2012). However, the word 'community' can be a cosmetic addition; these projects may not equally progress benefits or participation for everyone , even with the careful definition of RECs in RED II. Outcomes depend on who plans and executes RECs and how they do it (Berka and Creamer, 2018). Ignoring justice concerns can aggravate poverty and non-participation, and entrench gender biases (Jenkins, 2019).
Impoverished households should be enabled to participate in and benefit from projects, rather than only those with higher socio-economic status. Prosumership, an important component of RECs, requires access to financing, know-how, and a certain willingness to take risks. EU regulations create a 'welfare dilemma' as they require social benefit recipients to have no access to asset ownership or income (Lowitzsch and Hanke, 2019a), often prohibiting their participation in (co-)ownership of RE installations.
Impoverished households with poor housing conditions and irregular employment already struggle with changes in domestic energy infrastructure, such as energy efficiency refurbishments (Buzar, 2007). More changes in the regulatory frameworks and uncertain future benefits may also discourage participation (Devine-Wright, 2019). A consequential risk of RED II is that households well-off, with access to prosumership, are more likely to defect from the grid and become energy self-sufficient. This would leave poorer communities with a disproportionate burden of paying for the centralised electricity infrastructure (Baker and Phillips, 2019). For these reasons, legislators should distribute prosumption benefits equally across social groups. This will facilitate social acceptance and political support for the transition itself (Fuller, 2017;Middlemiss and Parrish, 2010).
The capacity of marginalized communities must be addressed directly by participatory and public engagement activities (Smith et al., 2016;Wyse and Hoicka, 2019) and in policy development. With respect to communities of place, participation policies can erode public confidence and produce mistrust if community participation is only symbolic (MacArthur, 2016;Wyse and Hoicka, 2019). This risks lack of acceptance of RES and weak benefits to the local community (MacArthur, 2016). Socio-cultural aspects of gender and race mediate benefits for particular social groups (Kumar, 2018;Petrova and Simcock, 2019). The average 16% gender pay gap (Eurostat, 2019) in the EU means that women have less income to invest as capital in RECs. Across Europe, women have invested less in and own smaller shares of renewable energy cooperatives than men (Fraune, 2015;Lapniewska, 2019). Energy poverty is shown to exacerbate existing gender inequalities. RECs, despite existing demographic trends, offer opportunities for empowerment and the reconfiguration of existing gender relations (Petrova and Simcock, 2019). Rather than a one-size-fits-all plan, RED II policy mechanisms should be flexible enough to respond to the socio-economic capabilities and needs of different communities and their constituents (Middlemiss and Parrish, 2010), including potential risks and opportunities and how they can be respectively mitigated and enhanced. To address this, ancillary rules should accompany the transposition of RED II, for example: (a) exempting investments in RECs from the necessity to liquidate one's assets when applying for means-tested social transfers; (b) allowing direct energy subsidies for vulnerable consumers to be capitalised as a lump sum to join an existing or set up a new REC (Hanke and Lowitzsch, 2020).
An interesting example of an innovative inclusive approach for the transposition of RED II is the French law on energy and climate of November 2019 (French Republic, 2019). In addition to defining the compliance criteria for RECs, it also defines the legal entity implementing a social housing project by law as a potential REC. The law also defines the residents of these buildings as REC members by default. In this way, the French legislator has installed an opt-out model for social housing RECs that accelerate participation of the residents. It remains unclear to what extent the new members also share in the ownership of the REC.

Financing and ownership models
From an energy justice perspective, different business models have the ability to facilitate or hinder meaningful participation in decision-making. They can also render partnerships with municipal or conventional investments more or less attractive (Jenkins, 2019). The appropriateness of a given REC business model depends on context. This includes the socioeconomic and demographic profile of the participating community, the overarching governing and legal frame, capacities, and the physical resource potential. Business models for RECs require (i) sufficient flexibility to include different types of co-investors; (ii) allowance for a fair division of responsibilities and benefits between them; and (iii) respect for RED II governance requirements.
This section compares two business models that -in contrast to that of limited partnerships -are consistent with the governance requirements for RECs in the RED II (summarised in Table 2), and that will allow RECs to fulfil their technical and socioeconomic potential (discussed above). The co-operative model (prevalent across existing RECs and therefore discussed in less detail), and the Consumer Stock Ownership Plan (CSOP), a business model specifically intended to support low income engagement in joint ventures.
The co-operative model has been very successful across Europe for the development and diffusion of smallscale RECs. The model is defined by the co-operative principle of 'one member, one vote'. Regardless of the number of shares held by any single individual or entity, all members have the same say in decision making. Compensation for co-operative managers is usually capped, and profits from operations are allocated under agreed-upon terms. Co-operatives by definition pursue economic or social community benefits for their members and contribute to the development of their communities by sourcing and investing locally. They are able to give equal or greater priority to social or environmental outcomes, if they so choose. In contrast, the main objective of business corporations is profit for their shareholders. Cooperatives therefore have more flexibility in defining operational priorities.
Cooperative models present some challenges. Co-operatives often rely on a significant amount of volunteer labour from members and this can result in capacity and stability challenges (Tarhan, 2020). They also tend to be risk-averse, limiting participation in larger-scale projects which may have overarching benefits (Herbes et al., 2017). The co-operative models also present some unexpected challenges with respect to the REC rules. For example, when cooperatives partner with municipalities, the necessity of representation of their officials on management and supervisory bodies has been reported as an obstacle (Lowitzsch and Hanke, 2019b). This is because all members of cooperatives are elected by and from the members' general assembly and cooperative law generally does not acknowledge a right of delegation. Co-operatives also require upfront capital for membership. This is a barrier for lower income segments of society and means that the benefits of REC participation are predominantly experienced by already privileged segments of society (Yildiz et al., 2015), and are not gender diverse (Fraune, 2015;Lapniewska, 2019).
There remains a need for business models that guarantee open entry to RECs, including for low-income households and consumers threatened by energy poverty as postulated by the legislator (compare Art. 22 para 4 (f) RED II), and that allow for representation on supervisory bodies, such as municipalities. The Consumer Stock Ownership Plan (CSOP), is one form that facilitates entry of those without capital, time or expertise through its trusteed format (Lowitzsch, 2019). A CSOP ( Figure 2) is a business model that employs an intermediary operating company and facilitates the involvement of individual consumers as investors through a trusteeship. The trustee is an independent fiduciary (i.e. a physical person or fiduciary entity) installed, in the case of RECs, by the local community. The trustee represents the consumerbeneficiaries.
CSOPs are particularly suited to situations where citizens lack upfront capital. The CSOP can buy into existing installations, or invest in new RE plants and may use external financing, thereby achieving the benefit of financial leverage. To address the lack of access to capital, the operating company is authorized to borrow funds (e.g. acquire external financing) for the acquisition of shares in the RE plant on behalf of the energy consumers. Revenues from the sale of the energy produced are used to repay the acquisition loan assumed by the CSOP. Once this debt is amortized, revenue is distributed to the consumer-beneficiaries.
In this way, citizens with low income are enabled to repay their share of the acquisition loan from the future earnings of the investment.
Since the operating company is usually a privately held corporation with limited liability, CSOPs are attractive for (local) commercial investors. Different than cooperatives, voting rights are proportional to shareholding. The REC governance model, required by RED II, is already enshrined in the statutes of the operating company. This means that there are 33% and 51% shareholding limits to ensure that no one actor is able to control a disproportionate amount of decision-making power. It also means there are restricted rules for sale between shareholders, or to outsiders. The two-tier level of rule setting "corporate statutes -fiduciary agreement" makes it possible to include objectives unusual to the corporate world. For example, the company statutes can contain stipulations on board composition (such as gender or income diversity), or on financial assistance for acquisition of shares to specific groups. The individual fiduciary agreements may contain gender-oriented rules for sale. This is an important lever as there are arguments for gender diversity in leadership in the renewable energy sector to bring about both energy democracy and energy justice (Allen et al., 2019), as well as and organizational effectiveness (Pearl-Martinez and Stephens, 2016).
The trusteeship is designed to protect the interests of consumer shareholders and ensure stable market participation. Representation by a trustee makes the consumers' voting behaviour predictable while still ensuring meaningful participation in decision-making. The fiduciary agreement, negotiated at CSOP inception, defines which decisions are retained by the consumer shareholders, and which are delegated to the trustee. It also defines the rights and obligations of the consumer beneficiaries. As a rule, decisionmaking for day-to-day tasks is left to the trustee jointly with the other shareholders of the REC. This provides stability because it ensures that consumer shareholder participation does not affect the management of routine, day-to-day operations. Strategic decisions are voted amongst the consumer shareholders. These votes are then represented via the trustee on the board of the operating company. Benefitting from a stronger position relative to the other municipal or corporate co-owners in the CSOP, the consumers can avoid fragmentation of their voting rights.
The compatibility of the CSOP model with municipal and more commercially-oriented investments comes at the price of moving away from the one-member-one-vote principle of cooperatives and accepting voting rights proportional to shareholding (see comparison in Table 2). However, as a trusteed scheme, the CSOP compensates this possible imbalance by ensuring that consumer shareholding is consolidated and that local shareholders will effectively control the RECs. A downside of the CSOP are the additional costs associated with the trusteeship which, nevertheless, can be offset to some extent by reduced transaction costs. However, CSOPs are not suited for small projects and require a minimum size to justify the two-tier decision-making process. Last but not least, the possibility of involvement of professional actors from the existing energy sector ensures that required expertise and experience is available to allow the REC to implement the more complex elements of RE clusters. This concerns the balancing responsibility, flexibility options and storage when various RES are involved. The capacity of a REC to become an aggregator and / or to engage in demand side management, and scale the projects are all important to profitability and improving the economic feasibility of RECs. This is because the reduction of load peak demand can be rewarded with reductions for grid fees but requires a certain minimum size (see e.g., in Germany paragraph 14a of the Electricity and Gas Supply Act (Federal Republic of Germany, 2020)). Allowing for maximum heterogeneity of co-investorsnot a priori excluding the incumbents -can therefore also encourage complementarity between RES.
The Greek law on Energy Communities from early 2018 (Hellenic Republic, 2018), is one of the first codifications of REC, which was passed before the RED II. It illustrates the how different ownership models can be restricted. Anticipating the new RED II rules for RECs, the Greek legislation limits the legal form of qualified RECs to that of cooperatives (REScoop and ClientEarth, 2020). This narrow approach rules out other types of legal forms, which limits the variety and reach of RECs and probably will be amended during the transposition process. While democratic mechanisms and principles are important, RECs need sufficient flexibility with regard to their form of incorporation.

Conclusion
The complex task of transposing the RED II into national law in the 27 Member States has the potential to achieve just and socioeconomically successful outcomes. While transposition first and foremost aims at the adaption of the new framework rules to the national specificities reflected by the different traditions and practice of RE projects, we have argued that there are a number of general issues to be considered in every Member State that would support the scale-up of RECs. In a context of pushback from incumbents (Brisbois, 2020a;Sovacool and Brisbois, 2019), geographic dispersion, temporal variability of RES potential (Pasqualetti, 2012;Ramirez Camargo and Stoeglehner, 2018) and problems of representation and inclusion in community energy projects (Creamer et al., 2019;Smith et al., 2016) successful implementation requires the coupling of technological solutions with good governance, based on sound analysis and knowledge of engineering, spatial planning, and social science. While co-operatives have been the most frequent legal form for REC governance, we outline the benefits of the CSOP model as an alternative for situations where upfront capital is limited, membership is heterogeneous, including, e.g., also SMEs and municipalities, or where projects are designed to be scalable. The transposition examples from Greece, Italy and France exemplify the broad range of possibilities and limitations of implementation by national legislators. As transposition continues, we recommend exchange of best practice between Member States on the elements we have highlighted above. This is vital to tailor the "enabling framework" to the most suited (regional) business models, while meeting the challenges of ensuring efficient and complementary installation of RE clusters.