What is an energy cooperative?
An energy cooperative is a specific type of cooperative whose activities focus exclusively on the generation, storage and trading of electricity or heat derived from renewable energy sources (RES). These activities are local in nature – they take place within a maximum of three neighbouring rural or urban-rural municipalities, under a single distribution system operator (DSO). Members of the cooperative may be natural persons, legal persons or so-called ‘partial legal persons’. The total capacity of all renewable energy installations operating within a single energy cooperative must not exceed 10 MW. For heat-generating installations, the limit is 30 MW. In the case of installations producing biogas or agricultural biogas, the maximum annual output is 40 million m³, whilst for biomethane it is 20 million m³ per year. At the same time, there are no lower limits on installation capacity, meaning that micro-installations may also operate within the cooperative.
The main objective is to use the energy primarily for own consumption – the installation should be capable of meeting at least 70% of the cooperative’s and its members’ own needs over the course of a year.
The decision to establish an energy cooperative brings many potential benefits, but also requires consideration of certain challenges.
Benefits of establishing an energy cooperative
The main advantage of an energy cooperative is the reduction in energy costs. Energy produced by the cooperative is exempt from certain charges, such as the renewable energy charge, the cogeneration charge or the capacity charge, which further enhances its economic attractiveness.
Another advantage is the opportunity to take advantage of numerous support schemes, as well as increasing local energy independence and the ability to make effective use of local renewable energy resources, such as photovoltaic installations or biogas plants.
Energy cooperatives – initial challenges
The cooperative’s activities are limited to a specific area and the capacity of the renewable energy installations. Such territorial and capacity limitations may affect the scale of the project, the availability of potential members, as well as the cooperative’s economic and technical capabilities.
The construction of renewable energy installations involves significant capital expenditure. It is therefore essential to secure adequate funding, which may mean applying for loans or grants. In addition to financial costs, organisational issues are also significant – the investment requires precise planning, preparation of project documentation, obtaining administrative permits, and finding contractors. During the operational phase, the cooperative must carry out regular accounting and technical inspections of the installations, which requires the involvement of suitably qualified personnel.
An additional challenge is the requirements arising from cooperative law. The cooperative must adhere to formalised management rules, such as maintaining full accounting and administrative records, organising general meetings of members, electing management and supervisory bodies, and regularly reporting its activities to the relevant supervisory authorities. This requires the cooperative’s members to possess the necessary knowledge and skills.
How to set up an energy cooperative?
- Analysis of technical and economic feasibility and the energy concept – the availability of renewable energy resources and the potential energy demand of future cooperative members must be analysed. It is also worth defining the area of operation, the number of members, supply points and the planned capacity of renewable energy installations at the outset.
- Establishment of the cooperative – adoption of articles of association in accordance with the Cooperative Law / Act on Farmers’ Cooperatives. Registration with the National Court Register (KRS) and allocation of a Tax Identification Number (NIP).
- Entry into the KOWR register – submission of an application containing the cooperative’s details, installation specifications, energy demand, etc. The cooperative may only commence operations once it has been included in the register.
- Conclusion of agreements with the DSO – obtaining connection conditions and concluding a distribution agreement with the local distribution system operator.
- Construction of the renewable energy installation – carrying out the project in accordance with the approved documentation and contracts.
- Commencement of operations – installation of remote energy meters by the operator and the start of energy production and consumption under the cooperative model.
Is it worth setting up an energy cooperative?
An energy cooperative is a very good solution for local communities, particularly rural ones, with renewable energy potential. The financial benefits resulting from lower energy bills and available tax reliefs usually outweigh the investment costs and administrative formalities involved in setting up a cooperative.
Before making a decision, it is worth preparing a detailed technical and economic analysis to ensure that the project will be profitable and deliver the expected benefits to all members of the cooperative.
An energy cooperative is therefore an investment which, if properly planned, can provide the community not only with savings, but also with greater independence and local development.
Do you need legal advice on energy law? Contact our law firm!
Specializes in corporate services for business entities and personal data protection. Assists the firm's clients in the preparation of all corporate documentation, including the registration of commercial companies and the further registration of changes, and provides ongoing and comprehensive advice on business. Provides advice in carrying out transformation processes of commercial companies, including transformations and mergers. Prepares and gives opinions on contracts, regulations and current documentation…
View profile →HWW lawyers offer consultations in Warsaw and online.
Do not miss the next analysis
Key legal changes and their business impact, once a month to your inbox.
By subscribing you accept the privacy policy. Unsubscribe with one click.
