In many countries, generating and selling electricity is the exclusive province of utility companies, which have a monopoly in their service area. That makes a certain amount of sense. The tangle of wires that run over our heads everywhere would be infinitely worse if several companies were all supplying electricity via their own distribution networks. And few areas would welcome more generating plants built and operated by competing electricity suppliers.
Image credit: Government of Lithuania
But ideas that made sense a century ago when Thomas Edison and George Westinghouse were slugging it out for supremacy in the shiny new world of electrical energy are less appealing today when anyone with a roof or a plot of vacant land can install solar panels to make their own electricity. The very idea frightens utility companies to their core and they have flexed their political muscles to prevent it from happening on a large scale.
Lithuania is taking a different approach. The government has recently approved new legislation based on proposals by the Ministry of Energy that will encourage the establishment of renewable energy communities where people and businesses generate their own electricity and share it with each other. Producers of renewable energy will be allowed to sell energy between themselves and to end users, according to the government.
“We can see that renewable energy is rapidly gaining popularity among residents and companies, so we are constantly looking for new solutions, improving the environment and expanding opportunities for everyone. Today, energy communities are still a novelty not only in Lithuania, but in other European countries as well, but in the future they will become a fairly common phenomenon, just as renewable energy has already become in many households today,” says Minister of Energy Žygimantas Vaičiūnas.
The amendments to the Law on Energy from Renewable Sources are designed so that renewable energy communities will be able to manage and develop power plants using renewable resources for energy production — to produce, consume and accumulate energy in their storage facilities and sell the energy produced, the government says. These communities can be owned by individuals, small businesses or municipal authorities, provided that humans hold at least 51% of the votes at the general meeting of shareholders.
The new legal provisions will reduce the administrative burden for renewable energy producers. In order to sell electricity to an end user, it will no longer be necessary to obtain a license as an independent electricity supplier. They can simply sell electricity to an end user subject to the same requirements as independent electricity suppliers. The new rules are intended to make it easier for renewable energy producers to sell the energy they produce. Special rules apply to systems with a capacity of less than 500 kW.
Renewable energy is a threat to investor-owned utilities which are used to a cozy relationship with regulators and a guaranteed rate of return no matter how poorly mismanaged they are. Hopefully the Lithuanian model will spread to other nations over time.
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