A Novel Community Energy Projects Governance Model and Support Ecosystem Framework Based on Heating and Cooling Projects Enabled by Energy Communities

Abstract

The EU power market system has successfully maintained a centralized governance structure ensuring stable electricity supply and affordable prices for over two decades. However, the ongoing energy transition towards carbon neutrality has exposed critical governance limitations, leading to challenges in community projects implementation. Given that Heating and Cooling (H&C) accounts for more than 50% of the EU’s energy consumption, community H&C initiatives can drive local energy transitions and support renewable integration. This study analyzes the best practices from European community energy initiatives, supplemented by insights from the Energy Leap project. By employing a comparative analysis approach, the study proposes a technically sound and regulatory feasible governance model, alongside a robust ecosystem support framework. The proposed framework introduces new roles and new forms of partnerships between communities—private entities and consumers—taking advantage of the benefits offered by the operation of Energy Communities (ECs), enhancing community engagement and regulatory adaptability. These insights offer practical guidance and contribute to effective policymaking in support of the EU’s energy transition objectives.

1. Introduction

Infrastructure and buildings are recognized to be among the most important energy users all over the world. In the European Union (EU), buildings account for 40% of energy consumption and 36% of energy-related greenhouse gas emissions [1]. A significant concern is that 85% of these buildings were constructed before the year 2000, and among these, 75% are classified as having a poor energy performance, while it is projected that between 85 and 95% of these buildings will still be standing in 2050. Based on Eurostat data [2], the energy used for heating in EU households accounts for 64.4% of the total consumption and water heating for 14.5%, and we can conclude that heating accounts for almost 79% of total household energy consumption, while other energy consumption sources show particularly low rates (e.g., cooking 6%)—except for energy consumption for lighting, which can be significantly reduced by the utilization of LED technology. The above give an indication that initiatives aimed at reducing energy consumption needs for the heating/cooling of buildings are expected to have a significant impact on the energy consumption profiles of buildings. Technological advancements such as heat pumps and thermal storage solutions play a crucial role in enhancing the efficiency and flexibility of H&C systems.

Electricity has been regarded as a commodity since market inception, though it has differed significantly from oil, coal, and gas due to limited production methods, a lack of sufficient storage technologies, and the absence of relevant innovations such as metering. Therefore, despite EU policy advocating market liberation, since the late 1980s [3], most EU electricity markets have remained regulated until recently. Nowadays, the EU aims to achieve an open and competitive electricity market—as presented by the 2019/943 EU Regulation [4]—fostering sustainability through the integration of RESs, which is attracting significant investment. Furthermore, recent studies [5,6] highlight the critical role of RESs in achieving the EU’s decarbonization goals. At the same time, the European Commission has established a framework for minimum energy performance requirements for both new and existing buildings as part of the “Energy Performance of Buildings Directive” (the original was published in 2002, and then revised in 2010, 2018, and 2024—the most recently amended and adopted version [7]). Frameworks and certification systems like the EU Levels Framework [8] educate tenants and/or potential buyers about the energy efficiency status of a building, linking economic benefits to efficiency improvements. This approach reinforces efforts to develop services that combine the promotion of improvements in the energy performance of buildings with the corresponding economic stimulus, which has been shown to be among the most important motivating parameters for citizens in the EU and worldwide [9,10].

In the sphere of social innovation pertaining to EU regulatory reforms, the establishment of the Energy Communities framework is deemed to be of substantial significance. In 2019, the “Clean Energy For All Europeans Package” [11] intended to put citizens at the center of the energy transition and give them the right to produce, store, share, sell, and consume energy. In an effort to facilitate a multitude of citizen energy initiatives across various EU nations—many of which took the form of energy cooperatives—the EU established a concrete regulatory foundation and framework through the introduction of “renewable energy communities” in the second Renewable Energy Directive [12] and “citizen energy communities” in the revised directive for the Internal Electricity Market [13]. This is corroborated by the 2020 report from the Joint Research Centre (JRC) [14], as it is highlighted that community energy initiatives are not only creating new opportunities for citizens, but also reinforcing positive social norms and facilitating the energy transition. For instance, such initiatives can enhance system operations by providing local flexibility services, which in turn reduces the need for traditional network upgrades. With [15], showcasing that the drivers shaping the emergence and success of energy communities include socio-economic, energy policy, individual project-related factors, and actors’ characteristics, it is worth considering that any solutions presented need to prioritize inclusivity, ensuring that all members, irrespective of their financial standing, have equitable access to the services provided.

Governance in essence is more than just direction setting; recognizing the differentiation between governance as steering and management as executing is crucial for developing a governance model. Effective organizational governance requires clarity of purpose beyond financial outcomes, transparency in value creation, and fair distribution among stakeholders [16]. Following ISO 37000:2021, the definition of organizational governance, relied on in this paper, is defined as a “human-based system by which an organization is directed, overseen and held accountable for achieving its defined purpose” [17]. For community energy systems, governance spans community, regional, and national levels, with particular emphasis on local governance due to its immediate impact [18]. Considering the human-based nature of governance systems, motivation is considered to be a determining factor in developing a new model. Community energy governance models should be built around the principle that the desire to lead a purposeful life is the primary motivator (i.e., the goal of positively affecting other people and thus developing our sense of worth) [16]. Purpose-driven organizations are based on the notion that the reward is primarily linked with the ability to serve the greater good, rather than focusing on monetary gains. Of these topics, municipalities play a crucial role, shaping governance culture through core values that prioritize community interests, adapting to local conditions and capabilities and ensuring continuous leadership.

The energy transition can be considered as a complex socio-technical system, due to the long-established dynamics of the energy market and the evolving role of consumers, who are increasingly becoming an active part, driving the energy transition. Therefore, the authors suggest that the development of new governance models is most effectively achieved through the analysis of interrelated case studies that reveal critical elements affecting solution implementation. For this reason, an objective has been set to achieve the capitalization of the common experience developed through the implementation of large projects in different European countries and presented in reports published by organizations, such as the Bridge Initiative, RESCOOP, etc. Through a more detailed analysis of the case of the Bristol City Leap project, it will be possible to compare new project management structures and formulate a governance strategy, taking into account the specific characteristics of the new management structure proposed. The analysis of the results of such studies is anticipated to help to elaborate on the elements that constitute a supportive environment for community projects, and to support the assessment of the necessity to develop new roles such as knowledge-brokers and further utilize structures such as energy communities.

This paper adopts a comparative case study methodology to develop a governance model and ecosystem support framework for Heating and Cooling (H&C) projects combining an in-depth analysis of a flagship European case (Bristol City Leap) with a review of best practices and insights drawn from European-level reports, the technical literature, and regulatory guidelines. The paper is organized as follows: In Section 2, an overview of the energy market situation in the EU is provided, along with the opportunities offered by energy communities and a systematic review of EU energy policies, directives (e.g., RED II, IEMD), the academic literature, and technical reports (e.g., REScoop, JRC, SEAI) to understand the existing models and governance challenges in community initiatives. The Bristol City Leap case study, which serves as a basis for the further development of the governance framework, is also introduced and analyzed. In Section 3, the overall proposed governance model and support ecosystem framework is presented, while new roles, e.g., knowledge-brokers, are introduced. The validation of the framework is based on an ex-post analysis of the Bristol project model. Section 4 positions the proposed framework as a dynamic tool for guiding inclusive, future-ready, and locally anchored energy transitions and highlights points that should be evaluated within the context of practical applications. The conclusions of this paper are presented in Section 5.

2. Materials and Methods

2.1. Operating Environment in the Energy Sector—EU Electricity Market

The European Energy Market is currently in a state of flux, as it transforms from a predominantly centralized national structure to a more decentralized model, transcending geographical boundaries while involving smaller transmission systems and regional balancing of supply. According to the IEA report on world energy investment [19], markets need to adapt to better integrate renewable energy systems and attract investments in fossil-free flexible technologies, such as demand-side response and energy storage, that can complement variable energy production. According to the 2024 Electricity Report [20], the most important energy transition challenges are (i) ensuring secure and affordable electricity access for consumers, while (ii) significantly reducing carbon dioxide (CO₂) emissions. Building upon the above, a McKinsey report [21] highlights that the European electricity market is experiencing one of its most challenging periods, with the residential demand for electricity [2] and the industrial demand tending to increase due to decarbonization and electrification, along with extreme volatility pushing up already high prices, based on the increased introduction of renewable energy sources into the system, while the influence of the geopolitical situation in the region (war in Ukraine—disconnection from Russian gas and fossil fuel sources) is also considered negative.

In a context of high market uncertainty, it is important for energy market players to carefully strategize the economics of their investments in renewable energy, such as wind and solar, as well as other emerging energy assets. At a higher level, the EU is currently working on the implementation of the REPowerEU plan [22], which focuses on bringing the EU closer to new markets, while liberating national markets to bring competition to the EU level by removing commercial and regulatory barriers. Jones Day [23] reported on a white paper in which the rapid changes led to considerable legal uncertainty, with proceedings before courts and arbitral tribunals commonplace. In fact, business models in place for over 50 years had to be updated or disposed of, as new markets and products emerged pushing the so-called legacy products to be discarded.

Today’s end users do not experience daily or hourly fluctuations in all EU countries—or more accurately, intra-day and intra-hour electricity market pricing, as the cost of electricity is based on the seasonal average cost of providing electricity. Such an economic model may have worked well in the past, but it needs to be updated to facilitate the digital transformation that the sector is undergoing, along with the progressing utilization of technology (e.g., advanced metering infrastructure, two-way communication, etc.) that makes up the smart energy grid emerging today. The simplicity of the model suited the straightforwardness of actors involved in the value chain of electricity in the traditional system (Figure 1). Up until it changed in several EU countries—impacted by energy market liberalization—power generation (power station), transmission, and distribution/energy retailing were controlled by vertically integrated companies, which in most of the cases were government-controlled corporations [24].

In recent years, the increasing share in the power mix of renewable energy sources (RESs) has significantly impacted electricity market dynamics, dictated specific infrastructure changes, and led to new product development in order to accommodate their variability and intermittency. Moreover, advancements in energy storage technologies are critical for supporting the integration of RESs, as they can mitigate fluctuations. However, storing large amounts of electricity is both complex and costly, necessitating innovative and commercially viable technological solutions [25]. There have been several efforts in novel solution development in this direction, including new materials’ development/utilization of battery storage, pumped hydro storage, and emerging technologies like hydrogen storage that provide the necessary flexibility and resilience to the grid [26]. Overall, the evolution of electricity markets is a complex and multifaceted process that requires continuous innovation and adaptation. Collaboration between various stakeholders, including policymakers, industry players, and researchers, is essential to address the challenges and opportunities presented by the energy transition [27]. It is worth highlighting that the national regulators define market rules and development pathways, while a single point—the Agency for the Cooperation of Energy Regulators (ACER)—oversees coordination at the EU level [28]. In addition, there is a perception that the clean energy transition is responsible for the recent highest prices of all time of gas, coal, and electricity EU-wide, which led to a severe energy crisis during the post-COVID-19 period [29].

As indicated by [3], when setting a regulated part of the price of electricity, it maintains prices at certain levels and thus eliminates part of the positive effects—a reduction in the end user electricity price based on the advanced competition—of market liberalization and competition. A more decentralized approach, which includes the operation within the framework of local energy markets can lead to looser regulation oversight and therefore to greater marginal financial profit margin, as well as more freedom to develop and manage energy production resources, thus favoring the development of new solutions and models [30,31,32].

2.2. Energy Communities

Energy communities have experienced significant growth in recent years, driven by renewable energy support schemes that provide incentives and raise awareness about collective actions. According to a JRC report [14], their long-term sustainability hinges on developing viable business models, innovative financing and remuneration schemes, smart technologies, national regulatory support, and broader social acceptance and citizen participation.

At an EU level, there is no harmonized approach to Energy Communities in all Member States, with no relevant national legislation actively complying with the relevant EU regulations. More specifically, the concept of Energy Communities (ECs) is defined in the “Clean Energy Package”, while Renewable Energy Communities (RECs) are delineated in the Renewable Energy Directive (RED II) 2018/2001 and Citizen Energy Communities (CECs) are presented in the Internal Electricity Market Directive (IEM) 2019/944. The provision of definitions on both RECs and CECs allows for differences in the interpolation on the core concept of the Energy Communities by the Member States. However, the conceptual focus to consumer empowerment remains constant, showcasing that Energy Communities have been formed as a way for consumers—who potentially turn into prosumers—to invest in distributed renewable energy sources and community storage and share electricity. According to [33], the lack of a clear and uniform legal definition for energy communities was identified as a significant barrier to the development of activities by energy communities. This hinders the broader adoption and understanding of the community-enabling capabilities such a regulatory reform aims to introduce at the EU level within the energy sector.

The promotion of energy sharing [34], cost-effective management of the system [35], and regulatory issues related to network and energy markets [36] are all under consideration when operating under the framework of an Energy Community. In Europe, there are more than 3500 renewable energy cooperatives—the most common type of energy communities found in North-Western Europe—while limited partnerships, development trusts, and foundations represent additional types of structures that allow for citizens’ participation and ownership in renewables. Even before the formalization of the term Energy Communities, individuals in some of the EU Member States—mainly in Germany, Austria, and Denmark—gathered around citizen-owned cooperatives, developing energy projects and delivering both energy and non-energy services [37]. As a result of this analysis, it was highlighted that the fields of activities of energy cooperatives largely align with the national energy system profiles: wind energy for cooperatives in Denmark, and biomass-based district heating for cooperatives in forest-rich Austria, while Germany and the UK have cooperatives active in many different fields, reflecting their diverse energy landscape.

PV systems have emerged as the main option selected in many cases for shared energy projects within energy communities, mainly due to the reduction in the scale of system installation costs—despite maintaining efficiency rates. Community PV systems operate mainly under two primary models: (i) the subscription model and (ii) the ownership model. According to [37], one of the most important contributing factors to the successful establishment of energy cooperatives is financial support schemes. In particular, guaranteed feed-in tariffs proved to be the most effective. In all countries studied, a withdrawal of the supportive schemes caused a remarkable downturn (or at a minimum, a noticeable slowdown) in the founding of new energy cooperatives. Energy cooperatives will have to face fierce competition when corporate actors finally enter the new promising markets that were only open to pioneering cooperatives. Yet, it is important to keep the minimum financial engagement low enough to ensure the participation of diverse social groups. This also supports the local acceptance for the necessity to transition to low-carbon energy systems [38,39]. A stronger tie to social opinion can also break the dominant position of established actors and counteract a revival of non-renewable energies [40].

2.3. Heating and Cooling Community Projects and Networks

Community Heating and Cooling (H&C) projects and networks often consider holding a monopoly position [41] within the boundaries of a specific community, due to the centralized infrastructure required. The main driver though for community district heating is the democratic ownership within the monopoly of heating and cooling. Moreover, the integration of renewable energy sources into district heating systems can significantly enhance sustainability and efficiency. Studies have shown that community ownership and involvement in H&C projects can lead to higher acceptance and better performance of these systems. The European Union’s policies and directives, such as the Renewable Energy Directive, further support the development of community-based H&C projects by setting ambitious targets for renewable energy integration. An important aspect here is transparency in decision-making.

REScoop, the European federation of energy communities, established a network of 2500 Energy Communities in the EU representing more than 2 million citizens who are active in the energy transition. Energy communities attract private sector investment and contribute to the public acceptance of energy projects which, in the long term, will allow us to take advantage of renewable resources. In addition, the benefits generated for the community members affect multiple areas and are not limited to alleviating electricity bills. Other aims include the reduction in pollution and the revitalization of local economies through the creation of new jobs [34]. Citizens can thus contribute actively and have more responsibility to complete the energy transition [42].

2.4. Bristol City Leap Project Use Case

Bristol City Leap is a flagship world-first city-scale collaboration of public and privately owned entities, with a goal of achieving carbon neutrality for the city’s infrastructure by 2030 [43]. The project itself has set multifaceted goals that span from the realization of the “One City 2030” plan [44] drafted almost 20 years ago to the creation of social value (new jobs, equity in access to energy sources/prevention of energy poverty) and, overall, the improvement of the quality of life and support to the local economy. The project is set for a 20-year delivery timeline, with a total budget projected to surpass GBP 1 billion of investment in Bristol’s energy system—the heat network contractor will allocate GBP 475 million by 2030 to enhance the heat network, supplying heating and hot water to approximately 12,000 homes. This highlights two fundamental challenges that projects of this type confront, namely (i) significant upfront investment for the development of the necessary infrastructure and installation of the corresponding systems, and (ii) the necessity for an extended project period.

Another important factor is its considerable complexity, due both to the innovative nature of the (sub)projects to be developed and to the need for the coordination of several stakeholders responsible for raising the maturity level of different types of infrastructure, in order to mature them to the operation phase. However, rather than handing the contractor a project from scratch, Bristol City Council prepared and laid the foundations—the first phase of the city’s heat network. In fact, the contractor will build on this work and use the same development approach to complete the action plan, while ensuring that the existing heat networks run well. According to the contractor Vattenfall, the Bristol Heat Network will be the lowest-cost, lowest-carbon solution for over 40% of Bristol’s buildings. In the following Figure 2, a scale indication of the project is presented, justifying the size of the project as well as the extent of the works that should be planned for the installation of the infrastructure, within an active urban network.

A key insight from this project—in terms of management—is the novel finance and procurement model that has been selected [45]. Starting the project with a 4-year procurement process, the most appropriate contractor was selected, who demonstrated experience and expertise in both administrative and operational aspects of the projects and gave assurances for project execution. This way, the project was carefully designed and the state agency responsible spent the appropriate time working towards the delineation of the requirements and the agreement on the project specifics with the contractor, a process that helped to alleviate the initial project maturity level significantly. This 4-year period, starting in 2019, was essential for developing the appropriate feasibility studies, facilitating public consultation, and issuing the necessary approvals, while the procedures for the selection of the contractor were underway, and completed in 2022.

The adoption of the public–private Joint enture ompany (JVCo) model is considered as an overall beneficial decision, especially for cases where the state agency responsible lacks the capacity, skills, and financial resources to deliver a flagship project. When based on a 50-50 public private ownership share of the special purpose vehicle that is created, with the state retaining strategic decision-making powers, it provides the contractor with the necessary freedom in delivery. Thus, the supervision of the project remains in the state’s control, with the contractor still being able to facilitate any operational/business activities, e.g., transfer the energy services team to the JVCo, and to sell the district heating network to the JVCo. Another critical factor of a such structure and management model is that the public procurement rules do not apply to the JVCo, enabling the project to run in a more flexible, efficient, and cost-saving manner. The management can also easily adapt to changes in the market status; there is no mandate to follow the time-consuming and bureaucratic process of public procurement, while direct negotiation with the suppliers can be established.

However, several risks have been signified and will be monitored during the project’s lifecycle to ensure its success [43,45]. While the project output services’ competitiveness depends on exploiting opportunities within the existing legislative framework and the evolution of social policy, it is of importance to highlight the link between strategic activities worth adopting from other case studies and the risks arising from the Bristol case.

Table 1. Bristol Leap Project key activities and related implementation risks.

Type	Operation/Activity	Risk Description	Risk Implications
Strategic risks	Ability to formulate own pricing policy for heat network operation	Changes in the pricing policy applied, with corresponding changes in the financial model and business plan, based on legal and regulatory upcoming changes related to the regulation of heat networks.	- Until now, there was no relevant legislation active to regulate pricing policies—changes are foreseen in the coming years. - Social policies applied and prices in general might be affected negatively for the end users (higher energy cost).
	Waste heat recovery application from incineration	Utilization of waste heat from a waste incinerator might not be classified as zero-carbon heat in the future regulatory regime, thus requiring a contingency plan to shift to a lower-carbon-emission source of heat.	- Such changes in regulation might lead the JVCo to face non-compliance issues with the environmental policies. - Contingency plans at a city-scale project might require significant investment planning.
Operational risks	Community engagement—active social policies	Increasing and maintaining the acceptance and engagement of citizens is essential for the effective operation of a project of such scale, vital to the functioning of the city.	- A potential reduction in citizen participation might limit the ability of the managing authority to implement social policies. - Initial decision of zero community buy-in can result in high service costs, negative public perception, and project delays.
	Application of different commercial models to different customer type	The management authority has identified different groups within the community (i.e., public sector, residential, industrial, and commercial sectors, etc.), which will be provided with individual offers, to attract them based on the dedicated sales strategy. The availability of a variety of services/models creates complexity, which requires solid management and planning, in order not to lead to financial challenges.	- Bristol Council’s social housing stock comprises around 17% of the total 27,500 houses in Bristol, which is a considerable percentage when planning pricing vs. social policies—in order for both to be effective.
Management/Financial risks	Heating network development undertaken by a contractor	The development and expansion of the Bristol Heat Network is considered to be a core component of the project. Based on the business plan, more than 62% of investment planned for the initial part of the project is linked to the heat network.	- With Vattenfall not being a member of the JVCo, there would be less of influence on strategic decisions from the partner that took over the project implementation. - Communication/performance challenges might lead the project to delays and risk financial viability. - Vattenfall’s success is linked with community trust-building in the project—an essential element for project success.
	Market stability, cost competitiveness, and investment attraction	A project with a 20-year implementation horizon requires careful investment planning and accurate cost forecasting to avoid potential non-implementation or deficiencies in cost and management control. This underlines the need for continuous monitoring and modification of the project implementation plan.	- Fluctuations in the energy prices and instability in the energy markets, linked to inadequate pricing strategy (long/short-term products, etc.) might have an impact on the project’s viability. - The inability to demonstrate market competitiveness would lead to a reduction in community and investor trust, which may hinder the management team’s ability to restore the project’s viability.

below presents a summary of the Bristol City Leap project’s principal strategic, operational, and financial activities, as well as the identified execution hazards. The analysis delineates essential dependencies, including adaptability in pricing strategies, dependence on waste heat recovery, and difficulties in engaging various community segments. It underscores the necessity of proactive risk mitigation strategies, transparent governance, and community participation to guarantee project resilience and conformity with changing regulatory frameworks.

The Bristol City Leap project offers a versatile example of a community-scale energy transition, yielding important insights across strategic, operational, and financial dimensions. From a strategic standpoint, it illustrates how different energy market models—Energy Supply Company (ESC) versus Community Supply Company (CSC)—affect pricing flexibility, citizen engagement, and risk allocation. The ESC model, while suitable for rapid deployment and centralized control, entails greater financial exposure and weaker community participation than CSC models, which evolve incrementally and allow pricing negotiation among members. In terms of regulatory adaptability, the project underscores the impact of legal classification on waste heat recovery. With emerging directives potentially disqualifying incineration-based heat as renewable, projects must include contingency pathways for shifting to lower-emission sources, highlighting the need for proactive legal and environmental planning. In addition, special focus on the replacement of fossil fuels with renewable energy sources is emphasized, because this is considered to be the single most practical pathway to climate stabilization when physical, financial, political, and environmental factors are all considered [46].

Regarding the operational aspects of such projects, the European Commission has coined the term “Responsible Research and Innovation” (RRI), which is defined as “an approach that anticipates and assesses potential implications and societal expectations regarding research and innovation [47]. In addition, organized community engagement involves social learning, collective responsibility, and action, with the changes becoming embedded in social norms and practice [48]. Community engagement in energy transition projects is context-specific, with multiple frameworks and understandings guiding goals. Fair energy transitions shift the risks and burdens to those who can better manage them and improve the net benefit distribution to disadvantaged groups [49,50].

In regard to managerial and financial aspects, it is worth highlighting that the vast majority of communities tend to disagree with owning a minority of the project [51]. As confirmed by recent regulations about EC, the communities’ aim is not profit, so it is possible to customize the mix of the aggregation so that the profit is zero or it is enough to repay only the management costs of the aggregator [52]. In addition, storage, heating, and mobility technologies are considered important enabling factors for community energy projects [53]. However, based on [54], only those communities with prior experience and knowledge seem to be able to develop further projects.

Table 2. Bristol Leap Project activities key takeaways for future similar developments.

Type	Operation/Activity	Point of Consideration Based on the Study	Bristol City Leap Project	Key Takeaways
Strategic aspects	Ability to formulate own pricing policy for heat network operation	ESC model applied vs. CSC market model	Responsibility in providing citizens with a robust and resilient supply of heat to buildings. Provision of a reliable, all-inclusive service for heat network customers at a fair price. Responsibility for compliance and alignment with changes in the legislative framework adapting pricing policy. Regulation of the hitherto unregulated heat network may benefit from competition and require additional planning by the operator, resulting in the business plan, not the market model, being at risk.	By simplifying the process and reducing individual connections, district heating becomes more efficient, cost-effective, and environmentally friendly. For projects of large scale, centralized heat networks are more efficient than individual ASHP installations in houses/building clusters. For large buildings, ASHP can require costly upgrades and ongoing capacity charges. JVCo development is effective for large scale, high-cost, high-risk, innovative projects in communities that lack experience and/or will rely on future revenues for financial sustainability and future-proofing. The ESC model has a less positive impact than CSC on citizen participation, which can be strengthened, however, by funding activities for innovative ideas/citizen groups.
	Waste heat recovery application from incineration	Regulatory evolution links to shared capital for community development and innovation	An important element of the Bristol City Leap project is the use of waste heat recovery from incineration. This involves harnessing and reusing the heat generated by the combustion of non-recyclable waste materials, which can significantly improve energy efficiency and reduce greenhouse gas emissions. In addition to projects to develop new technologies, the overall effort is supported by actions such as the “Bright Green Homes project”, aiming to fund eligible households to install a range of insulation and low-carbon technologies including (i) cavity wall insulation, (ii) loft insulation, (iii) air-source heat pump, and (iv) solar PV technology. Integration of project initiatives with additional efforts, including the establishment of three large photovoltaic parks and electric-vehicle-charging infrastructure projects.	Innovative concepts and applications considered for implementation have to be future-proof and comply with regulatory standards/environmental regulations, to ensure sustainability, as they will be associated with significant resource allocation. Advocacy for initiatives aimed at enhancing the efficiency of building infrastructure is recognized as a crucial component to be integrated within urban development projects. The legislative objective regarding building renovation or upgrades remains unchanged over time and technology advancement supports the development of the sector. Compliance with national and community policies will facilitate the development of innovative solutions, e.g., the promotion of initiatives that advance electric mobility policies, including intelligent charging infrastructure and energy recovery systems for electric vehicles, along with related services.
Operational aspects	Community engagement—active social policies	End-user level of acceptance and service impact on project success	The two private entities related to the project have created the GBP 1.5 million “Bristol City Leap Community Energy Fund”, which supports and enables community-led energy projects through a combination of grants and loans. The two entities also fund and support local community organizations like Grassroot Communities, contributing 350 volunteer hours towards improving communities. Establishing a Bristol City Leap Community Forum to enable Bristolians to feed into our strategy and decision-making. Provision of a reliable, all-inclusive service for heat network customers at a fair price.	Consumer engagement is crucial for the success of energy-related projects and thus consumer-engagement-related activities should be a core component of similar project, not a complementary action. Consumers should not be modeled/portrayed as passive, uninformed individual striving to maximize egoistic (material) gains [r4]. Instead, new services should be designed with a human-centered approach, incorporating them into the data interaction and provision loop related to the delivery of services, along with the decision-making process at each step (limited based on their role, without constraining the ability to provide feedback). Consumer participation links to equity funding of community projects should be considered as an additional activity, thus allowing residents to build up trust and ownership of the project’s actions.
	Application of different commercial models to different customer type	Business development activities vs. social innovation	The heat tariff consists of two parts: (i) Variable Heat Price: This is a charge per kilowatt hour (kWh) of heat consumed. Automated meter readings ensure accurate billing based on actual usage. (ii) Fixed Service Charge: This is a fixed per-year cost calculated based on the connection capacity, covering operations, maintenance, asset replacement, staffing, and utility costs within the primary network. Bristol City Leap’s expertise in engineering, design, and delivery is providing comprehensive retrofitting services to existing commercial buildings to support Bristol’s businesses meet their net-zero carbon targets/environmental commitments which in turn will deliver compliance with new minimum energy efficiency standards. Supporting public sector organizations in meeting their decarbonization goals by creating comprehensive and feasible decarbonization plans including energy audits, funding options, and support and delivery of low-carbon solutions for your property portfolio. A crowdfunding platform is launched to enable Bristolians to invest in and own Bristol City Leap energy projects.	No matter what pricing strategy is employed, revenues should be in line with the project’s actual costs (CAPEX and OPEX), with excess profits being strategically reinvested in the community. Crowdfunding solutions should be used early in a project to provide citizens a sense of ownership and reward further participation in other linked initiatives (e.g., reduced renovation charges). In collaboration with the community authority, such a venture should deliver sub-projects targeting energy consumption and carbon emissions by installing solar PV and solar thermal panels, heat pumps, and LED lighting—non-innovative but effective solutions. Energy-related projects could also be linked to the provision of both energy- and non-energy-related services provided by community lead initiatives, thus enhancing the engagement efforts of the project and supporting individual’s actions towards energy transition.
Management/Financial aspects	Heating network development undertaken by a contractor	Distinguishing roles between project owner and implementer/utilizing third-party specialization	Bristol City Leap is a twenty-year joint venture bringing three organizations into partnership, demonstrating how public and private entities can collaborate while including people previously working for the council, Ameresco, and Vattenfall. Vattenfall UK, the heat network subcontractor of the project, is specialized in delivering low-to-zero-carbon heating solutions through advanced heat network technologies, with over 100 years of heat network expertise. Council services are responsible for carrying out feasibility studies and reviewing the work of private bodies. Establishing a Bristol City Leap Community Forum to enable Bristolians to feed into our strategy and decision-making.	In order to present the necessary information in a structured manner for the project’s benefit, it is crucial that an entity that serves as a liaison between the technical partners and the citizens be established/considered. Leveraging the expertise of private entities can act as a catalyst for project implementation, while linking them to the project (through strategic contracting) leads to linking the brand to the project and enhances joint efforts. In any case, the community should have a greater sense of ownership over the project, allowing it to provide guidance without being directly involved in its implementation. This will prevent the complexity of public investment and procurement from being introduced.
	Market stability, cost competitiveness, and investment attraction	External factors and competitiveness	410 new jobs created in Bristol and 1000 jobs in total. The Bristol City Leap project is spending nearly GBP 3 million with local suppliers and voluntary community and social enterprise organizations to support the local economy and enable job creation. Establishing a Bristol City Leap Community Forum to enable Bristolians to feed into our strategy and decision-making. Bristol City Council controls about 40% of the council area’s land, which is essential for increasing the renewable energy supply. Rising energy prices and the high cost of living also work as influential factors towards turning residents to the project’s provided services. Within the residential target group, there may be a reverse auction opportunity with the able-to-pay market for residential solar PV.	The community may lack the expertise to implement large-scale projects, and its involvement in the management of such initiatives may complicate project oversight; however, it can contribute essential elements such as existing infrastructure, land for development, and social structures that greatly enhance the success of the project. Community involvement is essential. Attracting investment should not involve relinquishing community control, but rather the provision of medium-term, typically direct, benefits that facilitate the recovery of investment costs and generate profits, thereby incentivizing private sector involvement. Highlighting the actions of such projects and their recognition at the national and supranational level can be an additional incentive for private sector participation, as well as increasing the interest of third parties to get involved in the project.

shows a summary of the strategic and operational observations derived from the Bristol City Leap project, offering guidance for the development and replication of community-focused energy initiatives. It highlights the imperative of establishing clear pricing plans inside governance structures that can adjust to forthcoming legislative modifications. The potential categorization of waste heat as non-renewable underscores the need for regulatory forethought and contingency planning. Community engagement is acknowledged as a crucial factor for success, necessitating structured participation strategies, tailored communication approaches, and the use of non-monetary incentives to enhance social acceptance. Moreover, the implementation of distinctive business models for various customer groups requires integrated planning and ongoing performance assessment. The adoption of a public–private joint venture model facilitated flexible project execution; however, it concurrently complicated oversight and accountability. The sustainability of long-term investments depends on robust governance, explicit risk-sharing frameworks, and the ability to integrate emerging technologies. These observations provide a basis for enhancing future governance frameworks, ensuring alignment among stakeholder duties, investment strategies, and the overarching objectives of equitable and sustainable energy transition pathways.

3. Results

3.1. Community Energy Projects Realization Process

According to the Sustainable Energy Authority of Ireland (SEAI) [55]—an authority overviewing more than 900 communities, running projects of different types and scales—a structured approach to community energy projects involves three fundamental stages, which are (i) learn, (ii) plan and (iii) do. At the first stage, “earn”, it is highlighted that an energy project requires time, along with the need for the introduction of specific roles to facilitate the preparation process. These roles are as follows: a community steering committee, typically made up of different members or representatives from across the community, handling a crucial role as it is working as a focus group for preparing a specific energy project in collaboration with the local authorities. During this stage, the role of the community mentor is also introduced.

Receiving support at the early stages of a project with low maturity from specialized experts can only have a positive/catalytic effect on the project itself, when of course the allocation of the community’s own resources is out of the scope of the partnership. Based on the SEAI handbook [56], community mentors are able to provide a wide range of services, e.g., organization of workshops and meeting with experts for capacity and network building purposes, online support and tools for community engagement purposes and guidance on developing the project master plan, etc. The provision of such services, though, implies the pre-existence of a highly organized supervisory authority capable of managing information and generating new knowledge and policy recommendations. In countries lacking established collective experience, such services should be provided from within the community, involving both local authorities and emerging entities such as knowledge-brokers, who, according to the European Commission [57], play a crucial role in bridging the gap between research and policy, facilitating the transfer of knowledge and best practices across different sectors.

Following onto the second stage, “plan”, it is dedicated to designing and developing the energy project master plan, a plan which depicts how the community will achieve its energy goals. During this process, the baseline energy status of the community has to be quantified and evaluated in order to create a list of potential projects for energy efficiency and renewable energy. Consequently, this plan has to be tailored to address the specific needs of each community, taking into account the type, scale, and interdependencies of the proposed projects, in order to ensure that they effectively meet community requirements. Based on SEAI, this stage should lead to a concrete funding strategy, following the goal of the first stage. Based on SEAI Community Energy Resource Toolkit [58], the Planning Application Process is time-consuming—with an anticipated duration of more than 42 months—as it includes lengthy permission processes from the local authority, judicial review and public consultation. Despite supporting close collaboration with local authorities, the latter’s active involvement is considered as limited in relation to other models, e.g., the one proposed and followed by the Bristol City Council on the Bristol City Leap project. Projects of a smaller scale might be ideal to be governed by a steering committee, though it is crucial that all projects developed for a community should be developed considering all the actions planned locally, as well as the greater development strategy envisioned by the local authority. In addition, the build-up of interfaces between community projects and local authorities is considered, in order to enable the latter to expedite permitting processes and effectively allocate resources aimed at serving the citizens.

The last stage of the process, the “do” stage, is linked to the implementation of the master plan, which in the case of community projects in Ireland is closely related to managing the funding received, while searching for additional grants and networking opportunities. This link with external funding has already been highlighted in many use cases, as community energy projects are considered to be of the capital-intensive type. Therefore, delivering a solid and well-timed innovation funding strategy should be included in all stages, as there are funding opportunities for different types of projects and project maturity stages, e.g., the EU Recovery and Resilience Facility Funding district heating and heat storage project development and implementation [59], while the EU Climate-Neutral and Smart Cities Mission program [60] supports cities raising the level of maturity of community projects, e.g., district heating, etc. Except for funding, new infrastructure development dictates that project is curated by technical experts and therefore, cases of partnerships with individual external stakeholders should also be taken into consideration—following the JVCo model adopted in the Bristol City Leap project. As a result, regardless of whether a project is primarily managed by the private sector, or the extent of involvement from regional or municipal authorities and community members, it is crucial to create a change-friendly ecosystem that enables the project team to run it throughout its lifecycle. This research is bridging the gap in this matter by incorporating/enhancing the engagement of stakeholders in the proposed framework.

Another approach presented in [34] also incarnates a distinct phase for application for incentives and funding, while additionally linking the establishment of the new entity that will run the project, e.g., an energy community, as another distinct phase during a project realization process. Based on the above, along with data resulting from the analysis of the use cases, a holistic Community Energy project realization process framework is presented in Figure 3 below, focusing on the safeguarding time and knowledge availability at different stages of the project, supporting the team to reach their set goals.

3.2. Support Ecosystem

For technically complex and resource-demanding projects to kickstart, there is a pre-requisite that an appropriate support environment needs to be in place. This is especially important for the consumers, enabling them to familiarize themselves with, and benefit from, the proposed changes. The RESCOOP “Guidelines on Community Heating and Cooling” report of 2023 [61] presents the four quadrants of supportive ecosystems—as presented in Figure 4 below—that enable the development of successful community H&C projects.

Based on experience drawn from related projects in many EU countries, the report summarizes that (i) capacity-building and (ii) access to capital, (iii) permissive regulation, and (iv) municipal capacity-building are the elements that make up a support ecosystem. Such projects are mostly community-led, with limited private active participation, while geographically, these projects are located in the northern EU countries, where regulatory reformations are in favor and have long been in place. In order to further refine the support framework to be adapted at the EU level, it is essential to elaborate on certain aspects of the existing framework and to incorporate additional elements that will facilitate the achievement of the objectives in community-oriented projects.

Funding opportunities, though, are in some cases linked with the non-profit principle. For example, the Danish Heat Supply Act forces companies to calculate tariffs based on costs [62], while in other countries, i.e., Italy, community-based projects are associated with social development causes, e.g., social housing or renovations in homes of low-income families, thus embodying the non-profit principle. Financial sustainability is recognized as one of the key challenges for community-based projects. The analysis of the Bristol City Leap project highlights the link between profit-making, community funding, and engagement objectives—another critical issue for such projects. It is therefore recommended that the non-profit principle is applied on a case-by-case basis. For projects requiring substantial infrastructure investment and an extended period to become operational while addressing basic needs, such as heating, it is advantageous to maintain the non-profit principle. This approach enhances the competitiveness of the project, increases consumer interest, and ensures that the provision of basic needs is not commercialized. However, in line with the above, any action that indirectly promotes the increased use of renewable energy sources (RESs) or optimizes energy management—such as the provision of wellness services or smart vehicle charging—should retain the potential for profit generation. These profits can then be reinvested in the community to support empowerment, the development of new projects and services, the financing of new initiatives, and the overall improvement of the quality of life of citizens.

It is considered that a combination of actions is most effective, particularly in cases where the primary project requires specialized expertise and significant resource consumption, to enable active community participation and ownership of the project. In the case of the Bristol City Leap, it is suggested, that if a Renewable Energy Sources (RESs)-based project or an Energy Management Optimization project were implemented in parallel, allowing for consumer participation and ownership rights, the need for additional engagement activities would be minimized, as engagement would be achieved inherently. Furthermore, given the recognized challenge of municipalities’ limited capacity to manage large and complex projects, it is crucial to explore the establishment of joint ventures with specialized companies that can act as technology enablers/providers. Particularly for projects involving new technologies, it is essential to include at least an external technical advisor to support the municipal authorities on the delivery of the needed technical studies and feasibility assessments. This approach will ensure a more complete team for the critical preliminary study and capability assessment phase, which will inform subsequent phases and provide key figures for developing a robust business model for optimal project utilization. It is therefore recommended that an additional category be added to the framework, namely “private initiative, participation, and specialization”.

Evidence from various district heating and cooling (H&C) projects in the EU [63] and the UK, such as projects in Bristol and London, indicates the importance of the involvement of the private sector during the operational phase of the projects, as it contributes technical expertise, market knowledge, and financial capacity. In community-initiated projects, the inclusion of sector-specific companies with technical experience can also facilitate the de-risking of such heat projects. This approach serves as an alternative strategy to achieve the targets set in Article 23.4 of the revised Renewable Energy Directive (RED III). Following on from what is highlighted in [64], collaboration between citizens and large energy companies should also be reinforced. This can be accomplished by implementing a shared ownership model, where energy companies allocate a portion of the shares in large-scale renewable projects for purchase by energy communities. Such collaboration ensures that both sides have a stake in the project along with the benefits they generate, creating an environment of trust and knowledge-sharing. This allows technical expertise to flow towards smaller-scale community-led initiatives, while at the same time, large companies can use their extensive reach within communities to increase public participation in projects they run. Following the analysis of the Bristol City Leap project, it is crucial that the municipality retains control over the community project’s master plan and pricing policy. It is therefore recommended that municipalities allocate resources to train their staff to manage the preparation of projects of this scale prior to commencement, in addition to capacity-building efforts focused on managing available funding. Municipalities should interact with established networks for capacity-building and the adoption of best practices in project management and implementation of parallel activities. An example of such activities might be the integration of building renovation programs that prepare buildings for connection to district heating and cooling networks, e.g., buildings equipped with water-based heating distribution [65], while also incorporating energy efficiency measures, thus significantly contributing to the readiness of municipalities for district heating and cooling projects.

As a result, energy communities will be able to further utilize the knowledge gained based on the above-mentioned capacity-building activities and collaboration with technical experts and could assume the role of an Energy Service Company (ESCO) within the community. In conjunction with other experienced stakeholders from within the community, ESCOs can provide both energy (e.g., Energy Service Contracts, installation of energy efficient infrastructure, and RES projects) [66] and non-energy services (e.g., water management, air quality services, smart buildings, and renovation services), aiming to improve energy efficiency, and reduced costs could become available. Particularly with regard to non-energy services, adding and related to building renovation matters, new structures have been developed in Europe called one-stop shops, bringing together in one place solutions that can be offered and cover the needs of consumers in a holistic way. As described in [67], the emergence of various one-stop-shops (OSSs) in Europe, particularly in Denmark, Finland, and Sweden, has been driven by lead companies coordinating a network of contractors specializing in specific services and products, with a strong emphasis on local provision. Ideally, this leadership role should be taken by municipalities or energy communities in order to ensure transparency and, where appropriate, non-profit principles. It is therefore essential that the support framework prioritizes the community or municipality as the primary entity for one-stop-shop operations, with a distinct focus on delivery in both types of services.

Taking into account the above points and the analysis carried out, the following framework in Figure 5 below is proposed for the support of community projects.

3.3. Knowledge-Brokers

Building on the supportive framework for community-interest projects and taking into account the complexity of interfaces between systems and organizations operating within the city—which is presented as a system-of-systems—a new role has emerged: that of the knowledge-broker. According to [68], knowledge-brokers focus on evidence-informed policymaking (EIPM) and are distinguished by a combination of three criteria: (i) articulation of evidence, (ii) incorporation of teams with multiple/boundary-spanning backgrounds and knowledge-brokering tools, and (iii) closeness to government, despite being separate from the latter. Following up on the identified challenges related to the limited capacity of municipalities in the EU, while considering the recommendation made above for including external technical advisors towards filling the gaps of knowledge and enabling capacity-building, this role can turn into the cornerstone of success for community projects.

The articulation of information is closely linked to credibility and legitimacy, as KBOs have to be trusted third-party entities supporting decision-making processes and enabling the scalability of related activities. Credibility is also connected with financial independence [69], which is presented as a condition to avoid the existence of economic incentives that affect the flow of information and, by extension, the development of projects. Therefore, the entity assuming this role should be financially self-sufficient, to be able to proceed with its endeavors without external influences, while at the same time being close to the community members. In addition, despite access to government funding being considered as a significant parameter of the suggested support framework for community projects, it is anticipated that transparency in such procedures along with the strict award criteria applied will ensure the credibility of KBOs.

Following Partidario and Sheate’s [70] recommendation, it is considered that for a knowledge-broker to succeed in their role, a number of conditions must be met. • Range of stakeholders: Engagement of the appropriate stakeholders from within the community, providing opportunity in active participation in consultations and decision-making process. • Logistics: Resources, time, and space should be created to provide a non-judgmental environment for healthy communication and collaboration. • Learning environment: Stimulation of mutual learning and facilitate information and knowledge-sharing to build social capital. • Willingness to use different forms of knowledge: Integration of local knowledge with expert knowledge and incorporation of technical expertise provided through municipalities by technology companies and external technical advisors. The knowledge-broker can make relevant research information available and accessible for planning and decision-making through interactive engagement with audiences, while at the same time they will be able to identify measurable performance objectives to evaluate the effectiveness of the process and develop the lessons learned for future projects.

Considering the above, there is an alignment demonstrated between the elements that contribute to the success of an organization functioning as a knowledge-broker and the mechanisms for developing an effective support ecosystem for community-based projects. More specifically, knowledge-brokers can facilitate the flow of information among diverse stakeholders, translating consumer preferences into technical specifications and ensuring that technological advancements meet market demands, being informed by empirical data and consumer insights, thus enhancing the relevance and applicability of solutions considered for application. Also, by enabling a structured feedback loop between consumers and technical entities, knowledge-brokers ensure that solutions are continuously refined and improved. Figure 6 provides an overview of the key interaction points of knowledge-brokers along with the most significant relevant information flows. It also illustrates the role of this new entity within the context of a community project’s development and operation, functioning as an intermediary between the municipal authority, energy communities, and citizens.

Overall, Figure 6 illustrates the dynamic interplay among various stakeholders, each contributing to both scientific and practical advancements in energy community projects, while encapsulating the ecosystem of innovation and collaboration that is crucial for advancing the field of sustainable energy. Although the role of knowledge-brokers is not a recent development, studies such as [71] indicate that scaling up knowledge-brokering offers the best opportunity for policy and management decision-making to benefit from scientific knowledge. Additionally, there have been studies that delve into specific use cases within community-energy projects [72,73] which demonstrate and confirm the capabilities that knowledge-brokers provide in the development of new projects. According to [72], the knowledge-broker role can be critical to the balance and enactment of rural development, with the preferences of such critical decision-making bodies determining the form of development to be realized. Furthermore, the integration of knowledge-brokers into the analysis and decision-making processes for renewable energy projects—such as achieving a consensus on wind project siting decisions, which frequently encounter opposition and low acceptance rates from local communities—is crucial. In the study conducted as part of the research in [73], nearly all participants concurred that the presence of a knowledge-broker could facilitate the decision-making process, transitioning it from simple information dissemination to active collaboration.

Overall, municipalities are recognized as key stakeholders in the development and implementation of energy solutions, executing their roles in policy recommendations and regulatory oversight and providing the necessary governance frameworks that support sustainable energy transitions. Given their central role in managing the complex systems of cities, municipalities must disseminate specialized technical information about projects to citizens, keeping them informed and actively involved in decision-making. Therefore, it is crucial to integrate an entity—such as a knowledge-broker—within the community network focused on information management, emphasizing citizen engagement and addressing their needs. This integration will achieve the balance mentioned earlier and complement the functions of municipalities and other entities contributing to project development.

In addition, knowledge-brokers’ staff could serve as a crucial interface between local communities and international organizations, particularly specializing in the design and implementation of relevant projects. Except for the EU-funded project groups and communities, the International Energy Agency’s (IEA) Technology Collaboration Program is worth mentioning [74]. This program supports the efforts of independent, international groups of experts, enabling initiatives on advancing global energy solutions. Knowledge-brokers will be primarily responsible for understanding community needs and preferences, which are essential for tailoring energy solutions to local contexts. By engaging with community members and energy companies, they can develop recommendations that reflect the unique characteristics of their communities, fostering a more inclusive and sustainable energy transition. Therefore, it is suggested that knowledge-broker entities should consist of personnel from within the community’s entities of interest (municipality Energy Community(ies)–community). This approach underscores the significance of community networks in shaping the future of energy solutions, as these networks are vital for capturing community needs and preferences, informing the development of services and solutions that resonate with local populations.

3.4. Community Energy Projects Local Governance Model

The implementation of community energy projects is influenced by a broad variety of governance patterns that involve different combinations of (innovative) organizational and contractual arrangements, (local) identities, and (common) interests [75], while the success of their execution mainly depends on local factors and on addressing the needs of the citizens in the implementation area. In order to understand the concept of governance, it is important to determine its actors—who is involved, its function, what it does, its processes, how it achieves these processes, and its scale—as governance is used to refer to a new or changing way of governing society or groups within society [76].

3.4.1. Energy Communities Governance Model Attributes

The RED II Directive (EU directive 2018/2001) [12] introduced the concept of “renewable Energy Communities” (RECs), defining their structure and governance model, enabling the possibility of energy sharing within the REC—an enabling factor for interconnections among projects implemented at a local level. The IEMD directive [13] also supports this interconnection by allowing members of RECs “to be supplied with electricity from the generation plants within the community without being in direct physical proximity or behind a single metering point.” The governance model proposed also enables local authorities, even small and medium enterprises, to become members of the communities, with the positive introduction of limitations of the control share for each partner, thus safeguarding that the goal remains serving the public interest rather than maximizing profits (

Table 3. New Energy Communities governance model based on RED II and IEMD [77].

Points of Interest	Renewable Energy Communities (RED II)	Citizen Energy Communities (IEMD)
Types of members	Natural persons. Small and medium-sized enterprises. Local authorities, including municipalities.	Open to all types of entities in principle.
Ownership and control	Effectively controlled by shareholders or members that are located in the proximity of the RE project. Autonomous (no individual shareholder may own more than 33% of the stock).	Effectively controlled by shareholders or members of the project. Limitation for firms included in shareholder-controlled entities to those of small/micro-size (not medium). Shareholders engaged in large-scale commercial activity and for which energy constitutes a primary area of activity excluded from control.

). The non-profit principle introduced above should also be considered as another safeguard supporting the notion of the governance model itself.

3.4.2. Consumers Active Participation in Governance

In an environment where vision is crafted with the common good, citizen needs, and overall wellbeing in mind, it is crucial to provide opportunities for active participation to themselves. This includes participation in both the public consultation process on major projects along with involvement at all levels of community energy projects’ governance. Unlike purely financial incentives, which, as demonstrated by the Bristol example, do not guarantee active participation but rather an understanding of project goals, a more holistic approach is required. According to stewardship theory [78], meta-analyses have shown that financial rewards are only effective up to a certain point. This theory suggests that individuals are primarily motivated by a sense of achievement, intrinsic satisfaction from challenging work, the exercise of responsibility and authority, and recognition from peers and superiors. Therefore, it is essential to design citizen participation strategies from the masterplan preparation stage, detailing their roles in both the solution development and implementation phases. Additionally, it is important to ensure that, alongside their roles, there is a provision for calculating immediate benefits—primarily expressed in monetary terms. While these should not be the primary focus, the managing authority must provide such incentives to reinforce citizens’ interest and engagement in the projects.

3.4.3. The Role of Municipal Authorities

It is important that local authorities develop their masterplan with a clear vision on community energy projects, which should operate in a complementary manner, thus providing a roadmap, of guidance and steering, on each project development process along with a prioritization of activities in consideration for development by local entities. Such entities should be managed by their own governing bodies, e.g., energy communities should maintain their distinct management board, despite the fact that municipalities might assume an active role within their governing bodies. This will allow the municipality to remain actively involved, primarily overseeing the project activities, participating in strategic decision-making aspects, facilitating the development process by utilizing their own resources and the external expertise available—using external collaboration with experts, enabling the funding acquisition process, etc.—and ultimately maintaining highly successful purpose-driven organizations that genuinely create value in society’s best interest.

3.5. Proposed Governance Model

Figure 7 illustrates a systematic, multi-tiered governance model for the development, execution, and management of community energy initiatives, specifically emphasizing Heating and Cooling (H&C) systems. Drawing from the insights derived from the analysis of selected uses cases, a lack of resources or knowledge and consumer engagement are considered to be the main challenges that community energy projects are facing. The model is designed to support inclusive, resilient, and adaptive local energy transitions by clearly delineating roles across three core governance levels: strategic, management, and operational.

At the strategic level, the municipal authority drives the process of drafting the master plan, since it is in charge of creating a development vision for planning new energy projects. By means of this strategy, alignment with local, national, and EU policy frameworks (such as the Energy Performance of Buildings Directive and RED II) is needed, so as to define development objectives and construct a vision. Municipalities also need to identify opportunities for funding, to facilitate collaborations, and to provide administrative supervision to the public. Consequently, it is crucial for municipalities to maintain strategic oversight and leverage both internal and external resources during the initial “learning” phase to develop a masterplan tailored to community needs.

Following the notion that energy consumption for heating and cooling corresponds to up to 65% of the overall domestic demand—and is thus considered a priority need—the first priority in the community project to be examined should be related to developing district heating and cooling systems and networks. These projects, due to their substantial resources, expertise, and effort requirements, should be governed and managed by municipalities. The governance should be complemented by external expertise and partnerships with private entities, similar to the joint venture model exemplified by the Bristol project. Simultaneously, municipalities should develop plans for smaller-scale projects, such as EV charging parks and PV systems, as well as other RES installations. Such projects can be interconnected with the primary district heating and cooling project and managed by energy communities. This approach facilitates the integration of diverse energy solutions that are designed on the basis of a common local development strategy described in the masterplan, but also actively engages community members in a productive manner in all levels of local governance, thus leading the energy transition process.

The management level takes form around a board of energy communities (ECs), renewable energy communities (RECs), or joint Venture Companies (JVCos) based on the type of project under development. Such bodies are assigned to make sure that the financial sustainability of the project, social equity, and service delivery are properly implement. At this level, the responsibilities of governance consist of pricing strategy, stakeholder involvement, risk reduction, and reinvestment planning. Joint venture companies—usually with private sector partners—are ideally positioned for the building of capital-intensive infrastructure like district heating networks when municipal capacity is limited.

A novel component of the model is the integration of knowledge-brokers. Positioned between the strategic and operational layers, the knowledge-broker plays a bridging role by facilitating the flow of information among stakeholders, translating community needs into technical specifications, supporting decision-making with evidence-based insights, and ensuring feedback loops between citizens, energy communities, and authorities. The broker also monitors policy developments and helps local actors to remain adaptive to regulatory changes and technological evolution.

At the operational level, project execution is directed by specialized technical groups, such as contractors, utilities, and energy service companies (e.g., ESCOs). Such entities conduct feasibility studies, develop infrastructure, integrate systems, and provide services of several types, e.g., maintenance. The suggested governance model advocates a system-of-systems framework designed for intricate urban energy ecosystems. It harmonizes central planning with decentralized implementation, promotes public–private partnership, and incorporates participatory governance to facilitate equitable and sustainable energy transitions at the community level.

On the basis of the governance structure presented, the following points should be highlighted.

The purpose should be showcased as the primary value-generation goal that the governance system aims to achieve, with a focus on long-term wellbeing for all (sustainability).

The development of a well-structured masterplan is the responsibility of the municipal authority, which must utilize every possible source of information and expertise. After dedicating time to evaluate these sources, the authority should use them to design projects aimed at meeting the needs and ensuring the wellbeing of the population.

The implementation of new community energy projects must include plans for developing points of interaction with other systems and technological applications that are already operating locally.

All projects should be handled by their management board as wellbeing-value-creation projects driven by a sustainable purpose, rather than as an entity to be used for the optimized financial gain of any group involved. This aims at creating value and wealth that can be further utilized to create more value to the local community itself (in cases of the involvement of technology companies or projects of high CAPEX, profitability should be considered for covering the initial investment cost—with the application of a social interest rate also taken into account).

3.6. Application of the New Governance on a Use Case—Ex-Post Analysis

The Bristol City Leap project structure and processes are presented and analyzed in Section 2.4. In fact, this analysis provided the research team with the foundation for further exploration and formation of both the proposed governance model and further enhancement of the support environment framework proposed above. Moreover, the need to describe and introduce the role of the knowledge-broker stems from observed gaps in the project management level of the governance model applied along with the lack of utilization of generated information for new services’ development or the enhancement of existing ones. More specifically, it was observed that despite the design and establishment of funding mechanisms for new projects and community-generated ideas, there was limited-to-no planning for interaction or complementarity between the projects proposed and those that are already operational. The proposed new model addresses the above-mentioned deficiencies, while incorporating the planning of projects into the masterplan preparation stage and ensuring the appropriate inclusion of citizens at all levels of governance. The following table re-evaluates the key activities and associated implementation risks of the Bristol Leap Project through the lens of the proposed framework, highlighting significant points of interest for future applications (

Table 4. Bristol City Leap ex-post analysis based on the proposed governance framework.

Type	Operation/Activity	Points of Interest From a Governance Perspective
Strategic aspects	Ability to formulate own pricing policy for heat network operation	Operating under the framework of an energy community, all projects will be able to conduct transactions on energy resources, thus (partially/fully) covering the local resources each system needs (e.g., a PV plant installed in the area provides a district heating system with energy), offsetting consumption at the consumer level with the ownership share they may have in the PV plant. The non-profit framework disallows planning for a surplus or deficit in a fiscal year. Any surplus or deficit revealed in the project annual financial report should be offset in the subsequent financial year, through adjustments to the heating price—this could involve refunding consumers or modifying the energy price accordingly. Municipality external advisors shall provide the project teams with support on pricing policy development, while knowledge-broker and energy community mentor introduction will further enhance this process. Capacity-building activities in funding acquisition from the EU or the National Promotional Banks and the EIB will have an impact—if awarded on the pricing policy to be applied—with positive effects for the end users.
	Regulatory evolution links to shared capital for community development and innovation	There is a distinct need for operational signaling from all projects to the local market, so that they may respond to market signals, enabling sector coupling, and thus strengthening system interconnections. Operation under the framework of energy communities enables such processes on the basis of the recent regulatory reforms. Regulation of community energy profits will enable the community itself to gather resources that can be allocated to support new projects considered of high importance, such as a renovation program for the community’s building stock aligning with future regulatory reforms and innovation advances. The municipality will be able to develop contingency plans at a city scale, potentially requiring significant investment, which will reduce the total project cost. Utilization of municipal and energy community networks will be beneficial for capacity-building activities and policy recommendation and advocacy purposes on both a national and EU level. The centralized role of the municipality within the governance framework will enable the community to explore the new options available like renewable energy clusters, positive energy districts, etc.
Operational aspects	Community engagement—active social policies	Respecting the limits set for ownership and control of the projects from both external stakeholders and the municipality will safeguard community members’ engagement and ability to make decisions on projects at a governance and management level for energy community-based projects, while regulating profitability and thus controlling prices for projects based on a JVCo type of management. Participation of the municipality in all projects enables projects to provide non-energy-related services as additional benefits to consumers, enhancing their product, and thus connecting energy-related projects to other aspects of everyday living (e.g., a smart charging park project will be able to incorporate more parking spots based on the fact that the municipality is participating in the project). Community members will be able to have direct access to both primary data and information regarding the projects being carried out and to the results of analyses that will justify the outcome of these projects. In this way, the simultaneous improvement of the level of knowledge and understanding of citizens is achieved while the benefit from their active participation is perceived.
	Business development activities vs. social innovation	Application of the non-profit principle on a case-by-case basis, enabling profit generation from specific types of projects (described on the masterplan), will leave room for enhancing community participation on projects that might not tackle basic needs (e.g., EV smart charging, community PV parks, etc.). Participation of the municipality in community projects enables projects to link end-products or with non-energy related benefits, e.g., discounts on municipal fees, free access to controlled parking areas of cities, etc. Such non-monetary benefits might be of high value compared to the short-term monetary benefits anticipated at the consumer level, thus having a positive effect on customer engagement Building projects of purpose will align profit-making with impact maximization. Thus, excess profits should being reinvested back into the community.
Management/Financial aspects	Distinguishing roles between project owner and implementer/utilizing third-party specialization	Introduction of the role of knowledge-broker: They will be able to present the necessary information to consumers in a structured manner, while serving as the liaison between the technical partners and citizens. The proposed governance model distinguishes three levels—strategic, management, and operational—and depicts which entity will participate in each level of the project based on its type. Active participation in the public consultation of the municipality masterplan, while being excluded from participating in the core projects’ steering committees, will relieve consumers from the burden of strategy development on projects requesting expert knowledge.
	Market stability, cost competitiveness, and investment attraction	In addition, the implementation of projects that improve the quality of life of citizens, not necessarily related to the energy sector, e.g., improving the road network, has positive effects. The development of JVCos increases private interest in local projects, creates bonds with the community, and increases chances of collaboration in the development of new projects. Knowledge-brokers’ role ensuring transparency is essential for facilitating synergies with private stakeholders and ensuring local market stability.

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4. Discussion

A well-structured governance framework encapsulates the whole decision-making process along with providing clear directions and a solidified roadmap for project development and scale up. Additionally, it forms the basis upon which the overall development strategy of a project is shaped, the purpose is defined, and an implementation framework for the proposed projects is presented. Beyond governance, there are several parameters able to influence the success of a project and potentially provide added value. These parameters individually merit further analysis, with the results serving as input for the continuous improvement and adaptation of the model, particularly regarding the roles and responsibilities of the entities involved in the implementation. Some of the key parameters worth highlighting include the following.

4.1. Technological Evolution of Energy Systems and AI

Energy transition is linked to constantly evolving energy systems, which are changing following technological advancements, policy shifts, and market dynamics. The increasing availability and cost-effectiveness of advanced Information and Communications Technologies (ICTs), including edge-/fog-/cloud-computing, Big Data, blockchain, Artificial Intelligence (AI), and High-Performance Computing (HPC), are pivotal in driving the decentralization and democratization of energy ecosystems, accelerating the integration of Renewable Energy Sources (RESs), modernizing infrastructure, electrifying traditional sectors, improving energy efficiency, and enabling flexible demand. Consequently, ICTs essentially contribute to the transition towards a more decentralized, flexible, resilient, self-sufficient, and sustainable energy system.

Adapting AI models to these changes is challenging and requires strong collaboration between energy stakeholders and AI developers, while ensuring the continued effectiveness of AI innovation in the European energy sector is vital. AI-based services are set to enhance the models and procedures in power system planning and operation, improving their accuracy and response speed, and establishing a sovereign, adaptable, resilient, and user-centric data-driven energy system. Nevertheless, the growing demand for reliable AI products in the energy sector currently outpaces their availability along with consumers’ capacity in operating such systems, highlighting an urgent need for concerted efforts to ensure responsible AI deployment, knowledge management, and living-lab development associated with capacity-building activities. This could be a great opportunity for the knowledge-broker role to be enhanced. These advancements, beyond introducing new roles or upgrading existing ones, should be associated with the development of new structures, which can be fully integrated into the framework of community projects and developed in parallel with programs offering new services. For instance, community structures can be leveraged to form part of a Testing and Experimentation Facility (TEF).

4.2. Testing and Experimentation Facilities (TEFs)

TEF entities enable energy value chain stakeholders (including community members) to be involved from the very beginning, through living labs, in the co-creation of node-level services together with experts, which can be tested on real-life scenarios and at mature to market-ready readiness levels. At the same time, energy end users are able to actively participate during the validation, testing, and experimentation phases, allowing project teams to better understand how their services can introduce a significant benefit into the business and operational process of the energy value chain, hence bringing some significant cost savings and/or incremental revenues. These types of entities are currently the focus of EU funding programs, e.g., The Digital Europe and Horizon Europe programs, heavily invested in developing a strong EU innovation space. Based on the much-anticipated results, it would be of value to assess adding such structures in the operational level of an updated version of the proposed governance model.

4.3. Renewable Energy Clusters

The RED II directive specifies that Member States should take into account the specificities of renewable energy communities when designing financial schemes for renewable energy, as stated in Section 2.3. A new structure has emerged, “renewable energy clusters”, comprised of the complementarity of different energy sources, flexibility, the interconnectivity of different actors, the and bidirectionality of energy flows. In the technical literature, analogous concepts to the conceptualization of these clusters in this paper include the following: “hybrid renewable energy systems”, made up of solar PV at the household level, wind power at the community level, and battery storage [79]; “multi-energy systems” (MESs) that consider the optimal interaction of electricity, heat, cooling, fuels, and transport, at various scales, for example, district, city, or region [80]; or a “sustainable energy district” in an urban area, which considers renewable electricity from solar PV and wind micro-generation alongside combined heat and power units, and traditional boilers connected to the public grid [81]. Such socio-technical systems have a mix of linear and non-linear relations between different components in the system, making it difficult to predict how such systems will evolve over time. Hence, studying the potential functioning of community engagement and energy cluster operation requires a systems perspective, taking technical as well as social aspects into account.

4.4. New Services Worth Being Developed for Energy Community Projects

The new form that the energy market in Europe is taking—with a focus on the structures of local energy markets, combined with the new mechanisms offered and the utilization of the most innovative technologies such as digital twins, smart metering systems, and blockchain—is expected to form the basis for the development of new services that can now be implemented and create value for the citizens who will benefit from their use. Through the new conditions being shaped and the ability of energy communities to manage energy transactions within their boundaries, these services will now be able to overcome any obstacles they faced in the past for their implementation. Specifically, services such as providing flexibility through the utilization of a community-owned photovoltaic park, leveraging a network of smart vehicle chargers for optimized electric-vehicle charging management, and operating services like those described by the authors in another study [82], involving the development of resource optimization and energy management software within a microgrid and the utilization of Vehicle-to-Grid (V2G) technology, will now be feasible.

Furthermore, the EU advocates for the adoption of a lifecycle perspective, the promotion of circularity, and adherence to strengthening health and environmental standards within the built environment, signifying a strategic approach towards achieving sustainable development goals within the built environment sector. Such efforts have been enhanced via a series of initiatives and policies, notably the “Renovation Wave Initiative” [83], aimed at addressing fundamental principles pertinent to the built environment, which in conjunction with the “Fit for 55 package”, and along with others under the “EU Green Deal” have linked energy reduction with reduced carbon footprints and pollutants. In an attempt to reconcile the environmental and economic impacts of such actions, the Emissions Trading System 2 (ETS2) was introduced, a new and complementary system created as part of the 2023 revisions of the ETS Directive [84], which among other sectors, focuses on and addresses CO₂ emissions from fuel combustion in buildings. Such initiatives indicate a need for balancing the taxation reforms with the provision of market incentives for building renovations [85], while highlighting the need for the design and delivery of such services, but which have a substantial bias towards ensuring environmental protection and delivering a positive environmental impact.

Even though the immediate impacts of the EU ETS and revisions to the Energy Taxation Directive (ETD) may be minimal to real-estate owners, the resulting rising energy costs for end users will contribute to broader trends, indicating high tenant demand for decarbonized real estate—especially as carbon prices increase [86]. Notably, the incidence of energy poverty has consistently risen, reaching 9.3% in 2022 [2], which, coupled with the EU-wide mandate to triple the rate of renewable energy deployment to meet the Green Deal and REPowerEU objectives, unveils considerable opportunities for both consumers and service providers. Specifically, property owners who generate on-site renewable energy or have enhanced their properties to superior levels of energy efficiency are poised to reap substantial benefits from these shifts, with low-carbon and renewable energy systems such as photovoltaic panels, air- or ground-source heat pumps, and solar thermal water technologies are likely to come to the fore.

5. Conclusions

This article introduces a novel governance model for the design and implementation of Community Energy projects. The proposed approach focuses on the necessity of solidifying the purpose of community energy projects, which is to serve the common good while also to address the needs of citizens. Based on the realization that heating and cooling infrastructures serve the primary energy requirements of citizens, it became evident that addressing such needs should be central to local development plans. By evaluating the outcomes of previous applications and conducting further analysis based on a specific case study, a governance framework was proposed to tackle the majority of challenges faced by community energy projects. Additionally, the role of citizens in energy projects was highlighted. The proposed governance model, along with the support ecosystem framework, the introduction of new roles, and the modifications in the structures of a community management in different levels, aims to develop sustainable and resilient community energy projects, which are governed by the most appropriate bodies, under the best support environment and managed by the proper type of board (either of the type of a JVCo or an energy community, etc.). These projects should be capable of operating independently, coexisting, and collectively generating value, thereby ensuring the long-term sustainability of the community.