Energy communities for companies: Executives’ preferences for local and renewable energy procurement

Abstract

Energy communities are a cornerstone of the European energy transition. Small and medium enterprises (SMEs) exhibit a particularly high potential for energy communities due to their energy demand and flexibility volume. However, in contrast to residential consumers, empirical evidence on SMEs' preferences for participating in renewable energy communities is scarce. This study investigates European SMEs' preferences for local and renewable energy procurement in four countries with a choice experiment. Our sample includes decisions by 823 executives for different energy procurement offers with an energy community approach. In the study, in 67% of the choices, SMEs prefer a renewable energy community offer to their current supply option even without a price premium. Cost is the most important factor in SMEs' energy supply decisions. SMEs have marked preferences for local providers, low administration efforts and high interest in demand-side management and peer-to-peer trading. In contrast, SMEs might reject energy procurement models when major time investments are required, or the provider is an international company. Offers that include local companies or electricity providers and provide smart energy management are most likely to win SMEs' consent. The study recommends orienting the business model design of energy communities towards the specific preferences of corporate consumers to leverage their potential. The results suggest that electricity providers are well-accepted players by SMEs as potential providers of energy community solutions. National implementations of the European policy directive are recommended to take into account the role electricity providers can play in the development and operation of energy communities.