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Locally owned energy has the potential to be one of the most powerful drivers of a sustainable future and a green transition, but it requires the right conditions. Significant challenges remain, despite a strong political will to support this transition, both at the EU and national levels. In Sweden, as in many other European countries, the lack of clear structures and political support has made it difficult for local energy projects to flourish. Local stakeholders, who should be cornerstones of the green transition, are often seen more as obstacles than as opportunities, and more support is being called for at the EU, national, regional, and local levels.

Sweden needs clearer rules for locally owned energy. If there is political will at the national, regional, and local levels to support locally owned energy processes and projects, a global analysis indicates that four categories of instruments can be used:

• economic instruments,

• creation of access to power grids,

• environmental regulations in connection with permits for the development of energy supplies,

• support for regional and local planning for energy needs.

Within these four categories of instruments, a plethora of different policy instruments have been identified that can be used to encourage locally owned energy.

Globally, the highest rates of implementation were financial subsidies, feed-in tariffs (which aim to increase investment by offering long-term contracts to renewable energy producers), and grid services for connection and distribution.

Sweden’s national politicians should clarify their support for electricity distribution, according to a report from the Swedish Energy Agency. Europe has already recognised that energy communities can be a key to achieving our ambitious climate goals. According to the European Commission, EU residents can produce up to half of the EU’s renewable energy by 2050. To realise this vision, a concerted effort is needed, whereby both political support and clear rules serve to foster locally owned energy projects. Sweden can take inspiration from other European countries’ targeting of locally owned energy and the implementation of the EU’s Energy Community Directive in other European countries.

There needs to be a flexible interplay between central governance and local initiatives, with central frameworks for local solutions. Municipalities and regions need to create such frameworks that use national policy as their basis. There should be a legal obligation to have a strategic physical energy plan at the municipal or regional level that provides clear directives on what land and water areas are available for the establishment of major energy projects. It is crucial that such energy plans are developed in consultation with local communities. Such a process was initiated in Sweden in 2023 (regeringen.se), with the regional levels tasked by the national level with developing energy plans.

These initiatives are steps in the right direction towards a more localised approach. A renewable energy transition that is rooted in the local community requires the unique conditions of the location to be taken into consideration to ensure sustainable and robust regional development. These conditions include physical resources, business structure, and social capital. Energy projects where both the project/process and (parts of) the ownership have a clear localisation in one and the same geographical area are not necessarily the antithesis of industrial energy supply. Rather, they can be seen as steps towards a more secure and regionally adapted energy supply, where different solutions intertwine with and strengthen each other.

To minimise antagonism, politicians at the national, regional, and local levels should include local communities in the process before specific energy projects are even discussed or potential investors approached. Municipalities can use various methods to negotiate long-term sustainable solutions, and local communities should be given the opportunity to demand local ownership or local benefit when new energy operations are established.

To ensure that it is not only those with the greatest economic resources who have influence over energy in Sweden, it’s important to safeguard the equitable ownership of energy. This means that it is preferable to have a variety of organisational structures, including models where people with different levels of financial capital can own energy together. The Swedish Energy Markets Inspectorate points out that an economic association is a good structure for energy communities.

To facilitate permit applications, politicians at the national, regional, and local levels can clarify the importance of locally owned energy to regional energy offices, private energy consultants, and financial stakeholders. Funding and a willingness to invest are often lacking in local projects, which often require capital from local communities instead. Financial stakeholders such as banks, lending institutions, and other public investors need training material in order to increase their willingness to invest and better cater for the communities that want to create locally owned energy. Regional energy offices, research groups, and civil society organisations such as Studiefrämjandet, Rural Sweden, and Coompanion can assist in such a training initiative.

Tax rules should be reviewed at the national level in Sweden. The current regulations mean that large-scale industries and private individuals with solar panels on their own property can receive tax benefits, while small-scale energy communities pay full tax and VAT on self-produced energy. This puts small-scale energy partnerships at a disadvantage. There is a desire for the tax rules that apply to individual operators to also apply to setups where multiple people share an energy solution.

National and regional politicians should invite relevant stakeholders in each region to engage in ongoing dialogue on responsibility sharing and remuneration for energy balancing in the grid. To ensure access to energy in times of crisis, national stakeholders and grid owners may need to review technical expertise and ensure that grid companies are aware of the role they play in the energy system. The technical and safety expertise of energy companies is needed in order to facilitate energy sharing between households and to create ‘island operation’ in critical situations if necessary.

By implementing these recommendations, we can lay the foundation for a sustainable and equitable energy future in which locally owned energy projects are not only part of the solution to climate challenges but also strengthen local communities.