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Peer-to-Peer Trading and Energy Community in the Electricity Market - Analysing the
Literature on Law and Regulation and Looking Ahead
Lucila de Almeida, Viola Cappelli, Nikolas Klausmann,, and Henri van Soest
Contents
1. Introduction
2. Conceptual clarification: from self-consumption to emerging modes of exchanging energy
2.1. Individual self-consumption
2.2. Collective self-consumption
2.3. Peer-to-peer trading
2.4. Energy community
3. Peer-to-peer trading
3.1. Energy Law
3.2. Consumer Law
3.3. Contract Law
3.4. Tort Law
3.5. Property law
3.6. Competition Law
3.7. Data Law
4. Energy Community
4.1. Energy Law and Regulation
4.2. Company Law and Governance
4.2. Consumer Law
4.3. Tort Law
4.5. Property Law
5. Conclusion
1. Introduction
Assistant professor of law at the Wageningen University & Research, and co-director of the regulatory
delivery course at the Florence School of Regulation, Roberts Schuman Centre for Advanced Studies, European
University Institute.
Ph.D. candidate in Law at the Sant’Anna School of Advanced Studies, Pisa, Italy
Ph.D. student at Humboldt Universität zu Berlin, visiting researcher at Florence School of Regulation,
Roberts Schuman Centre for Advanced Studies, European University Institute, and research associate at Stiftung
Umweltenergierecht (Foundation for Environmental Energy Law)
PhD candidate at the Cambridge University.
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The threat of climate change, the significant growth of prosumers and local energy
generation, and the development of new technologies enabling new business models are all
contributing to a rapid change of the electricity sector. Within this context, peer-to-peer (P2P)
trading and energy community (EC) are new emerging modes of transacting energy that defy
the traditional hierarchies based on vertical agreements between energy providers at the retail
level and consumers. P2P trading and EC are primarily horizontal modes of exchanging
energy between two or more so-called prosumers, electricity market actors who both
consume and produce energy.
The terms P2P trading and EC are recent additions to the debate over energy regulation, and
they have generated a lot of interest among scholars and policymakers. P2P trading and EC
are part of a broader trend towards the trading and sharing of electricity and other associated
business models. These new concepts could contribute to a market integration of the existing
decentralized renewable generation that lays on the hands of final customers and civil society.
In addition, they may become a cornerstone for the balancing of the system at the local level,
by showing the potential for a decrease of grid dependencies and ultimately the avoidance of
network costs. Last but not least, such models could also promote the energy transition
through the expansion of distributed energy generation from renewable sources throughout
the society.
P2P trading and EC are different forms of transactions from the established relationships in
the electricity system, which are primarily relationships between utility companies and
passive final customers. For this reason, they sit ill at ease with the current state of energy law
and regulation. In addition, they generate tensions with more generally applicable areas of
law as well, such as consumer law, contract law, tort law, corporate law, competition law, and
data protection, among others. These tensions pose a challenge to the implementation of P2P
and EC models.
This article has two intertwined purposes. Firstly, it primarily undertakes a literature review
of the published research that addresses the descriptive and normative legal aspects regarding
the design and implementations of P2P trading and EC. The literature review has therefore
been conducted through sourcing, reading, organizing, and analysing published papers on
either P2P trading or EC in the most relevant sectoral and non-sectorial academic journals
and institutional reports in the last five years. Most of the referred literature considers P2P
trading and EC in the European context, which is reflected in our choice of analysing the
literature through the lens of European national laws and EU law. Furthermore, we consider
not only legal scholarship, but also interdisciplinary papers written by economists, engineers
and political scientists to the extent that we found a relevant legal dimension to their claims
and arguments. We organise the results of this literature review into blocks that represent the
legal issues already addressed in the literature.
The second purpose of this article is to look forward. Based on the findings of the literature review,
this article outlines missing blocks, covering the expected legal and regulatory issues that might arise
with the implementation of P2P and EC but which are not represented in legal research so far.
Designing markets for P2P trading and EC and implementing them is a complex challenge. The
second and main contribution of this article is therefore to provide an overview of the various legal
issues that might or must arise with the implementation of P2P trading and EC. Our legal reasoning
includes both sector-specific regulation and general fields of law. We hope to incentivize the legal
community to fill these missing blocks through academic research and through the practical
development of P2P and EC projects. The article is structured as follows. Section 2 is dedicated to the
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conceptual clarification of P2P trading and EC as used throughout this article. It does so by reflecting
and comparing how these terms have been employed by the literature and how they have been defined
in EU law. Section 3 develops the literature review and identifies the missing blocks in the context of
P2P trading. Session 4 does the same for EC. Finally, session 5 provides a conclusion.
2. Conceptual clarification: from self-consumption to emerging modes
of exchanging energy
One of the main challenges of researching P2P trading and EC is the conceptual confusion
that these terms still spark in debates among scholars or policymakers. There is neither a
consensus nor a shared understanding of the kind of decentralized energy exchanges covered
by P2P trading or EC. For instance, while some consider energy traded between final
customers using intermediary online platforms as P2P trading, others would restrict it to
trading between household consumers using blockchain technology. Similarly, while some
refer to EC as any group of prosumers who self-generate electricity and share it among them,
others would limit it to a group of prosumers who generate renewable electricity through
engaging in a non-profit legal entity. Given the range of conflicting definitions, we begin this
article with a conceptual clarification.
This section aims to clarify the concepts of P2P trading and EC as they are used consistently
throughout the paper. The conceptual clarification is done by comparing definitions adopted
in previous publications by scholars or regulators with the definitions recently adopted by EU
law in the framework of the Clean Energy Package (CEP). Therefore, this paper does not
intend to make a normative claim regarding the definition of P2P trading or EC, i.e. whether
the definition adopted by us is optimal or more suitable to market practices, but it aims to sets
a common framework for readers to navigate the following pages.
To explain the complexities of defining P2P trading and EC, we start by introducing the
overarching concepts relating to the activation of the demand side in electricity markets,
namely individual self-consumption (or prosumers) and collective self-consumption,
followed on an introduction of P2P trading and EC properly.
2.1. Individual self-consumption
In the context of the electricity system, the concepts of P2P trading and EC are closely linked
to the notion of individual self-consumption performed by prosumers. In general, prosumers
are market participants who both produce and consume their own goods or services. The term
was first coined in the bestseller Third Wave by Alvin Toffler to refer to the increasing
participation of consumers in the production of goods and services, leading to a blurring of
the distinction between consumers and producers.
In the context of the electricity system, the notion of the prosumer contains three recurring
areas of contention. First, there is a discussion about the types of actors that can be
prosumers. For the purposes of this paper, we posit that the term prosumer refers to end-users
Alvin Toffler, The Third Wave (Bantam Books 1990).
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who generate and consume their own energy, encompassing both individuals, including
households, and large customers like hospitals, schools, or factories.
A second area of contention refers to the need for prosumers to be connected to the grid.
Parag and Sovacool identify two interesting future paths. While the first path sees millions of
off-grid and self-sufficient agents managing their energy production and consumption
autonomously, in the second path consumers stay connected to the grid and provide services
to it. The jury is still out on which of the two scenarios will prevail, and depending on the
specific context, one path might be more likely than the other. However, prosumers that are
not connected to the grid do not have a contractual supply relationship with traditional utility
companies, and they do not engage in any type of energy exchange with other prosumers.
Therefore, for the purposes of this paper, we only consider prosumers connected to the grid.
The third area of contention relates to the different ways in which prosumers can feed
electricity into the grid. One option is to allow prosumers to sell their excess electricity to a
supplier in a net-metering relationship. Net-metering is, therefore, a pricing system that
allows prosumers to send their excess electricity back into the grid at the retail rates. Net-
metering schemes were particularly popular in the early 2000s as a way to support the roll-
out of distributed renewable generation. However, these schemes are currently being rolled
back throughout Europe as they are increasingly being replaced by more market-based
policies. Another option is to enable prosumers connected to the grid to either trade or share
their excess electricity directly with third-parties or through aggregators. Because the main
subject of this paper is precisely prosumers engaging in activities of trading or sharing self-
generated electricity, we will focus on the second alternative.
Taking into account these three contentious areas, we can establish a definition of prosumers
that we will apply throughout this paper. In this definition, prosumers are end-users who
generate and consume their own energy, provided that self-generation does not constitute
their primary commercial activity, that they are connected to the grid and that they do not
engage in net-metering schemes.
Many jurisdictions are currently reforming their regulatory framework to include a definition
of prosumers. This is also true at the European level. The EU proposed and approved several
regulatory reforms in the CEP, which superseded the 3rd Energy Package of 2009. The new
package encompasses a number of EU legal instruments that, inter alia, put in place the legal
framework to ensure the establishment and economic incentives for new modes of trading or
sharing self-generated electricity such as joint self-consumption, P2P trading, and EC. As
usual, the EU legislator does so by firstly harmonizing definitions, and it does so by giving
meaning to prosumers at the first stage.
The notion of ‘prosumer’ is covered by the EU legislation in the Recast Renewable Energy
Directive (EU) 2018/2001 (hereinafter, RED II) and the Directive on common rules for the
Henri van Soest, ‘Peer-to-Peer Electricity Trading: A Review of the Legal Context’ (2018) 19 Competition
and Regulation in Network Industries 180.
Yael Parag and Benjamin K Sovacool, ‘Electricity Market Design for the Prosumer Era’ (2016) 1 Nature
Energy 16032.
Council of European Energy Regulators, ‘Regulatory Aspects of Self-Consumption and Energy Communities’
(2019) <https://www.ceer.eu/documents/104400/-/-/8ee38e61-a802-bd6f-db27-4fb61aa6eb6a> accessed 2
September 2020.
Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on the
promotion of the use of energy from renewable sources [2018] OJ L 328/82 (Renewable Energy Directive).
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Internal Market for Electricity (EU) 2019/944 (hereinafter, IMED). However, instead of
using the term prosumer, which is widespread in the literature, the RED II and the IMED
adopt different terms to refer to activities commonly undertaken by prosumers. While the
IMED adopts the generic term ‘active consumer’, which does not distinguish consumers that
generate their own electricity from those engaging only in demand-response, the REDII is
more specific by defining it as 'renewable self-consumer’.
‘active customer’ means a final customer, or a group of jointly acting final customer,
who consumes or stores electricity generated within its premises located within
confined boundaries or, where permitted by a Member State, within other premises, or
who sells self-generated electricity or participates in flexibility or energy efficiency
schemes, provided that those activities do not constitute its primary commercial or
professional activity.
‘renewables self-consumer’ means a final customers operating within its premise
located within confined boundaries or, where permitted by a Member State, within
other premises, who generates renewable electricity for its own consumption, and who
may store or sell self-generated renewable electricity, provided that, for a non-
household renewable self-consumer, those activities do not constitute its primary
commercial or professional activity;
The concept of the prosumer in EU law, in its various forms, underpins the various models
for the exchange of electricity discussed in this paper. For instance, both ‘active customers’
and ‘renewable self-consumers’, as defined by EU law, may act as self-sufficient agents,
managing their energy production and consumption autonomously. On the other hand, they
also share and sell electricity with third parties. Whenever an individual prosumer establishes
a legal relationship with third parties to jointly consume self-generated electricity in a
condominium, share power as a donation, or exchange in a trade relation, this prosumer is no
longer acting autonomously and becomes part of a decentralised system that could connect
anywhere from two to hundreds or even thousands of prosumers.
2.2. Collective self-consumption
The recent development of the sharing economy, along with the increased viability of
individual self-consumption, has led to an increasing interest in the direct sharing of
electricity between prosumers. In contrast to individual self-consumption, collective self-
consumption is a term that could refer to any collective form of jointly energy production
and self-consumption.
A major characteristic of collective self-consumption schemes is that they constitute a
specific activity that exists regardless of the specific organizational and market aspects. In
other words, whenever two or more customers come together to self-generate and self-
Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for
the internal market for electricity and amending Directive 2012/27/EU [2019] OJ L 158/125 (Internal Market for
Electricity Directive).
Internal Market for Electricity Directive, art 2 (8)
Renewable Energy Directive, art 2 (14).
ibid.
Dorian Frieden and others, ‘Collective Self-Consumption and Energy Communities: Overview of Emerging
Regulatory Approaches in Europe’ (European Commission 2019).
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consume electricity, a collective self-consumption scheme is formed, regardless of the nature
of the legal relationship. This is the key difference between, on the one hand, collective self-
consumption and, on the other hand, P2P trading and CE for the purpose of this paper. The
latter are defined, among other aspects, by the specific types of legal relationships in which
they are grounded.
Collective self-consumption is mentioned specifically in both the IMED and the RED II. The
IMED enables collective self-consumption by defining active customers as either an
autonomous individual self-consumer or ‘a group of jointly acting active customers.’ The
RED II, instead, uses a more restricted definition to ‘jointly acting renewable self-
consumers’:
‘jointly acting renewables self-consumers’ means a group of at least two jointly
acting renewables self-consumers in accordance with point (14) who are located
in the same building or multi-apartment block.
The RED II restricts the concept of jointly acting renewables self-consumers to prosumers
located in the same building or multi-apartment block. Considering this limited definition of
the RED II, Frieden et al. make a distinction between jointly acting renewable self-consumers
on a building scale and jointly acting renewable self-consumers on a block scale. In this
regard, either a condominium as legal entity or common ownership of property holders would
manage the self-generation and self-consumption among those living into a condominium
and, as argued by Frieden et al, neighbouring condominiums .
Collective self-consumption as a way of sharing production and consumption of electricity
was recognized in some EU Member States, such as France and Austria, even before the CEP
came into force. With the enactment and ongoing transposition of the IMED and the RED II,
collective self-consumption has gradually been regulated at the national level, as well as the
distinctive nuances between collective self-consumption, P2P trading, and EC.
2.3. Peer-to-peer trading
For the purposes of this paper, we define P2P trading as a transaction of electricity between
two consumers or prosumers as peers utilising an electronic platform. This is a horizontal
transaction, which clashes with the traditional vertical structure of the electricity sector´s
value chain.
The literature combines the term P2P with different descriptions of certain behaviours, such
as sharing, transferring, exchanging, and trading. However, these terms are not consistent
with the nature of the underlying legal relationship. For the Council of European Energy
Regulators, the term P2P energy sharing is generally used as a broad overarching terminology
that encapsulates all possible interactions between participants in self-consumption schemes
(individual, collective & community self-consumption) including P2P trading. In the same
report, the term P2P energy transfer is used in relation to the use of blockchain technology as
a tool for certification within energy community projects. The term P2P arrangement is also
used in opposition to virtual net metering, as a complement to vertically integrated
Internal Market for Electricity Directive, art 2 (8)
Renewable Energy Directive, art 2 (14).
ibid.
Council of European Energy Regulators (n 6).
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arrangements and therefore as the opposite of horizontally integrated transactions. Others do
not apply these differentiations, and instead use P2P and sharing as synonyms. For this part,
the legislator uses the terminology of sharing energy when referring to renewables self-
consumers acting jointly in front of the meter. The legislator thereby distinguishes this
conduct strictly from peer-to-peer trading
The analysed literature also asks which actors are covered by the term peers. Some authors
apply a rather philosophical approach, which states that P2P trading is a structure where all
peers cooperate with what they have available for a commons-based distribution of goods.
Others use a more limited understanding and relate it to flexible, independent, grid-connected
and direct exchanges of electricity. The National German Regulatory Authority, as well as
Lang and Mueller, use the concept of P2P very broadly for both horizontal contracting
between businesses (B2B) and consumers (C2C). In this conception, in order to be
considered as peers, the actors only have to interact on the same market level, but not
necessarily as prosumers or consumers. For instance, two power generators that trade
electricity B2B could interact within a P2P scheme. This is an uncommon position, as it is
generally accepted that the actors participating in P2P trading are necessarily consumers who
produce electricity themselves and who switch between being buyers and sellers, or simply
prosumers. This gives rise to the well-established maxim that the two parties involved in P2P
trading cannot be engaged in the contractual relationship on a professional basis. This notion
distinguishes P2P arrangements from well-established business to consumer (B2C) and
business to business (B2B) relationships.
P2P trading is often seen as a characteristic of the sharing economy. In this context, the term
stands for prosumers being engaged directly with each other by using a platform as a tool for
the provision of a marketplace on a local or a virtual level. However, the European legislator
takes its own approach within the RED II, stating that:
’Peer-to-peer trading of renewable energy means the sale of renewable energy
between market participants by means of a contract with pre-determined
conditions governing the automated execution and settlement of the transaction,
either directly between market participants or indirectly through a certified third-
party market participant, such as an aggregator. The right to conduct peer-to-peer
ibid.
Lea Diestelmeier, ‘Regulating for Blockchain Technology in the Electricity Sector: Sharing Electricity - and
Opening Pandora’s Box?’ (2017) <https://conference.aau.at/event/95/material/6/1.pdf> accessed 2 September
2020.
Renewable Energy Directive, art 21 (4).
Renewable Energy Directive, art 21 (2).
Tiago Sousa and others, ‘Peer-to-Peer and Community-Based Markets: A Comprehensive Review’ (2019) 104
Renewable and Sustainable Energy Reviews 367.
Lurian Pires Klein and others, ‘A Novel Peer-To-Peer Energy Sharing Business Model for the Portuguese
Energy Market’ (2020) 13 Energies 125.
Markus Klein, ‘Die Blockchain-Technologie: Potentziale und Herausforderungen in den Netzsektoren Energie
und Telekommunikation’ (Bundesnetzagentur 2019).
Yikui Liu, Lei Wu and Jie Li, ‘Peer-to-Peer (P2P) Electricity Trading in Distribution Systems of the Future’
(2019) 32 The Electricity Journal 2.
van Soest (n 4); Chankook Park and Taeseok Yong, ‘Comparative Review and Discussion on P2P Electricity
Trading’ (2017) 128 Energy Procedia 3.
Council of European Energy Regulators, ‘CEER Conclusions Paper on Dynamic Regulation to Enable
Digitalisation of the Energy System’ (2019).
Renewable Energy Directive, art 2 (18).
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trading shall be without prejudice to the rights and obligations of the parties
involved as final customers, producers, suppliers or aggregators..
This definition talks very generally about market participants as peers. At first sight, the EU
definition might clash with the majority opinion in the literature, which limits P2P trading to
the new horizontal contractual relationship between prosumers and consumers. However, the
European legislator links P2P trading specifically to renewable self-consumers in the RED
II:
"Member States shall ensure that renewables self-consumers, (...) are entitled: to
(...) sell their excess production of renewable electricity, (...) peer-to-peer trading
arrangements, without being subject (...) to discriminatory or disproportionate
procedures and charges, and to network charges that are not cost-reflective; (...).”
Although the legislator only associates P2P trading with renewables self-consumers
explicitly, this does not mean that the trading behaviour is only open to these actors. Rather,
the aim seems to be to specifically protect the rights of renewable self-consumers, legislator
wants to open up the possibility of P2P trading to these actors as well, because established,
economically strong market players do not need special consideration in terms of procedures
and charges in order to conduct P2P trading.
The European legislator makes no mention of the need for the trading to be carried out
through a digital platform. Instead, the trade must abide by predetermined conditions
governing the automated execution and settlement of the transaction. Some authors see this as
evidence that the legislation wanted to encompass trading models that are associated
primarily with modern information technologies, such as blockchain, that have a high
potential for automatization due to so called smart, self-governing contracts, making the use
of a digital platform a requirement in practice. At the same time, the EU terminology is a
recognition of the complexity and speed of modern electricity markets, in which it seems
unlikely that P2P contracts without tailored conditions and automated execution could
actually work in practice. As a result, the EU has chosen a definition that tries to be inclusive
but understands P2P trading somewhat differently than most of the existing literature.
P2P trading is generally explicitly linked to the digitalisation of the energy system.
Digitalisation provides the data and connectivity that is essential for P2P trading. This leads
some authors to conclude that P2P trading necessarily relies on digital platforms, making
such platforms new retail-actors of the system.
Looking at the wider economy, early digital platforms enabling P2P trading of services and
goods, like Ebay and Amazon, were the first to recognise the potential ‘flattening’ effect of
the internet, whereby traditional hierarchies become less relevant. Conceptual works argue
Renewable Energy Directive, art 21 (2)(a).
Matthias Lang and Maria Müller, ‘Blockchain and Smart Contracts in the Energy Industry: A European
Perspective’ (Bird&Bird 2019) <https://www.twobirds.com/~/media/pdfs/blockchain-and-smart-contracts-in-
the-energy-industry--article.pdf> accessed 2 September 2020.
Council of European Energy Regulators (n 26).
ibid; Diestelmeier (n 18).
Rahmat Poudineh, ‘Liberalized Retail Electricity Markets: What We Have Learned after Two Decades of
Experience?’ (the Oxford Institute for Energy Studies 2019)
<https://www.oxfordenergy.org/publications/liberalized-retail-electricity-markets-what-we-have-learned-after-
two-decades-of-experience/> accessed 2 September 2020.
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that the combination of new communication and energy techniques provides fertile ground
for the rise of these kinds of transactions. The thinking on P2P transactions in the electricity
system thus forms part of a larger economy-wide trend of internet-enabled horizontalization.
Platforms enabling P2P trading can also be considered collaborative platforms that offer
offline services, such as the sale of electricity, and online services, like the digital
interconnection among prosumers and consumers. According to the European Commission
and its Communication on the collaborative economy, “the term collaborative economy
refers to business models where activities are facilitated by collaborative platforms that create
an open marketplace for the temporary usage of goods or services often provided by private
individuals (European Commission, 2016)”. More specifically, three main actors operate in
collaborative platforms: i) service providers who share assets or resources acting as
professional actors or on occasional basis; ii) the users of these services; iii) the online
platform acting as an intermediary that provides market operators with the digital
interconnection needed to facilitate their exchanges.
2.4. Energy community
For the purpose of this paper, the term ‘energy community’ (EC) and its variations, such as
renewable energy community, citizens energy community, community self-consumption, or
simple community, denote an organisation based on open and voluntary participation of civil
society which owns and controls its operations in market activities such as generation,
distribution, supply, consumption, aggregation, energy storage, energy efficiency, or charging
services for electric vehicles. Moreover, the primary purpose of ECs must be to provide
environmental and social benefits for the community or local area, rather than financial
profits. The definition of EC focuses much more on organisational and market aspects of this
business model, in contrast to the abovementioned collective self-consumption schemes.
Therefore, there are four key distinguished common features of ECs to be considered
throughout this paper: i) its organizational form, ii) the governance procedures to either
access or manage the organisation, iii) the ownership of organisational shares and assets, and
iv) its purpose.
There is an ongoing harmonisation of the use of the term ‘community’ in the EU internal
energy market, which is aligned to the definition of EC employed in this article. This is due to
the consistent definitions of ‘renewable energy community’ and ‘citizen energy communities’
introduced by the CEP in both the RED II and the IMED respectively. It is worth mentioning
Jeremy Rifkin, The Third Industrial Revolution: How Lateral Power Is Transforming Energy, the Economy,
and the World (2013).
For the legal debate on the collaborative economy, see Vassilis Hatzopoulos and Sofia Roma, ‘Caring for
Sharing? The Collaborative Economy under EU Law’ (2017) 54 Common Market Law Review 81; Sofia
Ranchordas, ‘Does Sharing Mean Caring: Regulating Innovation in the Sharing Economy’ (2015) 16 Minnesota
Journal of Law, Science and Technology 413; Marco Inglese, Regulating the Collaborative Economy in the
European Union Digital Single Market (Springer International Publishing 2019)
<http://link.springer.com/10.1007/978-3-030-30040-1> accessed 2 September 2020; Martien Y Schaub, ‘Why
Uber Is an Information Society Service’ (2018) 3 Journal of European Consumer and Market Law 109; Irina
Domurath, ‘Platforms as Contract Partners: Uber and Beyond’ (2018) 25 Maastricht Journal of European and
Comparative Law 565; Vanessa Katz, ‘Regulating the Sharing Economy’ (2015) 30 Berkeley Technology Law
Journal 1067.
European Commission, ‘A European Agenda for the Collaborative Economy’ (2016) COM(2016) 356 final
<https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52016DC0356&from=EN> accessed 2
September 2020; Caroline Cauffman, ‘The Commission’s European Agenda for the Collaborative Economy -
(Too) Platform and Service Provider Friendly?’ (2016) 5 Journal of European Consumer and Market Law 235.
Frieden and others (n 12).
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that consistency of the definition of EC is the result of the good lobbying by REScoop (the
European Federation of renewable energy cooperatives) during the law-making of those EU
legislations, which continues serving to the member states in the current stage of
transposition. However, before the CEP, there was no consistent use of the term community,
and it is still a source of confusion in the recent literature and policy debates.
Community scale energy generation is not a new feature of the sustainable energy debate.
Since the 1970s, the term community has been linked to the advocacy in favour of alternative
technologies for local, small-scale and collective approaches to sustainable energy
generation, and against the mainstream energy policies of large-scale and centralized
technical systems. However, there are an immense variety of ways by which those
community scale energy has engaged with civil society. For instance, Walker and Devine-
Wright distinguished existing community energy projects in the UK according to two
dimensions: namely, the process and the outcome dimensions. The process dimension
concerns the need of a large involvement of local people in the planning, setting up, and,
potentially, managing the project, while the outcome focuses on the benefits of the project
and how they are distributed among the local people. Although the process and outcome
dimensions consider the importance of civil society, they are silent about the organizational
form of communities and the ownership of the distributed renewable plant or legal entity’s
assets. These kinds of imprecisions on the use of the term community lead to the conceptual
confusion between EC and other consumer-centred initiatives such as collective self-
consumption, P2P sharing or trading. For instance, Vangulick and Ernst refer to prosumers
exchanging their surplus generated energy with their neighbours and/or with actors located
nearby as a community, even though the described initiative was not in reality a form of EC.
Similar misuse of the term community is seen in other commercial-oriented sharing
initiatives such as sonnenCommunity, which allows customers with PVs and batteries to
share their electricity with other customers but the platform is owned by the Dutch company
Shell.
Since the CEP, the organisational dimension of EC has become an integral part of the
definition of energy communities in the EU. The EU legislation reinforces not only the
process and the outcome dimensions, but also the mandatory allocation of ownership of
distributed energy resources in the hands of energy communities. The decision to strictly
define energy communities represents an innovation. The EU legislation introduces two very
Alberto Alemanno, Lobbying for Change: find your voice to create a better society (Icon Books 2017).
Gordon P Walker and others, ‘Harnessing Community Energies: Explaining and Evaluating Community-
Based Localism in Renewable Energy Policy in the UK’ (2007) 7 Global Environmental Politics 64.
Gordon Walker and Patrick Devine-Wright, ‘Community Renewable Energy: What Should It Mean?’ (2008)
36 Energy Policy 497.
Bernhard J Kalkbrenner and Jutta Roosen, ‘Citizens’ Willingness to Participate in Local Renewable Energy
Projects: The Role of Community and Trust in Germany’ (2016) 13 Energy Research & Social Science 60.
Frank Pieter Boon and Carel Dieperink, ‘Local Civil Society Based Renewable Energy Organisations in the
Netherlands: Exploring the Factors That Stimulate Their Emergence and Development’ (2014) 69 Energy Policy
297.
David Vangulick, Bertrand Cornelusse and Damien Ernst, ‘Blockchain for Peer-to-Peer Energy Exchanges:
Design and Recommendations’, 2018 Power Systems Computation Conference (PSCC) (IEEE 2018)
<https://ieeexplore.ieee.org/document/8443042/> accessed 2 September 2020.
Mikolaj Jasiak, ‘Energy Communities in the Clean Energy Package: Assessment of the Adopted Regulatory
Framework’ [2020] European Energy and Climate Journal 48; Josh Roberts, ‘What Energy Communities Need
from Reform’ (2019) 8 European Energy Journal 13.
This is a preliminary draft
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similar definitions of EC, contained in the RED II as ‘renewable energy community’ and the
IMED as ‘citizen energy community’:
‘renewable energy community means a legal entity (a) which, in accordance with the
applicable national law, is based on open and voluntary participation, is
autonomous, and is effectively controlled by shareholders or members that are
located in the proximity of the renewable energy projects that are owned and
developed by the legal entity; (b) the shareholders or members are natural persons,
SMEs or local authorities including municipalities; (c) the primary purpose of which
is to provide environmental, economic or social community benefits for its
shareholders or members or for the local area where it operates, rather than
financial profits’.
‘citizen energy community means a legal entity that (a) is based on a voluntary and
open participation and is effectively controlled by members or shareholders that are
natural persons, local authorities, including municipalities, or small enterprises; (b)
has for its primary purpose to provide environmental, economic or social benefits to
its members or shareholders or to local areas where it operates rather than generate
financial profits; and (c) may engage in generation, including from renewable
sources, distribution, supply, consumption, aggregation, energy storage, energy
efficiency services or charging services for electric vehicles or provide energy
services to its members or shareholders.
The CEP is in the transposition phase, which means that EU Member States should bring into
force national laws on the definitions of renewable and citizen energy communities by 30
June for the RED II and by 31 December 2020 for the IMED respectively. Looking at the
literature available, there are two approaches in which national laws are studied with regards
to EC’s definitions. One is the comparative analysis of national laws before the approval of
CEP, while the other is the dogmatical analysis of how the definition of energy communities
could still diverge after the transposition of CEP. There is a broad consensus that the EU
legislator left a few but important aspects undefined. It will be up to national legislators and
regulators to take decisions on, for instance, the precise proximity requirement that defines a
renewable energy community. In this context, Member States will have the opportunity to
experiment and eventually come up with innovative solutions and converge, at a later stage,
towards best practices.
3. Peer-to-peer trading
3.1. Energy Law
Renewable Energy Directive, art 2 (16).
Internal Market for Electricity Directive, art 2 (11).
Renewable Energy Directive, art 36 (1).
Internal Market for Electricity Directive, art 71 (1).
Council of European Energy Regulators (n 6); Athir Nouicer and Leonardo Meeus, ‘The EU Clean Energy
Package’ (Florence School of Regulation 2019); Tim Schittekatte and others, ‘TSO-DSO-Consumer Interface
Architecture to Provide Innovative Grid Services for an Efficient Power System’ (2019); Roberts (n 45).
This is a preliminary draft
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Conceptually, it is useful to split the electricity system into two distinct levels. First, there is
the physical layer, which denotes the engineered network consisting of generators, wires,
substations, etc. The physical system is regulated through grid regulation, which contains the
details for system operation and the responsibilities of all participants to keep the electricity
system stable. This set of rules can be described as grid regulation. Second, there is the
market layer, which is regulated through a set of market operation rules, which aim to ensure
an efficient allocation of resources. Different markets within the sector can be distinguished,
all of them partly equipped with different legal regulations. Firstly, the retail market,
where energy is sold to the end consumer, can be differentiated from the wholesale market,
the upstream market stage where mostly large-scale energy producers and a few major
consumers trade their products. In addition, there are markets for ancillary services, such as
the provision of flexibilities or capacities as system services. Furthermore, the establishment
of so-called local energy markets, aiming for a system-friendly balancing of supply and
demand on a local level, is being discussed in the political and legal sphere.
Consequently, in order to be able to engage in P2P trading, a player has to abide by both the
rules on grid-system access and on market access. This fact can turn out to be an obstacle for
P2P trading and in the end hinder its establishment. This is the reason why this section is
divided in twofold: while the fist covers the debate on to what extent sector-regulation rules
can facilitate or preclude i) grid-access for P2P trading, the second focus on ii) their market
access.
To start, P2P energy trading is generally only possible if the prospective parties to the
transaction have access to the electricity grid. Since the parties involved in P2P electricity
trading are prosumers, as defined above, we will discuss the barriers to electricity system
access from the point of view of these players. The challenges related to the integration of
prosumers are primarily technical, but they are translated to regulatory issues through the
relevant regulatory instruments.
The primary challenge is getting access to the network itself. Historically, large energy
companies in most EU Member States were hesitant to allow prosumers to access the grid.
As prosumer activities have grown from a marginal occurrence to a widespread phenomenon,
regulators have gradually become more accepting of granting grid access to prosumers. The
main regulatory instrument for enabling prosumers to access the grid is the concept of third-
party access. These rules were introduced as part of the liberalisation of the energy system, in
order to prevent large integrated energy companies from limiting access to the network. The
third energy package included relatively strong unbundling rules and stringent language on
third party access, to remedy the ineffectiveness of the second energy package. The rules on
third party access have been strengthened even further in the Clean Energy Package. The
IMED states that third-party access should be granted on the basis of published tariffs,
applicable to all customers and applied objectively and without discrimination between
system users. This language makes clear that prosumers should be treated as other systems
users, thereby ruling out discrimination against prosumers in accessing the grid.
A second issue relates to the responsibilities for the imbalances that should be attributed to
actors in the electricity grid. If P2P traders are considered suppliers, they would be subject to
Internal Market for Electricity Directive, art 6 (1).
Anna Butenko, ‘User-Centered Innovation and Regulatory Framework: Energy Prosumers’ Market Access in
EU Regulation’ (Tilburg University 2016); Saskia Lavrijssen, ‘The Right to Participation for Consumers in the
Energy Transition’ (2016) 25 European Energy and Environmental Law Review 152.
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the same requirements as large-scale suppliers. The IMED clarifies that prosumers are
financially responsible for any imbalances they cause in the system unless they transfer the
balancing responsibility to another party. However, the allocation of responsibilities is
intimately linked to the question whether prosumers, and by extension P2P traders, should
primarily be seen as consumers or as suppliers. The result is that while prosumers can
continue to rely on consumer protection, they are nevertheless treated more as suppliers for
issues relating to the technical aspects of the electricity system. This creates an idiosyncrasy
that cannot be solved without a close look at the general rules of consumer, contract, and tort
laws as proposed below.
A third issue related to P2P energy trading is a complex operation that relies heavily on
modern communication technologies. Accordingly, a successful participation of prosumers in
smart energy systems depends not only on access to the grid, but also on access to the
telecommunications required for the operation of smart energy systems. While IMED makes
clear that Distribution System Operators (DSOs) are obliged to connect energy consumers to
the grid, authors point out that the rules surrounding access to the communications systems
are less absolute. The variety of communication technologies allows for a variety of parallel
networks. As a result, regulations on access to telecommunication regimes only include
minimum guarantees, as the consumer has (in theory at least) a variety of telecommunication
networks to choose from. It is argued that the current framework does not guarantee that
smart energy services will be available to all consumers. Accordingly, a stronger framework
for access to telecommunication networks, like the third-party access regime in electricity
regulation, needs to be developed.
A fourth issue concerns the role of DSO in enabling P2P trading. Although long distance P2P
trades are in principle possible, the natural environment for P2P trading seems to be the local
environment. This local dimension raises questions about the role of the DSO in ensuring the
smooth execution of P2P trades. Some authors argue that the DSO should take on more
system operation roles, for example as the coordinator of virtual power plants (VPPs)
consisting of P2P traders. It is also predicted that the transition towards a more distributed
electricity system, of which the development of P2P trading is one example, will lead to a
growing role for DSOs in system management. In addition, the DSO taking on roles relating
to ICT and data sharing between market participants is anticipated. However, this extended
role for the DSO remains rather conceptual for now, and there are many outstanding issues,
both technical and legal, that need to be solved before this concept could be operationalised.
For instance, the question of how the P2P energy trading business models are affected by the
EU unbundling requirements must be addressed. The unbundling rules could be an
insurmountable hurdle for certain business models that might otherwise offer great potential
Internal Market for Electricity Directive, art 15 (2)(f).
Renewable Energy Directive, art 21 (2)(c).
Lea Diestelmeier and Dirk Kuiken, ‘Smart Electricity Systems: Access Conditions for Household Customers
under EU Law’ (2017) 1 European Competition and Regulatory Law Review 36.
Diestelmeier (n 18); Diestelmeier and Kuiken (n 55).
Diestelmeier (n 18); Diestelmeier and Kuiken (n 55).
Thomas Morstyn and others, ‘Using Peer-to-Peer Energy-Trading Platforms to Incentivize Prosumers to Form
Federated Power Plants’ (2018) 3 Nature Energy 94.
Saskia Lavrijssen and Arturo Carrillo Parra, ‘Radical Prosumer Innovations in the Electricity Sector and the
Impact on Prosumer Regulation’ (2017) 9 Sustainability 1207; Saskia Lavrijssen, ‘Power to the Energy
Consumers’ (2017) 26 European Energy and Environmental Law Review 172.
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for reaching the goals of the European Union. The impact of the unbundling rules has not
been properly discussed in the literature.
There are still two major issues that have not yet been fully explored in the academic
literature. The first issue concerns network charges where electricity is shared over the public
network. The IMED states that smart meters should be able to account for electricity put into
the grid from the premises of the active customer. Moreover, both the RED II and IMED
ensure that prosumers are subject to cost-reflective, transparent and non-discriminatory
network charges that account separately for electricity fed into the gird. However, neither the
Directive nor the literature has clarified whether the network charges as they apply to
standard electricity consumption should also apply to P2P electricity trading. A second issue
concerns the role of the platform providers for P2P trades. The exact legal and practical
design of these platforms is still unclear. While several authors have hinted that this role
could be taken up by the DSO, it remains to be clarified whether this would be in line with
the unbundling rules.
Besides ensuring grid-system access, the implementation of P2P trading can be precluded by
lack of rules ensuring prosumers access to retail, wholesale or even flexibility markets. An
essential first step is that P2P traders are recognized as market actors by the regulatory
framework. From a historical point of view, the right to sell self-generated energy is not at all
naturally given. Prosumers were not entitled to the same level of market access as traditional
parties, such as large energy producers, suppliers and traders. Researchers find that this
historical background has led to a regulatory disconnect that hinders innovation. With the
CEP, the European legislator has for the first time created a set of rules that explicitly
addresses P2P trading. Since it did so by the usage of a directive, Member States are now in
duty to transpose the set of rules into their national legal framework.
Nevertheless, this general inclusion of prosumers and P2P trading does not exclude the
existence of other legal barriers to market access. For example, the basic requirement of a
retail supply license by the regulator imposes a significant constraint and complexity on
innovative business models around P2P trading. In addition, the legal framework lays out a
clear set of rules on the supply of electricity, such as requirements regarding the form of
contracts, reporting and information-transfer obligations, but also regarding the balancing
obligations of energy suppliers. The strong focus on a single-supplier model is also
problematic. Most of the current retail arrangements allow only a single supplier to settle the
system costs on behalf of a consumer. The existing retail market therefore prevents a multi-
supplier model. In practice, an individual consumer can in most circumstances only obtain his
or her power from a single supplier. A P2P trading scheme, in contrast, consists precisely of
constant and short-term switching between different suppliers, for example between P2P
Internal Market for Electricity Directive, art 20 (d).
Renewable Energy Directive, art 21 (2)(b).
Internal Market for Electricity Directive, art 15 (1) and (2)(e).
van Soest (n 4).
Butenko (n 52).
van Soest (n 4).
Poudineh (n 32).
Council of European Energy Regulators (n 6).
Elexon, ‘Enabling Customers to Buy Power from Multiple Providers’ (2018).
Poudineh (n 32).
Council of European Energy Regulators (n 26).
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trading activity and a back-up supplier who can add supply capacity when the local
production is insufficient. The single-supplier model also presents a hurdle for making use of
flexible demand, although this limitation is partly tackled by the CEP, for example through
the recognition of the role of aggregators and the possibility for consumers to conclude a
contract with an aggregator without the supplier’s permission.
Besides the removal of barriers, scholars also point to the importance of incentives for P2P
participation. Prosumers should be exposed to relevant price signals on the retail level and
receive tangible financial incentives for adjusting their consumption pattern accordingly.
Flexible electricity offers such as dynamic pricing, subscription models, and pricing
according to comfort levels rather than kWh, are expected to become a reality for many
consumers in the coming years supporting the empowerment of prosumers and P2P schemes.
However, there risk of cross-subsidisation in favour of prosumers, whereby those currently
unengaged and digitally excluded get left behind.
In order to be able to engage in P2P trading, potential sellers need to be able to connect with
potential buyers. In the case of P2P trading, there is usually a P2P platform provider. The
literature contains discussions on the exact role of the P2P platform provider. Scholars see the
role of the P2P platform provider primarily as a facilitator rather than an energy supplier.
They also believe that P2P transactions will generally take place behind the meter. Morstyn
et al. propose four paradigmatic models, namely retail supplier platforms, vendor platforms,
microgrid and community platforms, and public blockchain platforms.
In summary, the research carried out so far initially addresses the question of whether P2P
trading is prohibited. Currently, P2P trading is not prohibited. On the contrary, the CEP aims
to put the consumer at the centre of the system. The European legislator introduces new
market participants and provides them with new rights and obligations. After its transposition
into national law, this future regulatory framework is quite promising in its support for new
business concepts such as P2P energy trading. Nevertheless, the research has identified many
practical hurdles posed by law, as well as a lack of incentives to get involved in P2P trading.
This previous display of the status quo of the legal literature leads to a multitude of open
questions. Since P2P trading between prosumers is a new type of transaction, the rules
relating to P2P trading and the scientific examination of them are still very much in their
early stages. Nevertheless, a lot of open questions remain for entrepreneurs who want to
implement new business models or prosumers who want to enter the market. A clarification
of these terms will bring important legal security for prosumers and other actors.
Furthermore, it appears that the literature relies solely on the new definitions of new market
participants and trading concepts when referring to potential changes in the Member States’
market regulations. However, in order to truly understand the legal framework, it is necessary
ibid.
The European Consumer Organisation (BEUC), ‘Fit for the Consumer? Do’s and Don’ts of Flexible
Electricity Contracts’ (2019) <https://www.beuc.eu/publications/beuc-x-2019-
016_flexible_electricity_contracts_report.pdf> accessed 2 September 2020; Council of European Energy
Regulators (n 26).
Council of European Energy Regulators (n 26).
Council of European Energy Regulators (n 26).
Morstyn and others (n 57).
Sinan Küfeoğlu and others, ‘Digitalisation and New Business Models in Energy Sector’ (University of
Cambridge 2019).
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to read these terms in conjunction with all the rules that the European legislator has linked to
these concepts. The RED II states that the concepts related to new market participants are
connected to the obligation of the member states not to discriminate against them within their
national regulatory framework and not to impose unreasonable burdens on them. A complete
understanding of the legal framework therefore requires a view on the relationship between
these concepts and the relevant laws of the Member States. One of the main outstanding
questions will be how to distribute balancing responsibilities and other tasks amongst market
actors in order to guarantee a cost efficient and safe system on the one hand and an accessible
system with low market entry barriers on the other.
3.2. Consumer Law
P2P trading primarily affects the role of consumers, traditionally seen as passive market
actors. Indeed, P2P platforms are based on disruptive technological innovations designed
mainly to empower consumers and promote their active role as prosumers. To this end, the
spread of new models to generate and share energy forces a rethink of whether current legal
instruments ensuring consumer protection in the electricity market could be adapted to P2P
contexts, or whether it is necessary to conceive new tailored legal solutions.
The main legal issue concerns the legal nature of prosumers that operate in these platforms,
particularly whether a prosumer that sells energy to another prosumer in a P2P platform is a
business or still a consumer. Answering this question is crucial for stimulating the
engagement of household prosumers in these innovative business models: it stands to reason
that they will only participate if they are sure to maintain their consumer status and,
consequently, continue to benefit from consumer law protections. The literature tried to
rationalize this question merely from a regulatory point of view, arguing that considering
prosumers as suppliers could result in an unjustifiable burden being placed on them because
the prosumers will have to comply, for example, with strict consumer provisions when they
sell energy. As a result, imposing the obligations of suppliers on prosumers could prevent the
rise of P2P trading platforms. At the moment, there are no systematic legal answers to this
complex topic. In this section, we endeavour to give some preliminary solutions to this issue,
firstly by taking into account the more general European energy law framework and,
secondly, by examining the compatibility of the innovative figure of the prosumer with the
European consumer law.
From a European energy law perspective, the question of whether prosumers have to comply
with the rules imposed on energy suppliers is still unsolved. According to the article 21 (2)
(c) of the RED II, renewable energy consumers are entitled to maintain their rights and
obligations as final consumers. This notion of final customers also includes the category of
renewable self-consumers and, therefore, household prosumers. As a result, household
prosumers should continue to benefit from specific energy consumer protection provisions in
addition to their general consumer rights. Similarly, article 2(18) states that the right to
conduct peer-to-peer energy trading shall be without prejudice to the rights and obligations of
the parties involved as final customers. However, even though the directives recognize the
consumer nature of prosumers, it is still unclear whether, in disintermediated P2P electricity
marketplaces, a prosumer should grant to other prosumers the basic contractual rights
Renewable Energy Directive, Recital 68.
Lavrijssen and Carrillo Parra (n 59).
Lang and Müller (n 29).
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enshrined by article 10 of the IMED, and whether the public services obligations should be
imposed on prosumers. In answering these questions, it should be taken into account that,
because of their non-professional nature, prosumers acting as sellers could hardly ensure a
high level of consumer protection to prosumers acting as users, at least if P2P transactions are
not mediated by centralized platforms that take care of these issues. Similarly, it is
implausible that they could handle complaints of consumers or other prosumers in a simple,
fair and prompt manner because they do not have a complex legal structure that would
enable them to carry out this task. This leads us to conclude that prosumers cannot act in the
market as suppliers because their non-professional nature does not allow them to comply with
the legal obligations laid down by energy law. Moreover, enforcing the compliance of
prosumers with the strict provisions imposed on suppliers would also violate the principle of
non-discriminatory treatment to which prosumers are subject according to the IMED and the
RED II. According to this principle, in similar circumstances, prosumers must be treated in
the same way as other electricity undertakings, whereas in different circumstances, they must
be treated differently than other electricity undertakings, unless there are objective reasons to
do differently. If prosumers must not be subject to disproportionate and discriminatory
procedures, they should not be required to comply with the same legal obligations imposed
on energy suppliers to protect consumers and ensure the security of supply.
These preliminary findings on the legal nature of prosumers from an energy law point of
view need to be coordinated with the notion of the consumer as outlined according to the
European consumer law, in order to give a broader conceptual basis to our analysis. Is the
energy prosumer, as described above, covered by the notion of consumer according to
European consumer law? Or should we develop a whole new legal category? Or should we
consider him as a producer? We will examine whether energy prosumers can be considered
consumers from a general consumer law perspective.
According to European consumer law, a consumer is a natural person who is acting for
purposes which are outside his trade, business, craft, or profession. This notion does not
differ much from the definition of prosumer contained in the RED II and the IMED,
according to which household prosumers are allowed to generate and sell self-generated
renewable electricity, provided that those activities do not constitute its primary commercial
or professional activity. In any case, beyond definitions, could the fact that prosumers act as
producers or suppliers towards other prosumers and consumers in P2P platforms jeopardize
their legal qualification as consumers?
The qualification of prosumers as consumers seems to be coherent with the gradual openness
shown by the European institutions and the Court of Justice regarding the notion of
consumer. The intention of stretching the notion of consumer is clear from Recital 17 of
Directive 2011/83/UE on Consumer Rights, according to which “[t]he definition of consumer
Internal Market for Electricity Directive, art 9.
Internal Market for Electricity Directive, art 10 (9).
Alexandra Schneiders and David Shipworth, ‘Energy Cooperatives: A Missing Piece of the Peer-to-Peer
Energy Regulation Puzzle?’ [2018] SSRN Electronic Journal <https://www.ssrn.com/abstract=3252486>
accessed 2 September 2020.
Internal Market for Electricity Directive, art 15 (1).
Renewable Energy Directive, art 21 (2)(a)(i).
Jasiak (n 45); Roberts (n 45).
Renewable Energy Directive, art 2 (14).
Internal Market for Electricity Directive, art 2 (8).
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should cover natural persons who are acting outside their trade, business, craft or profession.
However, in the case of dual purpose contracts, where the contract is concluded for purposes
partly within and partly outside the person’s trade and the trade purpose is so limited as not to
be predominant in the overall context of the contract, that person should also be considered as
a consumer”. Recital 18 of the Directive 2013/11/EU on Alternative Dispute Resolution for
Consumer Disputes reaffirms that if a “contract is concluded for purposes partly within and
partly outside the person’s trade (dual purpose contracts) and the trade purpose is so limited
as not to be predominant in the overall context of the supply, that person should also be
considered as a consumer”. Said otherwise, consumers that act for purposes that are
predominantly – but not exclusively – personal can maintain their status as consumers. From
this standpoint, P2P agreements are not concluded by household prosumers for dual purposes
- partly commercial and partly not - but only to satisfy their energy consumption needs and,
marginally, to sell the energy in excess in a non-professional manner. Even if the agreements
between prosumers in P2P platforms were considered dual purpose contracts, prosumers
would continue to enjoy consumer protection because the energy trading activity is marginal
and does not constitute the predominant activity in the overall context of the supply
contract. With regard to the European Court of Justice, the recent Condominio di Milano via
Meda case and the Schrems case could be relevant to our investigation. In the first case, the
question referred to the Court was whether the “concept of consumer within the meaning of
Directive 93/13 preclude an entity, such as the commonhold association (condominio) in
Italian law, which does not come within the concept of 'natural person’ or ‘legal person’ from
being regarded as a consumer in cases where that entity concludes a contract for purposes
which are outside its trade”. According to the Court, even though a commonhold association
does not fall within the concept of consumer within the meaning of Directive 93/13, Member
States case-law can extend consumer protective rules to it. Consequently, the Court extends
the scope of application of consumer law beyond natural persons by ensuring that the
Member States can apply consumer protections to subjects that cannot be legally considered
consumers but suffer a situation of asymmetry of information and bargaining power toward
the professional market actors. In the Schrems case, the Court had to decide whether the
activities of publishing books, lecturing, operating websites, fundraising, etc., entail the loss
of a private Facebook account user’s status as a consumer. The judges refer to the previous
case-law of the Court, explaining that the notion of a consumer is defined by contrast to that
of an economic operator. They confirm that only contracts concluded solely to satisfy
individual needs in terms of private consumption, outside and independently of any trade or
professional activity, are covered by the special rules laid down by the regulation to protect
the consumer as the party deemed to be the weaker party. In addition, the Court specifies that,
in case of dual purposes contracts, consumer law provisions are applicable only if the link
between the contract and the professional activity of the contracting party is so slight as to be
marginal. Consequently, consumer protection rules apply to contracts concluded by market
actors that can be considered weak parties because they do not operate in their professional
Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on consumer rights,
amending Council Directive 93/13/EEC and Directive 1999/44/EC of the European Parliament and of the
Council and repealing Council Directive 85/577/EEC and Directive 97/7/EC of the European Parliament and of
the Council Text with EEA relevance, OJ L 304.
On the relevance of these recitals, see Marisaria Maugeri, ‘Elementi Di Criticità Nell’equiparazione, Da Parte
Dell’AEEGSI, Dell’AEEGSI, Dei “‘prosumer’” Ai “‘consumatori’” e Ai “ ‘clienti Finali’”’ (2015) 31 La Nuova
Giurisprudenza Civile Commentata 406.
Condominio di Milano, via Meda v Eurothermo SpA [2020] European Court of Justice C-329/19.
Maximilian Schrems v Facebook Ireland Limited [2018] European Court of Justice C-498/16.
Francesco Benincasa v Dentalkit Srl [1997] European Court of Justice C-269/95; Johann Gruber v Bay Wa
AG [2005] European Court of Justice C-464/01.
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role. Precisely because of their non-professional nature, consumers suffer a situation of
asymmetry of information and bargaining power towards their contractual counterparties that
are professional market actors. For this reason, the law lays down complex mechanisms of
protection. Most importantly, the Court specifies that, in the context of consumer contracts,
the knowledge and information that a person possesses or the expertise which that person
may acquire in a specific field cannot deprive him of the status of consumer. The position of
prosumers in P2P platforms can be analysed through the lenses of these rulings.
Prosumers enter into a P2P agreement with other prosumers not to pursue a professional
activity but to sell the excess of self-produced energy that they usually self-consume.
Although they can acquire expertise in the field of energy trading, they do not have
professional or commercial skills in this sector and act merely to satisfy their individual needs
by consuming the self-produced energy and selling it only if in excess. The only actor who
assumes a professional role in a P2P energy trading network and pursues commercial
interests is the platform provider who manages the transactions. Prosumers rely on the
complex system constituted by the network of peers precisely because of the monitoring role
played by the internet service provider that ensures order and the proper functioning of the
platform. In P2P energy platforms, and more generally in the entire sharing economy context,
the notion of the consumer as a subject who restricts himself to only consume products or
services in a passive manner is intended to be overcome by a broader concept that also
includes prosumers, who remain weaker parties in contractual relationships (asymmetry of
information and bargaining power towards the platform) but have a more proactive (non-
professional) role in the market.
Another relevant but unsolved question at the intersection of general energy law and
European consumer law is whether the traditional business-to-consumer (B2C) electricity
market model is still appropriate regarding the consumers’ rights to transparent information
insofar as the parties are equal and not professional. Indeed, a comprehensive legal analysis
of the effects of the transposition of traditional consumer law guarantees in P2P contexts is
still missing. Electricity consumers are subject to art. 10 of the IMED, which provides the
same contractual rights to users as Annex I of the repealed Electricity Directive of 2009 and
is inspired by the traditional theory of information. This theory claims that the main
instrument ensuring consumer protection is access to information because information about
their consumption allows consumers to compare other offers from competitors and put into
effect their right to freely choose suppliers. In this way, they can take full advantage of the
opportunities of the liberalized internal electricity market. Accordingly, the question arises
whether it still makes sense to adopt a traditional B2C model, which has the aim of
Saulė Milčiuvienė and others, ‘The Role of Renewable Energy Prosumers in Implementing Energy Justice
Theory’ (2019) 11 Sustainability 5286. The authors analyze the Schrems case and argue that “according to the
preliminary ruling of the CJEU, not all household energy prosumers would be subject to consumer protection
law. Energy prosumers fall into two main groups for consumer rights protection law. According to the ruling of
the court, one group of energy prosumers that acts as consumers (the trading activity is only marginal) would
enjoy consumer protection; the other group, which acts for commercial purposes, would lose the consumer
protection in relation to contracts that have commercial purposes. However as mentioned above, the wording of
the directive (EU) 2018/2001 ‘On the promotion of electricity from renewable energy sources’ guarantees all
household energy prosumers the protection of consumer law, even when their activities have commercial or
professional aims. Consequently, such legal regulations can be considered as part of a support scheme for
energy prosumers”. However, this solution is not convincing not only because of the concrete non-professional
action of prosumers in P2P electricity agreements but also because prosumers that sell self-produced energy
pursuing commercial interests cannot be classified as prosumers (“active consumers” and “renewables self-
consumers”) according to art. 2(8) DIME and art. 2(14) RED II and, for this reason, they cannot benefit from
consumer protection provisions laid down in energy law and general consumer law.
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addressing the information asymmetry between consumers and suppliers, if all prosumers in a
P2P platform are considered as active consumers and operate on a level playing field. A
linked outstanding question is how traditional energy consumer law instruments – such as the
right to choose and switch suppliers, the right to a highly regulated contract with an energy
supplier, and the right to receive detailed contractual information from suppliers – change in
a market in which collective models of consumption are emerging and traditional actors are
losing their market power. The platform (or even the internet service provider that manages
the platform) seems to be the subject in the best position to ensure consumer protection to
prosumers and consumers in P2P transactions. All these questions are deeply connected to
another one, namely the legal qualification of digital energy trading platforms, that is of
crucial importance from the perspective of consumer protection law.
P2P electricity platforms can be considered collaborative platforms in the context of the
emerging sharing economy. As the case law of the European Court of Justice has shown, a
central question with collaborative platforms is whether they should be qualified as providers
of information society services that keep consumers in contact in the light of the E-
Commerce Directive (2000/31/EC), or whether it would be better to view them as energy
suppliers. The Court has outlined the criterion of decisive influence as the method to identify
the applicable regime to these platforms, in which some aspects relate to services, while
others relate to goods, such as Uber and Airbnb. According to this criterion, a platform can be
considered a provider of information society services if the intermediation service offered is
autonomous and not merely ancillary from the substantive service, such as transportation for
Uber or provision of accommodation for Airbnb.
The legal literature has not yet examined the legal questions raised by P2P electricity
platforms in the framework of the collaborative economy in depth. However, some authors
notice that the decisive influence criterion doesn’t seem to be a solution that could be easily
adapted to electricity P2P trading. Indeed, it would be hard to see whether the digital
connection of prosumers in the network has not had a decisive influence on the substantive
service and can be considered as an autonomous service, or whether the digital
interconnection is an integral part of an overall service whose main component is the supply
of electricity.
The IMED ensures a specific level of protection to energy consumers, tailored to their
peculiar needs in a highly regulated market through the action of suppliers in the market. Not
considering P2P energy platforms as energy suppliers would be problematic because it would
result in depriving prosumers of their rights as energy consumers, and the benefits resulting
from the public service obligations imposed on suppliers. However, even not applying the E-
Commerce Directive could seriously affect consumers, thus diminishing the
protective instruments specifically designed for consumers operating in a digital
environment. The E-Commerce Directive contains a detailed list of transparency
Internal Market for Electricity Directive, art 12.
Internal Market for Electricity Directive, art 10.
Asociación Profesional Élite Taxi v Uber Systems Spain SL [2017] European Court of Justice C-434/15.
Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects
of information society services, in particular electronic commerce, in the Internal Market, OJ L 178 (E-
commerce Directive).
van Soest (n 4).
Internal Market for Electricity Directive, art 10.
Internal Market for Electricity Directive, art 9.
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requirements and regulates the treatment of online contracts, including the information that
should be given to users before the order is placed, such as the different technical steps to
follow to conclude the contract and the technical means for identifying and correcting input
errors. As a result, it appears that the most suitable solution would be to qualify P2P
electricity platforms as providers of information society services subject to the E-Commerce
Directive and, at the same time, as electricity suppliers, according to the Electricity Directive.
This would ensure a high level of protection to consumers in their twofold role as digital
consumers and as electricity consumers. At the same time, this dual qualification could assure
a fairer competition by obliging providers of P2P platforms to comply with the strict market
requirements imposed on electricity suppliers.
3.3. Contract Law
The traditional electricity market design was based on bilateral contracts as agreements
between two parties, a buyer, and a seller. In a community of prosumers, the relationships
between buyers and sellers can no longer be conceived as bilateral, because a P2P market
implies multi-bilateral agreements between agents. This represents a substantial innovation
for the market structure of the electricity sector and raises significant questions about the
contractual relationships among prosumers who operate in the same energy platform and
share the electricity generated by their self-production units. Addressing the issue of the legal
design of P2P platforms from a contract law perspective is of crucial importance for
regulating the energy transition.
The main questions are related to the automated nature of transactions and depend on the
decentralized design of electricity P2P trading platforms. Indeed, the innovative technological
context makes it difficult to adapt the traditional contract law categories elaborated for
transactions between consumers and suppliers to trading relationships among peers in a
digital environment. Blockchain is the most promising technology to implement P2P
electricity transactions, as the iconic case of Brooklyn Microgrid has shown. In this case,
smart contracts running in a blockchain platform allow owners of rooftop solar panels to sell
the electricity produced in excess directly to their neighbours. The use of blockchain and
smart contracts pose relevant contract law issues, mainly related to the difficulty of
translating the computer code of smart contracts into human language and programming
smart contracts in such a way that they can anticipate any eventuality. To this end, a strategic
role also from a legal perspective is played by coders and developers, which can be
considered accountable parties in so far as “smart contracts are only as smart as the person
who programs them”. Moreover, in the current legal context in which smart contracts are not
yet regulated, concluding P2P energy contracts also in the “dumb” form could be the best
intermediary solution to ensure a framework with higher legal certainty for energy consumers
in case of disputes. Smart contracts might be very successful in the electricity P2P market
because energy transactions contain rules and terms that are highly formalized and can more
E-commerce Directive, art 5 and 6.
E-commerce Directive, art 9-11.
Schaub (n 34). The Author introduces the solution of the dual qualification of Uber, arguing that it applies to
all collaborative platforms.
Sousa and others (n 21).
Lang and Müller (n 29).
On the necessity of “code-and-contract” hybrids, see Mateja Durovic and André Janssen, ‘The Formation of
Blockchain-Based Smart Contracts in the Light of Contract Law’ 19.
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easily translate into code. Indeed, contract law rules are characterized by flexibility and
malleability, and the inflexible structure of smart contracts may be a problem in the case of
complex and articulate transactions. However, this aspect does not seem highly problematic
for the energy sector due to the rigid structure of P2P electricity agreements.
Apart from the specific case of blockchain and from a more general standpoint, one of the
main issues should be whether it is possible to adapt traditional contractual liability rules in
P2P energy platforms. The question we must ask ourselves is who would be responsible and
accountable for a breach of contract. Is the prosumer involved? Is the platform itself or all the
prosumers who participate in the platform? In addition, it remains to clarify whether it is
possible to easily identify the defaulting part in a decentralized context in which transactions
are launched autonomously in the platform. If this is not possible, it would be necessary to
find legal solutions to manage disputes in networks of peers, emphasizing the horizontal
dimension in which these platforms operate. Moreover, according to article 10 of the IMED,
energy consumers have the right to a contract with their supplier that specifies the
fundamental elements. It is necessary to find out how we can interpret this right in a
disintermediated P2P context. Most specifically, who is the counterparty of the peers that
interact with each other in the platform? The platform itself? Other peers? In answering these
questions, it is necessary to find the most adequate contract law solution to ensure a
framework of legal certainty to prosumers, consumers and, most importantly, vulnerable
consumers, who may be the most affected actors by digitalization and disintermediation.
All these questions lead us to explore another important emerging issue in the context of the
collaborative economy, namely the allocation of liability for non-performance by the non-
professional suppliers of the offline services. This question also concerns P2P electricity
platforms, and the point is to determine criteria to define cases where a platform could be
held liable for non-performance of the underlying energy supply service, or where this
liability rests on prosumers. This question arises because platforms often act not as mere
intermediaries but as the actual suppliers of the service. Platform providers operate as
professional actors and assume the economic risk of P2P trading operations by defining the
content of the supply contract, the terms and the standards that prosumers must meet to offer
the performance. To this end, the approach adopted by the E-Commerce Directive on
“Liability on intermediary service providers” could present an appropriate solution.
Although these provisions have been applied mainly with regard to infringements of
intellectual property and personality rights and are not meant for the collaborative economy
context, it should be stressed that the Directive refuses a form of unmitigated platform
immunity and introduces liability for user conduct only when platforms have an active role in
the transmission or storage of information. In principle, without going into the specific
content of these provisions, platforms should not be held liable for suppliers’ conduct as long
as their actions do not correspond to the situations referred to the E-commerce Directive.
Adopting the same regulatory approach could be useful to define whether electricity
platforms should be held liable for non-performance by individual prosumers. It would be
On the inadequacy of smart contracts for complex transactions: Larry A DiMatteo and Cristina Poncibo,
‘Quandary of Smart Contracts and Remedies: The Role of Contract Law and Self-Help Remedies’ (2018) 26
European Review of Private Law 805.
European Law Institute, ‘Model Rules on Online Platforms’ (2019)
<https://www.europeanlawinstitute.eu/fileadmin/user_upload/p_eli/Publications/ELI_Model_Rules_on_Online_
Platforms.pdf> accessed 3 September 2020.
E-commerce Directive, art 12-15.
Ibid.
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possible to introduce a sort of joint liability of the platform in cases where it exerts an active
“remote control” over the conditions under which the supply service is provided by
prosumers (for instance when it determines at least the maximum fare, when it receives that
amount from the user before paying part of it to the prosumers or when it exercises a certain
control over the quality of the means by which the supply service is provided). This solution
is also coherent with the philosophical foundations behind the concept of P2P trading in the
electricity sector, namely the idea of empowering and enabling consumers to become
prosumers and to trade without intermediaries. Allocating the entire liability for non-
performance on prosumers would mean preventing the success of these innovative
marketplaces and creating an untrustworthy environment for consumers. This because
prosumers do not have the complex legal and financial structure required to offer energy
services on their own, and, for this reason, they rely on the professional role played by the
platform.
Finally, there are some issues related to international private law that should be mentioned,
since peer-to-peer platforms allow their participants to exchange electricity not only with
other members that are in proximity but also with consumers and prosumers that are further
away. This is not a problem in cases of a national P2P agreement, concluded by national
prosumers and consumers, and to be performed only on national soil. In this case, the P2P
contract will be subject to the corresponding national law, which also determines the
jurisdiction. However, in relation to P2P international agreements, the issue is more complex.
A failure to properly determine the applicable law and the competent jurisdiction in the
agreement would lead to legal uncertainty that could seriously affect weak parties in the
market, such as prosumers and consumers. Although this issue has been addressed by some
authors regarding smart contracts and blockchain, it has not yet been addressed by the legal
literature on P2P electricity marketplaces. To overcome this problem, it could be useful to
adopt a general agreement at the moment of the initial connection of prosumers to the
platform that establishes the criteria according to which parties can choose the applicable law
and jurisdiction in cases of need for judicial enforcement. These criteria could be related to
the place in which the contract has been concluded, or where the hardware operating the
platform is located, or even the place in which the default has occurred.
3.4. Tort Law
The intersection of new energy technologies recalibrates the relationships within energy
supply systems in favour of a decentralized energy-sharing network. Within this context,
whether there is – or should be – a middleman responsible for energy supply is a core issue to
investigate. While intermediaries challenge the fundamental assumptions of P2P systems,
they also enormously ease the allocation of liability in case of dysfunctions (failures,
accidents, errors). So, one of the most relevant questions to address is where liability for
accidents should stand in a complex system that combines the traditional energy
infrastructure with an automated digital grid based on advanced technologies, such as
blockchain.
Riccardo De Caria, ‘The Legal Meaning of Smart Contracts’ [2017] European Review of Private Law 731;
Alexander Savelyev, ‘Contract Law 2.0: “Smart” Contracts as the Beginning of the End of Classic Contract
Law’ (2017) 26 Information & Communications Technology Law 116.
Ibid.
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Indeed, using disintermediated and decentralized technology to implement P2P platforms
could radically change the roles of market actors, posing the urgent regulatory question of
how to organize responsibilities. In these decentralized contexts, system users could
contribute to the quantity and the quality of supply, and this leads to weakening the need for
intermediate entities, allowing peers to interface directly in a dispersed market. According to
a legal framework that assigns to intermediaries - suppliers and system operators - the
responsibilities of electricity supply, how should these responsibilities be allocated in a
context in which trust in intermediaries is replaced by trust in a technological system?
Regulating the role of peers in decentralized trading platforms requires rethinking the design
of market regulation, because the changing role of system users makes it complex to enforce
a measure of clear accountability in case of failures, accidents or errors.
From a liability perspective, the first step should be to address the disintermediation issue.
Intermediaries enormously ease the allocation of liabilities in case of dysfunctions of the
system. In addition, they allow us to isolate such dysfunctions throughout the transaction
flow. Conversely, disintermediation makes a clear identification of liable subjects difficult to
achieve. In this context, it is first necessary to identify the market operators affected by
disintermediation. The energy suppliers? The system operators such as distribution and
transmission companies? Answering this question is essential because each market actor has
different obligations towards consumers, so identifying the subject affected by
disintermediation could clarify which responsibilities have to be redistributed. To this end, it
should be noted that disintermediation involves electricity transactions at the retail level and
exclusively concerns the supply phase, namely the market relationships between traditional
suppliers and prosumers/consumers. The transmission and distribution layers, on the contrary,
would be hardly influenced by the building of a disintermediated platform. These layers are
closely connected to the technical management of the physical energy grid, rather than on
the digital infrastructure that can be built upon it. Consequently, if failures concern the
transmission or the distribution phase of the electricity supply chain, system operators can be
held responsible according to the traditional liability rules in force in the electricity sector. On
the contrary, if accidents are caused during the electricity supply phase, the liability, which
traditionally is on suppliers (intermediaries), should be reallocated through the development
of new legal mechanisms.
Having clarified this point, secondly, it should be addressed the issue of who can be
considered liable in case of system dysfunctions. Said otherwise, which organizational entity
can be held responsible if the system fails in this decentralized context? More specifically, it
is necessary to establish whether a single prosumer should be accountable to other prosumers
in the platform in case of failures. If so, as noted in section 3.3., the non-professional nature
of prosumers could be an obstacle to ensure adequate compensation to damaged parties.
Moreover, in decentralized systems, it would be difficult to identify who has done what and
therefore have a clear understanding of accountable actors and traceback failures in the
energy supply chain. To this end, it could be useful to introduce mechanisms of pooled
responsibilities compliant with the current system in which suppliers and system operators
are accountable to consumers. As a result, a distributed form of liability among peers that use
decentralized technologies and take the risk of dysfunctions, failures, and errors may
guarantee the reliability of the energy system and, at the same, promote participation to these
platforms, introducing an element of legal certainty. From this angle, the benefits offered by
decentralization are balanced with the acceptance of the risks of failures by all participants of
the platform. Therefore, if no one is directly responsible for how the platform works, but
Internal Market for Electricity Directive, art 2 (28) and art 2 (34).
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everybody concurs in it, then everybody should be liable for dysfunctions or errors.
Otherwise, it would be no space for ensuring ex post legal guarantees to participants in
disintermediated systems. From this point of view, consumers could claim damages directly
from the entire network of peers in the case of highly decentralized platforms and be sure to
obtain compensation; then, at a later stage, those who paid compensation and those who
caused the damage could regulate their internal relationships and decide how to allocate these
costs. So, this system could guarantee to market participants both the certainty of being
compensated in case of failures and the distribution of risks that they cannot easily monitor
because of decentralization. And above all, this solution could ensure a balance between
empowerment and self-responsibility on the one side, and the need for protection of
consumers on the other side.
Finally, the liability among market actors in case of dysfunctions remains to be qualified in
legal terms. The abovementioned idea of a system of pooled responsibilities seems easily
adaptable to decentralized electricity P2P marketplaces. However, it should be clarified
whether this liability concerns the breach of contractual obligations of market actors, or
whether it should be classified in terms of non-contractual liability, denying the existence of a
contract interconnecting all peers who trade electricity in a digital platform. In the latter case,
it should be examined whether a regime of fault-based liability or strict liability could fit
better in the context of energy supply activities. Considering the speed of electricity
transactions and the decentralized environment of P2P platforms, proving the existence of the
psychological element in case of system failures could be extremely difficult. In any case,
where accidents are not caused by acts of individual prosumers but depend on coding or
design errors, traditional rules on product liability can be considered applicable.
3.5. Property law
Distributed energy generation and new peer-to-peer technologies also challenge the role of
property law in the energy sector. In the recent past, property law was relevant mainly for the
resources side of the energy sector, contrary to what happened in the field of production and
consumption, in which property law issues were of marginal importance. However, today
property tools should be the focus of the legal debate on the energy transition process,
precisely because of the rise of innovative decentralized business models. Most specifically,
some authors identify a new property-energy connection that can be summarized in this
sentence: “if you want to put a solar panel on your roof, it has to be your roof”. This
connection raises different legal issues, among which the so-called “renter’s problem”.
Tenants have the possessory interest in assets but not the authority to decide whether to install
smart and distributed energy systems in the landlord’s home. At the same time, they do not
have the time horizon necessary to get the return on their investment in installations such as
rooftop solar. On the contrary, landlords have the authority to make decisions and the time to
get the return on their investment, but they lack incentives to invest in such energy projects
because they are not bearing the energy consumption costs. Given the increase in the number
of people that rent their residences in the last decade, addressing this problem is of strategic
importance to the spread of renewable energy sources at the local level. Several ideas have
been suggested: the first solution is to provide mandating upgrades in such a way that
buildings include energy efficiency installations and renewable energy generation assets.
Yael Lifshitz, ‘Private Energy’ (2019) 38 Stanford Environmental Law Journal 119.
ibid.
ibid.
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Second, it should be possible to envision smart energy leases as voluntary mechanisms to
incentivize landlords and tenants to install energy efficiency technologies. A third way to
overcome the renter’s problem is to promote participation in energy sharing projects and
peer-to-peer trading platforms, in which parties pool their interests and cooperate to share
their energy.
Another related question concerns the role of property as a strategy for delegating authority to
multiple agents in the context of distributed energy resources management. Dispersing the
production of energy at the local and residential level means distributing control over the
management of these resources, and so the power of making decisions. However, in the
energy context, the shift of the centralized market paradigm towards a distributed structure
could be problematic because grid operators need to provide a reliable electricity supply to
various distributed customers. This means not only that transmission and distributions
companies should adapt their modus operandi to this new scenario and govern the problem of
the intermittency of renewable energies, but also that individual prosumers should become
self-responsible for the management of the production units that they own.
Finally, we should also examine the connection between private law and public law aspects in
the regulation of the entire energy transition process. Some authors stress that full ownership
is still a precondition for participating in P2P agreements and, more generally, in smart and
distributed energy projects. This precondition represents a significant barrier to reach an
energy democracy driven by technological innovations, as theorized by some authors. It
appears that creating a really democratized energy market involving all the citizens requires
participatory mechanisms not based on ownership, but that enable consumers to be active,
even if they cannot install solar panels on their rooftop. Considering ownership as a de facto
precondition to participate in energy projects could be classified as a discriminatory treatment
towards the most vulnerable consumers and is in contrast to the approach of the Clean Energy
Package, according to which all consumers can play a key role in fostering the energy
transition. In a nutshell, enabling only homeowners to become prosumers represents a
disproportionate and discriminatory requirement that jeopardizes the right of consumers to
act as “active consumers” as enshrined in the IMED and the RED II.
3.6. Competition Law
P2P energy trading is necessarily enabled through electronic platforms processing data as a
tool to connect peers. These platforms provide the foundation for multi-sided markets (or
platform markets) that have at least two distinct user groups that provide each other with
network benefits. As a new intermediaries connecting buyers and sellers directly, P2P trading
platforms for electricity oppose the traditional pipeline model, in which a retailer makes a
pre-selection of possible products.
ibid.
Shelley Welton, ‘Grasping for Energy Democracy’ (2018) 116 Michigan Law Review 581.
Internal Market for Electricity Directive, art 15.
Renewable Energy Directive, art 21.
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As the developments in the sector for the sale of goods or short-term renting show, electronic
platform intermediaries potentially gain enormous market power through network effects and
economies of scale, thereby having the ability to change market structures completely. This
leads to new challenges for competition law. Firstly, scholars and policy makers are trying to
address the enormous market power such platform Intermediaries are able to generate. When
a market-dominant position has been achieved, its abuse is prohibited by the legislator (Art.
102 TFEU). In order to determine if a market dominant position is achieved, one's market
power has to be measured. For this purpose, the relevant market has to be defined in a
geographical, product- and time-related sense. Traditionally this is done by analysing which
products are substitutes to each other. The digital economy makes this process significantly
more difficult. For business models containing “free” services, in particular, the question is
being raised whether such a market even exists within competition law. Furthermore, it is
debated if multiple sides of a platform constitute several different markets or if the platform
constitutes a market on its own. The answer to this lies within a complex individual
assessment of the products and services being traded, the network effects and the possibilities
for substitution.
When it comes to P2P trading of electricity, the complex conception of digital markets is
combined with the equally complex outline of electricity markets. For example, it is unclear
whether the product of electricity within a P2P trading scheme differs from the product of
electricity from a central power plant or even from traditionally produced and marketed
renewable energy. The outcome of the market definition heavily determines the existence of a
market dominant position. Whereas traditionally market power is assessed through market
shares, in the context of the digital economy this approach seems to be of limited use due to
increased volatility and dynamics in digital markets. For example, the European Commission
argued that in a volatile environment market shares provide less indication of market power.
As a result, other factors are gaining importance in determining the dominant market position
of digital economy players, such as the existence of barriers to market entry, network effects
and access to data. These factors will therefore also have to be considered for the markets in
which P2P trading platforms operate.
As P2P business models are only just emerging, it seems that P2P trading platform
intermediaries are far from achieving a dominant market position if we apply traditional
market definitions. Conceptually, P2P platforms share characteristics of both the markets for
fully digitized services and traditional business models. In this respect, the traditional
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regulatory and legislative approach seems capable of responding to the competitive
challenges of such business models in the most parts.
Another issue is the way prices are set in the context of electronic platforms enabling P2P
trading. Depending on the exact structure of the business model, it is conceivable that the
prices will not be found dynamically and autonomously between the parties, for example due
to the usage of algorithmic pricing (which is potentially problematic in itself) or manually,
but that they are pre-determined contractually by the platform operator. The purpose of such
agreements could be the stimulation of transactions in a system-friendly manner, for example
in relation to certain weather conditions or times of day. Nevertheless, it seems questionable
whether such a contractual conduct by the platform operator is compatible with Art. 101
TFEU. According to this article, all agreements between undertakings which may affect trade
between Member States, and which have as their object or effect the prevention, restriction or
distortion of competition are prohibited. Individual prosumers using the platform are
undertakings within the meaning of Article 101 TFEU, because the status of an undertaking
does not depend, for example, on the intention to make a profit, but only on the fact whether
the actor is permanently economically active. Such contractual agreements on price
determination are also capable of artificially changing market conditions, since prices
possibly behaved differently without such agreements. If these agreements are carried out not
only nationally, but within the framework of a cross-border setup, an effect on the trade
between Member States cannot also be excluded. However, in order to be covered by art. 101
TFEU there must also be a noticeable effect. There is no noticeability if the relevant market is
only marginally affected because of the weak position of the parties on it, making a violation
of art. 101 TFEU improbable.
The use of blockchain in platforms has also been covered by the competition law literature,
where the development of the technology is either described as being hindered through
existing regulations or seen as a tool in order to tackle legal hurdles. Nevertheless, the
academic discussions on blockchain and competition law seem to get ahead of themselves.
For example, some authors argue that blockchain makes antitrust law as we know it unusable,
because the very concept of blockchain as a trust-guaranteeing technology contrasts with a
legal area that intends to regulate anti-trust. Nevertheless, blockchain and competition law
framework are striving for the same goal, namely decentralisation. Therefore, technology and
law should work hand in hand instead of against each other - according to the approach of a
regulation of and with blockchain.
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3.7. Data Law
Even though the exchange of energy between prosumers could in theory be conducted
without any digital framework, almost all authors and the European legislator agree that P2P
trading consists of a certain degree of automation through the use of a digital platform
environment. Therefore, P2P trading and other future business models necessarily depend on
data. This data relates, for example, to the consumption and generation behaviour of actors
participating in a P2P trading scheme. Ultimately, it is used to combine the consumption and
use of energy and to run through all further processes associated with it automatically.
Since this digital data must first be collected, a smart meter infrastructure seems an essential
prerequisite for the actual implementation of P2P trading. Currently, such an infrastructure is
to a large extent not yet in place, since the data available to existing retail suppliers cannot be
accessed by other parties and is often of poor quality. Nevertheless, smart meter rollouts are
happening across Europe, supported by the CEP. The European Commission predicted in
2014 that close to 200 million smart meters for electricity will be rolled out in the EU by
2020. At the same time it is pointed out that the data from smart meters will have to be
complemented by other sources of data, such as network data, data from EVs and home
appliances as well as the concept of the Internet of Things (IoT).
The use of data is regulated in the European Union. Data cannot simply be collected, stored,
used or passed on. Data protection in the European Union finds its foundation within the
General Data Protection Regulation (GDPR), which is directly applicable and does not
require transposition by the Member States. Future business models, including P2P trading
schemes, will have to be designed in accordance with this legal framework. Nevertheless,
scholars have expressed their concern about the current level of protection of personal data in
the EU. The authors find that dynamic pricing and aggregation contracts collect enormous
amounts of personal consumption data, which are the cornerstone of the whole system. They
emphasise the importance of a sustainable protection of such consumption data.
If P2P trading is organised without intermediates, for example on the basis of blockchain
technology, further legal questions arise. The use of a blockchain per se could already violate
the European legal framework. There is quite some legal uncertainty as to the legality of
blockchain-based smart contracts. EU data protection law appears to pose major obstacles to
blockchain applications, especially where they are public facing. Following the authors, if
personal data within the regional scope of the GDPR is processed using a blockchain, the
Poudineh (n 32).
Council of European Energy Regulators (n 26).
Poudineh (n 32).
Council of European Energy Regulators (n 26).
European Commission, ‘Benchmarking Smart Metering Deployment in the EU-27 with a Focus on
Electricity’ (2014) <https://ec.europa.eu/transparency/regdoc/rep/1/2014/EN/1-2014-356-EN-F1-1.Pdf>
accessed 3 September 2020.
Council of European Energy Regulators (n 26).
Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection
of natural persons with regard to the processing of personal data and on the free movement of such data, and
repealing Directive 95/46/EC, OJ L 119 (General Data Protection Regulation).
The European Consumer Organisation (BEUC) (n 72).
Lang and Müller (n 29).
General Data Protection Regulation, art 3.
This is a preliminary draft
please do not cite or distribute without permission
legal framework seems to be generally incompatible with the specific technology. This is
because data subjects have the right to access their personal data and information relating to
the data processing, the right to the rectification of inaccurate personal data, and the right to
erasure of personal data, namely the “right to be forgotten”. A blockchain, on the other hand,
is characterized as an immutable ledger, to which data can only be appended or deleted.
According to the authors, neither the draft proposal for a new ePrivacy Regulation (which
acts partly as a lex specialis to the GDPR), nor the Commission’s proposal for a recast IMED
from 2016 (which includes general data protection provisions and references to the GDPR
relating to data protection in smart metering systems) seem to offer certainty for blockchain
applications. Consequently, in certain cases the use of a blockchain is not compatible with the
GDPR. The right to be forgotten appears to be particularly problematic, leading to the
finding that if Art 17 of the GDPR is taken seriously in its current form, the use of blockchain
technology in a wide range of areas is only conceivable in a manner that violates its basic
principles. Therefore, the authors push for an evolution of data protection principles with
regards to decentralisation and the digital internal market. In order to not endanger the
innovation potential of blockchain technology in general, lawmakers are encouraged to
reduce this right of deletion for complex and decentralised IT architectures in favour of a
right to sufficient protective measures, in particular pseudonymisation.
4. Energy Community
4.1. Energy Law and Regulation
Energy community (EC) represents a significant novelty in the landscape of the liberalised
electricity market as it emerged in Europe during the 1990s and 2000s. Energy communities
are a collective actor with specific organisational and governance features, not primarily
driven by commercial purposes. Contrary to collective self-consumption and other traditional
market actors, energy communities are necessarily constituted as a legal entity (for example
as a cooperative, public-private partnership, or an association) and they have to comply with
sector-specific governance rules the openness to new shareholders and members, the effective
control over decision-making and management, and the ownership of organization’s assets.
Energy community projects can take diverse forms, ranging from large cooperatives taking
full advantage of the open grid to off-grid island systems.
Several authors focus on the regulatory disconnect between the lofty goals of energy
communities as a legitimate way to promote the engagement of citizens in the energy sector
and a way to streamline the energy transition, and the reality that many energy communities
lack resources because of their small scale, local nature, and non-profit structure. Because
energy communities often experience difficulties navigating complex administrative
General Data Protection Regulation, art 15.
General Data Protection Regulation, art 16.
General Data Protection Regulation, art 17.
Richard, Mamel and Vogel (n 88).
ibid.
Roberts (n 45).
Aura Caramizaru and Andreas Uihlein, ‘Energy Communities: An Overview of Energy and Social Innovation’
(European Commission 2020) <https://www.dropbox.com/home/Task1_LiteratureCompilation?
preview=Caramizaru+2020.pdf> accessed 2 September 2020.
Council of European Energy Regulators (n 6); Roberts (n 45).
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procedures, authors call for a reduction of unjustified regulatory and administrative barriers.
Such demands include fair, proportionate and transparent licensing and registration
procedures, as well as fair, proportionate, transparent and cost-reflective charges. In
particular, there is a need to determine network charges through a cost-benefit analysis, which
provides an opportunity to frame energy communities in terms of the benefits they can
provide to the energy system and the community. The impact of this regulatory burden have
been discussed in light of EU primary law as well. Following the general principle of 'equal
treatment', it is forbidden to treat similar situations differently and different situations the
same way without objective reasons. In the Paint Graphos case, the European Court of
Justice established the criteria of a non-commercial operator in order to determine if tax
exemptions for co-operatives did not distort competition within the meaning of Art. 87 (1)
TFEU. The co-operatives in question were free from the interests of outside investors and
were controlled by equal members, which in the eyes of the CJEU led to the conclusion that
tax exemptions for the co-operatives in question did not violate EU law. Scholars are now
applying this idea to the regulatory treatment of energy communities.
However, the requirement for non-discrimination works both ways, and it cannot result in an
unfair and inefficient deflection of certain costs. In particular, energy communities using the
regulated system infrastructure should contribute to the recovery of system costs and be
rewarded only as far as their activity brings a reduction in those costs. For this reason, most
authors accept that community self-consumption should be subject to network charges and
levies to a certain extent. Exempting it entirely from those payments would represent an
unjustified advantage and would penalise other network users not being part of an energy
community.
Energy communities also touch on the role of the energy supplier. When self-consumption
covers only a fraction of energy demand and a traditional market operator continues to supply
the residual demand of the community members, a series of issues emerge. Traditionally, the
supplier has been usually considered the only interface of individual customers and the rest of
the energy system and market. As a result, it has been vested with a series of duties like the
collection of network charges and levies or the performance of specific universal service
obligations. The development of self-consumption can compromise the delicate balance of
rights and duties imposed on the supplier. In particular, it may lead to higher costs and lower
revenues, undermining the economic sustainability of the supply business.
A major issue that has not been settled refers to the amount of charges that community
members should pay on the energy collectively self-consumed. The CEP refers to ‘cost-
reflective network charges’ but does not provide further clarification. In a similar vein, the
CEP states that charges, tariffs and levies shall be defined by national regulatory authorities in
line with a transparent cost benefit analysis, but it does not provide details on how such a cost
Jasiak (n 45).
Energy Cities and others, ‘Unleashing the Power of Community Renewable Energy’ (2018)
<https://www.foeeurope.org/sites/default/files/climate_justice/2019/community_energy_booklet_v5-pages-
300.pdf> accessed 3 September 2020.
Roberts (n 45).
Vereniging voor Energie, Milieu en Water and Others v Directeur van de Dienst uitvoering en toezicht energie
[2005] European Court of Justice C-17/03; Citiworks AG [2008] European Court of Justice C-439/06.
Paint Graphos and others [2011] European Court of Justice C-78/08.
Ibrahim Abada, Andreas Ehrenmann and Xavier Lambin, ‘On the Viability of Energy Communities’ (2020) 41
The Energy Journal <http://www.iaee.org/en/publications/ejarticle.aspx?id=3454> accessed 3 September 2020.
Council of European Energy Regulators (n 26).
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benefit analysis should be performed. National legislators and national regulatory authorities
are working to clarify these issues. The implementation of the new legal framework in the
coming years will provide an opportunity to develop national approaches. We hope that this
will lead to convergence on a shared vision, similar to the one that is currently emerging on
the regulation of individual prosumers, where net-metering is now widely considered as an
inefficient and unfair way of promoting renewable distributed energy generation via network
regulation.
4.2. Company Law and Governance
The distinguishing feature of ECs in the EU is that they must be constituted as organisations.
This means that community initiatives that are not constituted as a legal entity would be not
eligible to be recognised as an EC. The RED II and the DIME also impose rules concerning
the corporate governance of ECs. Articles 2(16) of RED II and 2(11) of DIME establish that
ECs must be based on the open and voluntary participation of natural persons, small and
medium enterprises and local authorities. This means that the discussion on the enabling
framework of ECs is heavily intertwined with issues that fall into the realm of company law
and corporate governance.
The main legal issue concerns the non-harmonizing legal forms that could constitute an EC.
Member States have the discretion to choose the type of legal entity that may be used to form
an EC. As a result, cooperatives, (limited) partnerships, companies with community interest,
foundations, non-profit organization, social enterprises, associations, and public-private
partnership have all been recognised as ECs. There are also legal forms that are recognised
only in a particular jurisdiction, such as civil law agreements in Poland, collective consumer
ownership in the Netherlands, and non-profit customer-owned enterprises in Denmark.
Among the varieties of legal forms, scholars tend to agree that cooperatives provide the best
Roberts (n 45).
Autorità di Regolazione per Energia Reti e Ambiente (ARERA), ‘Orientamenti per La Regolazione Delle
Partite Economiche Relative All’Energia Elettrica Oggetto Di Autoconsume Collettivo o Di Condivisione
Nell’Ambito Di Comunità Di Energia Rinnovabile’ (2020) <https://www.arera.it/allegati/docs/20/112-20.pdf>
accessed 3 September 2020.
Schittekatte and others (n 50).
Josh Roberts, Frances Bodman and Robert Rybski, ‘Community Power: Model Legal Frameworks for
Citizen-Owned Renewable Energy’ (ClientEarth 2014)
<https://ec.europa.eu/energy/intelligent/projects/sites/iee-
projects/files/projects/documents/model_legal_frameworks_2014.pdf> accessed 3 September 2020; Mariya
Gancheva and others, ‘Models of Local Energy Ownership and the Role of Local Energy Communities in
Energy Transition in Europe’ (European Committee of the Regions 2018) <https://doi.org/10.2863/603673>
accessed 3 September 2020; Roberts (n 30); Caramizaru and Uihlein (n 152).
A Wiktor-Sułkowska, ‘Do the Polish Energy Clusters Have a Chance to Become Units Independent from
External Energy Supplies and Can They Operate as Self-Financing Bodies?’ (2018) 20 Inżynieria Mineralna
123.
Sanne Akerboom and Felicia van Tulder, ‘Consumer (Co-)Ownership in Renewables in the Netherlands’ in
Jens Lowitzsch (ed), Energy Transition: Financing Consumer Co-Ownership in Renewables (Springer
International Publishing 2019) <https://doi.org/10.1007/978-3-319-93518-8_15> accessed 3 September 2020.
Salvatore Ruggiero and others, ‘Developing a Joint Perspective on Community Energy: Best Practices and
Chellenges in the Baltic Sea Region’ (2019).
This is a preliminary draft
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model to frame ECs. In cooperatives, the distribution of profits is limited and any surplus is
invested in supporting its members or the civil society. Moreover, cooperatives that
subscribe their foundations to the seven International Cooperative Alliance (ICA) Principles
are aligned ahead with corporate governance rules imposed on ECs, such as voluntary and
open memberships and democratic members control.
The decision to not explicitly define a legal form for ECs at the European level has
advantages and disadvantages. Member States can use their discretion to decide which
existing legal forms are most appropriate to be used by ECs according