How to Start an Energy Community in Denmark: A Complete Guide
Step-by-step guide to founding an energy community in your Danish municipality — from legal structure to grid connection.
What is an energy community?
An energy community is a legal entity where citizens, small businesses, and public institutions come together to produce, store, consume, or sell renewable energy. In Denmark, energy communities are regulated under the EU's Clean Energy Package and the Danish Electricity Supply Act, with two main types: Renewable Energy Communities (REC) and Citizen Energy Communities (CEC).
RECs require that members are located in the vicinity of the production facility and focus exclusively on renewable energy. CECs have broader activity options — including energy storage, EV charging, and electricity trading — and are not bound by the same geographic requirements. Both types must be open for voluntary participation and have as their primary purpose to deliver environmental, economic, or social benefits to their members.
Step 1 — Check your municipality's readiness
Your municipality's existing renewable energy infrastructure, klimaplan targets, and grid capacity directly affect how easy it is to start an energy community. We've analyzed all 98 Danish municipalities — use our search tool below to find yours and see its readiness score.
Look for: high renewable energy capacity (indicating permitting experience), a published klimaplan (municipal support), and a klimaplan gap (showing need for new renewable projects).
Showing 10 municipalities
For a complete analysis of all municipalities, see our Municipality Readiness Overview →
Step 2 — Choose your legal structure
The two most common legal structures for energy communities in Denmark are the andelsforening (cooperative association) and forsynings-AMBA (utility cooperative). The choice depends on your size, purpose, and governance preferences.
| Aspect | Andelsforening | Forsynings-AMBA |
|---|---|---|
| Governance | Democratic — one member, one vote | Democratic — one member, one vote (statutory) |
| Liability | Limited to member contribution | Limited liability (AMBA = cooperative with limited liability) |
| Minimum members | 3 founders | 2 founders |
| Registration | Erhvervsstyrelsen (CVR) + Energistyrelsen | Erhvervsstyrelsen (CVR) + Energistyrelsen |
| Best for | Smaller communities (10-100 members), local neighborhoods | Larger projects, utility-scale, municipal partnerships |
Step 3 — Gather your founding members
While the legal minimum is 2-3 founders, it is recommended to start with at least 5-10 committed members. This ensures a broader capital base, distribution of tasks, and more robust decision-making. Focus on finding members with complementary skills — legal, technical, financial, and communication.
Hold a founding general assembly where you adopt bylaws, elect a board, and set member contributions. The bylaws must at minimum define: purpose, membership criteria, voting rules, contribution amounts, withdrawal rules, and surplus distribution. Remember that energy communities under the EU directive must be open for voluntary participation and controlled by members in the vicinity.
Step 4 — Register with authorities
Once your legal entity is established, you need to register it officially. The process involves three steps:
1. Energistyrelsen registration
Apply for registration as an energy community with Energistyrelsen (the Danish Energy Agency). You must document your legal structure, bylaws, member list, and planned activities. Energistyrelsen assesses whether you meet the requirements in the Electricity Supply Act's definition of an energy community.
2. Notify your DSO (grid operator)
Contact your local grid operator (DSO) to inform them of your plans. The DSO must approve the grid connection and set up energy sharing agreements. They also need to know which metering points will be part of the community.
3. Datahub access
Apply for access to Energinet's Datahub, which handles metering data and energy sharing between members. Datahub registration is necessary to settle energy internally within the community.
Step 5 — Plan your energy project
Denmark has a total of 5049 MW of solar capacity and 7499 MW of wind capacity across 98 municipalities. Your technology choice should be based on local conditions:
Solar panels: Lowest risk, fastest to install, suitable for rooftop or ground-mounted installations. Typically 3-6 months installation time.
Wind turbines: Higher production per invested krone, but requires environmental impact screening, longer permitting processes, and larger investments. Typically 12-24 months project time.
Battery storage: Can be combined with solar or wind to optimize self-consumption and reduce peak load costs. Particularly relevant for communities with variable production.
Check your municipality's data in our Municipality Readiness Overview →
Step 6 — Finance your project
Financing an energy community typically consists of three elements: member contributions, loans, and public grants. The new local collective tariff, which took effect in 2025, gives energy communities economic advantages for sharing locally produced energy — a significant improvement to the business case.
Energistyrelsen offers funding pools specifically targeting energy communities, and several municipalities have local support schemes. For a complete overview of financing options, economic models, and grant schemes:
Step 7 — Connect to the grid
Grid connection is the final technical step. Contact your DSO (grid operator) to apply for connection of your production facility. The process includes a grid capacity assessment, connection agreement, and installation of smart meters on all participants' metering points.
The new local collective tariff is a key mechanism for energy communities in Denmark. It allows sharing locally produced energy between members at a reduced grid tariff, since the electricity does not burden the transmission grid. In practice, this means members pay lower grid costs for the portion of electricity that is produced and consumed locally.
Understanding the "nearby" requirement
The EU directive requires that members of a REC are "located in the vicinity" of the production facility. The Danish implementation delegates the interpretation to the DSOs (grid operators), which creates regional differences. Generally, proximity is interpreted as being connected to the same local distribution grid or transformer station.
In practice, this means the proximity requirement varies from DSO to DSO. Some grid operators define it as the same postal code, others as within a certain radius (typically 2-10 km), and others use the technical criterion of being behind the same 10/0.4 kV transformer station. It is important to contact your local DSO early in the process to understand their specific interpretation.
Note: Citizen Energy Communities (CEC) are not subject to the same proximity requirement as RECs. If geography is a constraint, a CEC structure may provide greater flexibility.
Timeline and cost expectations
Timelines and costs vary significantly depending on the project size. Here are estimates based on Danish experience:
| Aspect | Small (10-50 members) | Medium (50-200 members) | Large (200+ members) |
|---|---|---|---|
| Timeline | 6-12 months | 12-24 months | 18-36 months |
| Estimated cost | DKK 500K - 2M | DKK 2M - 10M | DKK 10M - 50M+ |
| Key challenges | Sufficient capital, member recruitment | Grid connection, governance complexity | Regulatory approvals, EIA, financing |
Frequently Asked Questions
There is no statutory minimum, but in practice at least 5-10 founding members are recommended to ensure robust governance and sufficient capital. For andelsforeninger (cooperatives), a minimum of 3 founders is required.
Administrative startup costs typically range from DKK 15,000-50,000 for legal advice, registration, and bylaws. The total project budget depends on scale — a small solar project can start from DKK 500,000, while larger wind projects can cost several million.
No. In an energy community, the community collectively owns the production facility. You participate as a member and pay an initial contribution or membership fee, but you do not need to personally own the facility.
A Renewable Energy Community (REC) focuses on renewable energy production and requires geographic proximity to the facility. A Citizen Energy Community (CEC) can also include other energy activities such as storage and electricity trading and does not have the same geographic requirements.
Yes. Both homeowners and tenants can participate in an energy community. Tenants can sign up as consumers and receive a share of the produced energy, even if they do not own the property.
From idea to operation, it typically takes 12-24 months for a smaller project and up to 36 months for larger projects. The timeline depends on the municipality, grid connection, and financing.
Energistyrelsen (the Danish Energy Agency) offers various funding pools for energy communities. Additionally, the new local collective tariff provides economic benefits for local energy sharing. Read our financing guide for a complete overview.
Members are still connected to the regular electricity grid and purchase any shortfall from their normal electricity supplier. An energy community does not replace the grid connection — it supplements it.