How energy cooperatives are changing the rules of the game in Poland’s energy market?

Economic context and historical background of energy cooperatives in Poland

Electricity and gas prices in Poland have reached record highs in recent years. In 2022, the SPOT market price of gas exceeded PLN 1,000/MWh at its August peak, while electricity prices hovered around PLN 1,017/MWh. This surge was driven by several factors: heavy dependence on imported energy resources amid limited domestic production, the effects of the war in Ukraine, and the market’s sensitivity to global commodity price fluctuations.

In 2022, Poland imported over 20 million tonnes of coal—mainly from Kazakhstan, South Africa, and Colombia—while spending on natural gas imports rose by 76% compared to 2021, reaching PLN 79.6 billion. This increase hit both Polish households and the state budget, which in 2022–2023 allocated PLN 26.4 billion to freeze electricity prices for households and SMEs as part of the “Solidarity Shield” introduced to cushion the price shock.

Additional costs were driven by EU mechanisms, including the European Emissions Trading System (EU ETS), which internalizes the cost of CO₂ in energy prices, thus raising fossil-fuel generation costs. While Poland initially profited from selling emission allowances, these benefits have declined with rising energy prices and lower allowance volumes, potentially increasing fiscal pressure on the state and consumers. The traditional coal-based model has been severely tested—domestic infrastructure has proven insufficient, and the market highly vulnerable to resource price volatility—resulting in soaring bills and necessitating government intervention.

This situation creates real pressure on the energy sector globally. From Poland’s perspective, it is essential to seek local solutions that accelerate the energy transition and promote distributed energy generation. Energy cooperatives, the focus of this article, offer precisely such an approach—enabling concrete local actions with nationwide significance. These solutions bring measurable economic, environmental, and social benefits to local communities. The model of “we produce together, we consume together” helps members optimize energy use, increase the efficiency of local renewable sources, and reduce exposure to market price fluctuations. It is also an excellent opportunity to build lasting relationships with neighbours and foster multilevel cooperation.

What is an energy cooperative?

An energy cooperative is a formal association operating under several legal frameworks, including the Cooperative Law, the Renewable Energy Sources Act (RES), and the Energy Law provisions on grid connection and energy trading. Like traditional cooperatives, its main bodies are the general assembly, supervisory board, and management board—ensuring democratic and transparent governance. In cooperatives formed by individuals, the “one member, one vote” rule guarantees full equality of participation.

Energy cooperatives operate locally—currently, one cooperative may function within up to three neighboring rural or urban-rural municipalities. Planned legislative changes may extend this to towns under 100,000 residents, although the situation remains fluid. The maximum number of members is 1,000, with a minimum of 3 for legal entities and 10 for individuals. The total installed generation capacity may not exceed 10 MW for electricity and 30 MW for heat, with sources including photovoltaics, small wind turbines, biogas plants, and energy storage systems.

The activity of these communities is based primarily on mutual generation and consumption of electricity. A key concept here is self-consumption, meaning the direct use of energy at the moment it is produced. Currently, at least 40% of annual demand must be covered this way. Moreover, accounting periods for both electricity and heat are now measured in 15-minute intervals rather than hourly, enabling four times more precise monitoring of production and consumption. Consequently, careful planning of generation and consumption is crucial during both the preparation and operational stages of a cooperative.

Energy cooperatives settle accounts both internally (between members) and externally (with the grid operator). Under current mechanisms, they operate similarly to the older net-metering system but with a 1:0.6 coefficient (lower than that for individual prosumers in the “old” system). This means that any unused kilowatt-hour may be fed into the grid and partially “retrieved” within a year. However, maximizing real-time self-consumption remains the key to achieving the best financial outcomes. Energy drawn from the grid when internal production is insufficient is billed according to the standard tariff rates applicable before joining the cooperative.

Why now?

The rise of energy cooperatives today stems from overlapping economic, legal, and social factors. First, persistently high energy prices force consumers to seek local cost-stabilizing mechanisms. Second, EU and national policies promote energy decentralization and citizen participation in energy markets. From a legal standpoint, key frameworks include the RED II and RED III directives, which define rules for energy communities and citizen energy initiatives, supporting distributed energy generation and local involvement. Poland’s implementation of these directives allows the creation of cooperatives backed by EU and state support—through grants, tax incentives, and preferential loans. Another growth driver was lowering the self-consumption threshold from 70% to 40%, which increased the feasibility of photovoltaic projects. However, from 2026 the requirement will return to 70%, encouraging investment in energy storage and demand optimization to sustain efficiency.

Legal and financial advantages for cooperatives in Poland

Energy cooperatives benefit from multiple legal and fiscal incentives that significantly reduce operating costs. Members are exempt from distribution fees (up to about 40% of the retail price), RES, capacity, and co-generation charges, and excise tax on energy produced and consumed internally.They can also reduce or avoid balancing costs, often covered by an obligated supplier with whom the cooperative must sign a contract.

Cooperatives can take on debt, invest in new sources and storage, and make use of underperforming installations previously operating under net-billing. Surplus energy from one member’s system can be shared among others, maximizing overall benefits.

They also enjoy simplified grid connection procedures—the operator cannot arbitrarily deny access, which aligns with the local nature of these projects. Moreover, cooperatives have access to low-interest loans, higher funding limits, and advisory support under national and EU programs.

These programs, promoting local community development and long-term energy efficiency, make energy cooperatives an attractive tool for supporting citizen energy initiatives and strengthening community resilience to energy price volatility.

This first article presented a theoretical and legal analysis of the energy cooperative model in Poland. It identified key macroeconomic factors, regulatory frameworks, and systemic incentives supporting this model. In the upcoming articles, we’ll explore how local energy cooperatives are turning ideas into real projects and communities into active players in Poland’s energy transition.

Sources:

1) Energy Forum - Dr Joanna Maćkowiak-Pandera, Piotr Kleinschmidt „How Much Do We Pay for Our Dependence on Fossil Fuel Imports?”, December 20, 2022 (https://www.forum-energii.eu/ile-placimy-za-uzaleznienie-od-importu-paliw-kopalnych?)

2) Ministry of Climate and Environment – “Electricity Price Freeze Act Adopted by the Sejm”, October 7, 2022 (https://www.gov.pl/web/klimat/ustawa-zamrazajaca-ceny-pradu-przyjeta-przez-sejm?)

3) RED II Directive (2018/2001): It introduces the definition of "renewable energy communities" (REC). According to Article 2, point 16, a REC is a community based on voluntary participation, independent and effectively controlled by its members, who are located in close proximity to renewable energy projects owned and developed by the community.
This directive obliges Member States to establish legal frameworks that support such initiatives.

4) RED III Directive (2023/2024): It sets a target of achieving a 42.5% share of renewable energy in the EU’s final energy consumption by 2030. The directive also introduces procedural simplifications for renewable energy projects and promotes innovative models such as energy communities through the so-called “regulatory sandbox” — a testing space for new solutions..