In mainland northern Portugal, less than an hour's drive from Porto, lies Guimarães. This historic city of around 156,000 inhabitants has more to offer than its UNESCO-listed centre. This year, it is the European Green Capital – a title awarded by the European Commission to spotlight local action in the green transition.
A lot is going on in this municipality: from educational programmes and workshops engaging locals to the development of an energy community set to power public and residential buildings.
The city has already fully electrified its public transport system and aims to make it free by the end of this year to encourage people to reduce their car use in the city centre.
“In the last decade, we have accelerated the journey from an industrial historic city towards a green city,” Ricardo Araújo, mayor of Guimarães, told us. “And this transformation only makes sense if it increases the quality of life of the local people.”
Sharing is caring
Electrification and communal energy are where municipalities like Guimarães can truly make a difference. Similar success stories are popping up across Europe. Take Malaunay, in northern France.
This small municipality of just over 6,000 inhabitants struggled with high energy bills back in 2012 and was close to cutting public services. It then secured generous national funding to kickstart its local energy transition.
The logic is simple: when you can generate and use your own electricity, you save money. And if excess electricity is shared with other buildings when production is high, even more people can benefit.
Malaunay started by installing solar panels on the rooftops of almost all municipal buildings, covering 1,700 sq meters of roof space. Some of them are linked to a battery system to provide electricity storage for when the panels' production drops.
The municipality now has its own electricity-sharing scheme and saves €51,250 annually thanks to its photovoltaic system, compared to buying power from an external supplier.
Since 2022, the city council has begun extending the sharing concept beyond municipal assets by engaging residents and businesses. Locals pooled money to finance one of the solar roofs, and the municipality encouraged more households to install solar panels on their homes.
While energy communities that allow local electricity sharing can exist without the municipality's involvement, its participation usually motivates more people to join.
“A municipality can bring trust because the concept of electricity sharing is still relatively new. It can also provide some financial resources, staff, and expertise,” said Mathieu Bourgeois, policy officer at Energy Cities, a network representing more than 1,000 local governments across Europe.
In Valencia, the third-largest city in Spain, authorities took the idea one step further by focusing on tackling energy poverty. The city is currently offering the municipal rooftops to citizen-led energy communities to help them expand. Groups of residents can apply for rooftop space through a public tender. If selected, they can install and operate their own solar panels there free of charge for 25 years.
The produced electricity then powers their households. At least 10% of the installed capacity must supply municipal buildings, and 5% must be donated to vulnerable households identified by local social services to help reduce their electricity costs.
Your town's checklist
In Europe, municipalities often serve as “laboratories” for innovative ideas and solutions, as such initiatives are easier to implement on a smaller scale first.
“You cannot achieve climate neutrality if you do not decarbonise every single municipality out there, starting with the smallest ones,” Miłosława Stępień, Just Transition coordinator at CEE Bankwatch Network, told us.
Municipalities are also key to the decentralisation of Europe's energy system, which was initially designed mainly for large fossil-fuel-fired power plants. Renewable energy sources have one major advantage over fossil fuels: they are available locally. Electricity can be produced and consumed within the borders of a single village or town.
Municipalities can be of great help in building the storage and flexibility needed for an energy system based on volatile renewable energy.
According to the European climate campaign network Beyond Fossil Fuels, an ideal pathway towards local energy security could look like:
Firstly, the focus is on energy efficiency: building renovation, insulation, and electrification to reduce energy waste and cut costs. Then comes the expansion of local renewable energy production. Unused spaces, such as public rooftops and parking lots, are the perfect place to start producing cheap renewable energy. Local support schemes can also help get private households on board.
The next step is the electrification of public transport alongside investments in cycling and walking infrastructure. And finally, establishing and supporting electricity-sharing systems through energy communities, such as those in Malaunay or Valencia.
Where's the catch?
In many places, we're still far from this ideal scenario. The obstacles are plenty, starting with the projects' timescales.
“Developing a decarbonisation project from beginning to end is extremely time-consuming,” Stępień told us. It usually takes between three and 15 years to get an idea from paper to full implementation. That can be much longer than a single election cycle.
“Putting in all this work, and then not having it continued by the next person or political group in power in the municipality is always a risk,” she said. “Local elections can change everything, and something that has been worked on for years and agreed to can suddenly just completely be abandoned.”
Her organisation, the CEE Bankwatch Network, draws on years of experience supporting local transition projects primarily in Central and Eastern Europe.
Stępień calls for more EU support in ensuring budget security: “If the EU wants to create replicable and scalable climate-neutral projects, it has to have a more serious approach to supporting and funding them that takes into account the reality of what it means to develop such projects.”
Access to funding is another obstacle. While EU funds often contribute to these projects, municipalities also rely on national support schemes and local budgets.
That is something the mayor of Guimarães acknowledged. “We have some projects with EU funds and also some projects funded by the national government. But at the end of the day, the major part comes from the local budget,” Araújo said.
Even when funding options exist, municipalities often don't know about them or give up on applying because of complex administrative procedures. This is particularly difficult for smaller municipalities that lack the expertise and staff needed to deal with the application processes.
Many EU funds are also designed for large-scale projects, meaning smaller municipalities can only apply if they can collaborate with other towns.
Stępień said that her team faced struggles due to a lack of awareness and capacity in most of the municipalities they worked with across Central and Eastern Europe.
“They really would not have moved on developing the projects if we hadn't provided a lot of hands-on support and assistance, including providing technical analyses or helping to develop project proposals, business plans, and building their capacities and understanding of these issues.”
More structural support will be needed to bring more municipalities on board with the energy transition, Stępień believes. “At the end of the day, it's not only about money. You need to find municipalities that have the courage to try something new.”