Testing Europe’s positive energy future in neighbourhood ‘labs’

The cities of Genk, Pamplona and Tartu are leading Europe’s inclusive energy transition through first-of-a-kind pilots for ‘positive energy neighbourhoods’ – areas that produce more renewable energy than they consume, while making energy more affordable and available to all. Supported by Bax & Company alongside 31 European partners, the oPEN Lab initiative is Europe’s leading effort to combine innovative finance for efficient energy renovations with local renewable generation.

Our collaborators on this initiative: The cities of Tartu, Genk and Pamplona, VITO and 28 others

Where Europe’s energy future is being tested

At first inspection, there seems to be little connection between a yellow Soviet-era apartment block in Tartu, Estonia, an unassuming low-rise suburb in Genk, Belgium, and a red-roofed district in Pamplona, Spain. 

But these three sites have been united as testing grounds, or “Living Labs”, for Europe’s vision for positive energy neighbourhoods (PENs) – residential areas that produce more renewable energy than they consume, powering warmer houses and lower bills. 

Through the Horizon 2020 project oPEN Lab, these laboratories are testing innovative ways to deliver renewables and renovation all in one go – boosting green production and reducing energy needs to go ‘energy positive’.  

With over €100m in funding mobilised, including €20m of support from the European Commission, the initiative aims to rapidly test the business, policy and organisational setups that will make scaling positive energy neighbourhoods (PENs) possible. 

Supported by Bax & Company, alongside more than 30 industry partners, these Living Labs are ground zero in Europe’s understanding of how the Green New Deal will change how we heat and light our homes. 


Why Positive Energy Neighbourhoods are the future

JPI Europe, who have set the framework for PENs in 20 members states, define a positive energy neighbourhood (PEN) or positive energy district (PED) as an:

energy-efficient and energy-flexible urban areas or groups of connected buildings which produce net zero greenhouse gas emissions and actively manage an annual local or regional surplus production of renewable energy. 

Put simply, a PEN is a neighbourhood that produces more green energy than it consumes. It flexibly shares energy amongst buildings based on their daily energy profile, and emits almost no greenhouse gas. The renovation materials also aim to be zero-embodied carbon, built from regenerative plant materials such as miscantus.

PENs are also socially ‘positive’. Blocking a wintery draft or paying less for your energy bills improves the livability of homes. At a time when almost 1 in 10 Europeans are struggling to heat their homes, PENs could offer significant improvements in quality of life during the cold months.

oPEN Lab is also investigating new ways to pay for these improvements, reducing barriers for the most vulnerable tenants to benefit from energy efficient insulation, solar panels, and battery storage. 

The challenge for PENs

Against the backdrop of European energy supply disruption, more visible climate change, and soaring energy bills, it’s easy to see why the European Commission aims to see 100 PENs established by 2025.

But while the concept is straightforward, setting up a working PENs still requires innovation. As of yet, there is no way to organise and finance the ambitious aims of a PEN, which often involves dozens of organisations making complex agreements. Making green energy plentiful and useful across an entire neighbourhood demands a level of coordination in energy and money flows not yet reliably available anywhere.

“Who pays, who controls, and who maintains are still open questions when it comes to PENs. We need tried-and-tested models before the EU can scale up its residential green energy ambitions.” said Rolf Bastiaansen, Lead for Local Energy Systems.

“PENs make sense for energy security and community resilience. What is missing is a blueprint business model and scalable organisational setups to make PENs work for citizens across Europe.”

Differing definitions mean there is no clear answer to how many PENs currently operate in Europe. But however you count, there is agreement across the continent that what is missing is a scalable, replicable, and adaptable approach for PENs suitable for Europe’s diverse urban areas.

Take a tour of Europe’s residential energy future

PENs have been theoretically outlined by the JPI Urban Europe, and now need testing in real-world conditions. The cities of Tartu, Genk and Pamplona have taken up the lead in Europe, testing the PEN concept in a live environment. 

Each one of these ‘Living Labs work closely with local residents and tenants associations, ensuring that the end users of green energy are satisfied by the setup.


Tartu, Estonia

The first living laboratory in Estonia is the Annelinn+ project, which is converting three medium-rise residential buildings into near-zero energy buildings. This will involve:

  • A combination of solar panels and batteries on-site
  • Automated energy management for homes
  • State-of-the-art renovation methods to reduce energy needs by 50%

This transformation will be carried out in collaboration with apartment associations, crafting a comfortable, modern living environment that improves livable whilst also securing green energy.

Estonia aims to become energy independent from neighbouring Russia by 2025. Local, resilient energy neighbourhoods will be central to this policy. 

Learn more about Tartu’s PEN here.

Credit: oPEN Lab

Pamplona, Spain

Pamplona is building a PEN as part of a large-scale urban regeneration project. The 30,000m2 former industrial estate IWER will be renovated to meet PEN standards, with one of its largest consumption sources – EV charging points – powered by solar panels on IWER’s roof. 

The site’s new nursing home, offices, and shops will also explore an energy community model to collectively buy and share energy at reduced prices. To support their goals, Bax & Company is helping the newly forming community to evaluate whether an energy service company (ESCo) could deliver the setup and maintenance of this new PEN. 

The city is also overseeing comprehensive energy renovations for 12 social housing units in San Pedro for vulnerable tenants, including the installation of solar panels, modifying building roofs, new HVAC systems, and integration of energy storage solutions.

Here, Bax & Company are investigating a “One Stop Shop” business model, in which a central organisation brings together all relevant parties to set up the PEN.

Learn more about Pamplona’s PENs here.

Credits: Nieuw Dak

Genk, Belgium

The Living Lab in Genk aims to improve energy efficiency and communal cohesion through its PEN. In the neighborhoods of Waterschei and Nieuw Texas, Genk is working closely with 30 tenants to test innovative renovation techniques and services, customised to tenant needs. 

Once finalised, these designs will offer tenants a menu of renovation options that avoid a one-size-fits-all approach. 

This is particularly important for tenants with minimal energy use. For these homes, renovation often doesn’t make financial sense, simply because they don’t use enough energy. Instead, Genk will consider new ways to make renovation financially attractive, such as new income streams for tenants who renovate.

Learn more about Genk’s PEN here.

Creating oPEN Labs for Europe’s green energy future


The living laboratories of Pamplona, Tartu and Genk are funded and supported through the Horizon Europe oPEN Lab project. 

With €20m in funding from Horizon Europe, the alliance of 33 industry, private and public leaders is Europe’s leading effort to take neighbourhoods to net zero through positive energy neighbourhoods. Bax & Company were asked to join the collaboration to provide business model innovation support. 

The challenge of making PENs financially viable

“One of the biggest challenges to the Positive Energy Neighbourhood is deciding who pays and who runs it” said Dominic Stephen, Energy Innovation Consultant and lead for oPEN Lab. “Payback times are typically outside the horizon of a bank or private investor. And the coordination costs can be significant without a centralised partner”.

To support the project, Bax & Company’s Local Energy Systems team are supporting the development of new business models for PENs that make the pre-financing and operating of a PEN viable beyond municipally-run schemes.

“For now, it’s only forward thinking municipalities like Tartu, Genk and Pamplona who are willing to make the upfront investment for PENs.” said Thomas Gelauff, Energy Innovation Consultant. “But by working with industry leaders and applying the best models we see in Europe to conditions in the Living Labs, we aim to create models that brings closer to a commercial, and therefore scalable, reality” 


What next for Europe’s positive energy neighbourhoods?

The Living Labs are currently in the design and implementation phase, working with local residents to build renovation solutions, renewable energy programs, and business and finance models that work for them. 

The oPEN Lab project will continue until 2026, aiming to create a replicable blueprint to scale positive energy neighbourhoods across urban and suburban Europe. 

Bring a Positive Energy Neighbourhood to your city or region

If you’re interested in learning how your area could benefit from a Positive Energy Neighbourhood, get in contact with our Local Energy Systems team: