The recast of the Renewable Energy Directive (RED II) provides an enabling framework for “Renewable Energy Communities” (RECs) that is being transposed into law by the 27 European Union Member States by June 2021. RECs are majority owned by local members or shareholders who are authorized to share energy within the community, offering the potential to unlock private investment and financing for renewable energy sources and provide social benefits. However, successful implementation and a just energy transition requires the coupling of technological solutions with more open decision making, based on sound analysis, knowledge of engineering, spatial planning, and social science. We argue that financing and ownership models that address renewable energy complementarity, spatial organization of resource potential, demographics, pushback from incumbents, and inclusion of traditionally marginalized groups, are common issues across all Member States that are crucial for the transposition of RED II and a just energy transition. This paper highlights the benefits and challenges of widespread development of RECs, and using examples from the pending transposition process provides policy advice for effective implementation of the RED II with respect to RECs.