Purpose of Review: Recent energy crises entailed more interest in local energy sources and development of energy communities. Energy communities have enormous potential to contribute to sustainable energy systems. Its deployment results in numerous challenges and opportunities from regulatory, economic, technical and social aspects. This paper aims at providing a comprehensive review of the energy communities’ conditions in Sweden and identifying barriers and incentives to promote them. Recent Findings: Regulatory authorities should develop frameworks incentivizing distribution system operators and energy communities to cooperate. Efficient cooperation will ensure unlocking flexibility potential from distributed energy resources to alleviate local grid needs. Summary: Despite the adopted legislation to promote energy communities, further regulatory support is still crucial to removing barriers in Sweden. The necessary measures for policymakers include 1) creating beneficiary conditions, 2) ensuring redesign of current markets to create fair conditions for all actors, 3) ensuring economic stability of energy communities by lowering taxes and grid fees.