Energy communities are key elements for local energy transitions, collectively generating, distributing and consuming energy, using renewable energy technologies. Thermal energy communities, as one type of energy community, are focused on thermal energy applications, such as heating, cooling, bathing, showering and providing hot tap water. As thermal energy applications and systems receive increasing academic and policy attention, there is a need to better understand the formation processes they undergo. In this study, various technical and institutional conditions are explored that influence thermal energy community formation processes by using an agent-based modelling approach. The results show that technology selection is not the most crucial and determining factor for the success of thermal energy communities, yet the surrounding institutional conditions are. Key factors that influence these formation processes pertain to providing training, so that the thermal energy community leaders become more skilled, and allocating subsidies based on the projects’ degree of environmental friendliness. For all stakeholders, finding the balance between all of the decision-making criteria is key to success. The results are useful for practitioners - and especially for policy makers - to develop more impactful policies and strategies to support the expansion of local thermal energy communities.@en