In light of accelerating climate change transitioning the energy sector towards renewable energies is becoming ever more urgent. Niche experimentation has been advocated to play a crucial role in this transition. These niche experimentations happen at the local level, for example local energy communities, and are thus in an ideal position to bring citizens along. However, hopes that these local niche experiments would scale up, with citizens engaged everywhere, and reshape the wider regime have so far fallen short. All this points towards a knowledge gap of the interplay between the niche and regime level and how the governance structure influences this interplay and the larger transition process. To contribute to closing this gap, we address the following research question: How does the interplay between local niches and the wider polycentric governance system shape municipalities’ approaches around citizen engagement in local energy transitions in three municipalities in DK, NL, and PL? To answer this question, we compare embedded case studies, in three EU countries, Denmark, the Netherlands, and Poland that are part of the two EU Horizon 2020 projects SERENE and SUSTENANCE. To compare our cases, we developed a theoretical framework based on six key polycentric governance features that may influence citizen participation in local energy system transitions. We found that in our cases, the extent to which polycentric governance features were present within each case shaped the approaches to citizen engagement in the local energy transition and that municipalities use their discretion to implement overarching rules in ways that support niche activities, sometimes even subverting the regime and thus contributing to changing it in small ways.