Self-organization has been previously coined as a concept that describes the shifting relationships between citizen groups and institutional stakeholders in various fields, including sustainability and energy transitions. Yet, little has been known about what exactly the transformative power of self-organization is. The present article discusses processes of self-organization associated with small-scale, decentralized energy projects, such as local energy initiatives. By building on prior literature on energy initiatives, self-organization, and niche-regime interaction, attention is given to the mutually reinforcing relationship between local initiatives and the institutional context in which this relationship is situated. In analyzing the relationship between the internal aspects of the initiatives and their institutional arrangements, this article suggests that the processes of self-organization facilitate socio-institutional practices that are observable not only within the initiatives but also traceable in wider institutional contexts. These socio-institutional practices are essential for a better understanding of the interface between the citizen-driven energy projects and local governance. The analysis further supports the idea that processes of self-organization, along with market-led and state-led mechanism, underpin innovative and pragmatic pathways which could enhance the energy transition towards a carbon neutral future.