Energy Cooperatives

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Description

Simon Luyts:

"Energy cooperatives, also called REScoops (Renewable Energy Sources Cooperatives), are characterized by their cooperative business model. Sharing the cooperative values, it means that citizens are involved in both the decision making and financial & economical participation. A renewable energy cooperative’s main characteristic is not its legal statute, but rather a way of doing business by creating value to the community. A cooperative is defined as “an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly owned and democratically- controlled enterprise”, (UN, 2012) and is characterized by the 7 ICA-principles (Coopkracht), formed by the International Cooperative Alliance. It is their guide to ethical entrepreneurship." (see Collaboration between Local Authorities and Renewable Energy Cooperatives)

Characteristics

""First, the self-supply of energy and the opportunity to generate extra revenue (after an initial investment) allows marginalized social groups to strengthen their economic autonomy vis-a-vis the government and energy suppliers. In addition, the organization as energy communities with joint economic resources strengthens their position on the market and thus creates greater equality in terms of economic power, thus attenuating the feeling of powerlessness vis-à-vis the big energy companies. This obviates the need to confront elites, and allows the diversion of energy into more politically and economically effective activities.

Secondly, energy cooperatives can recreate group identities and communities. Communities, as Bauman says, is a word with a certain feel, conjuring up a feeling of warmth, belonging and comfort, in other words, something positive. By adhering to certain group norms and actively engaging in community business (jointly investing into installations, participating in members' assemblies, recruiting new members, and more), members benefit not only from the protection of joint resources but also from the development of trust and social cohesion.

Thirdly, the internal procedures of energy cooperatives are often strongly democratic, at times developing novel forms of participation. This is important because it provides members of the cooperative an example of the challenges and benefits of democratic procedures, not to mention a realization of empowerment." (http://www.globalpolicyjournal.com/blog/05/05/2017/fighting-populism-energy-politics-%E2%80%93-energy-cooperatives-europe)

Examples

Member-owned energy supplier in Vermont.
Offers practical solutions for bringing top-quality fuel products to market.
Aims to deliver renewable energy to Greater Manchester in the United Kingdom.
"twelve organisations in seven European countries (Belgium, Denmark, UK, France, Germany, Italy, and the Netherlands) having joined our forces in REScoop 20-20-20. Coming from various backgrounds (renewable energy cooperatives, federations of REScoops and coops, local energy agencies, academic partners, and sustainability agencies), we all share a work experience related to renewable energy sources and cooperatives, and a tenacious desire to speed up local and citizen-led renewable energy projects across Europe."

History

Extracts from the report: The energy transition to energy democracy. Power to the people. Final results oriented report of the REScoop 20-20-20 Intelligent Energy Europe project. By Dirk Vansintjan.

"Looking back over the past century, we see numerous examples of people working together in difficult circumstances or in response to a crisis, also for providing energy.

We have already described how rural and remote areas with large distances between scarce residents and businesses could not count on the interest of private investors: there was no profit to be made. The same also occurred in the United States. In Europe, World War I destroyed not only the dreams of millions of people, but also much infrastructure.

The world economy declined substantially from 1929, and private investors were scarce or very cautious. In the first decades of the 20th century, we see local governments or cooperatives of citizens filling in the electricity supply gaps throughout Europe. Also in Germany.

Wave of electricity cooperatives in Germany after WWI

Interestingly, Germany not only experienced a wave of hundreds of new energy cooperatives in the past decade, but already in the first decades of the 20th century there was a veritable tidal wave of ‘electricity cooperatives’.

One of the surviving German electricity cooperatives is EGR: Elektrizitätsgenossenschaft Röthenbach. Founded in 1918 and still active. (www.eg-roethenbach.de)


A thorough study from 2012 28 shows that between 1895 and 1932, no less than 6.000 electricity cooperatives were created in Germany. They were mostly operators of their own electricity grid in rural areas. Note that the growth occurred mainly in the difficult years after the end of World War I: 1918-1925. Their number has steadily decreased since 1930 to around 50 today.

According to this study, this is due primarily to the following:

  • Intensive concentration under pressure from the Nazi regime in the 1930s;
  • Forced stoppages;
  • Change of legal status;
  • Dissolution because of diseconomies of scale, particularly financing problems
  • Nationalisation in the GDR and Poland after World War II;
  • Concentration in the Federal Republic of Germany after World War II;
  • Liberalisation of the energy market and increased bureaucracy due to legislation on renewable energy and distribution networks.

Between 1895 and 1932 no less than 6.000 electricity cooperatives were created in Germany. For many reasons, only about 50 are still in existence.

The rise of wind cooperatives after the 1973 oil crisis

The 1973 oil crisis was caused by a decision of the Arab oil-producing countries in OPEC to raise prices by 70%, scale back production each month by 5%, and boycott the sale of oil to a number of Western countries that had supported Israel in the Yom Kippur War.

This made it painfully clear to the people of Europe how dependent they had become on oil imports. Car-free Sundays and schools without heating left a deep impression on several generations. From then on, alternatives and diversification were sought. Renewable energy became a political issue and an area of scientific research.

But citizens too went to work. Enthusiastic do it yourself builders constructed their first wind turbines in the Netherlands, Belgium, Germany, Denmark… Associations of self-builders were established such as the Energofielen in Belgium and the Windmolengroep in Amsterdam.

From these first initiatives emerged the first wind cooperatives in the 1980s in Denmark and later in the Netherlands and Germany: citizens working together to install and operate ever-larger wind turbines. And professional manufacturers of wind turbine technology followed.

The most impressive example of what citizens could do together was given by the Danes. In the Danish town of Ulfborg, on grounds belonging to the Tvind school centre, from 29 May 1975 more than 400 people worked together for 3 years to build the (then) largest wind turbine in the world: Tvindkraft. This wind turbine is still running today and continues to attract visitors. Tvind was so groundbreaking that the full story deserves a place here.

...

The world has since seen an explosion in the number of really big wind turbines in many countries. The Windmill Team was the group of people who built the windmill. It consisted of some teachers from the schools at Tvind together with different people from all over the country and from abroad, who had come to build the windmill. They all worked under the same conditions. They did not receive a salary, but board and lodging and pocket money. Some of the students joined in from time to time.

The building of Tvindkraft served from the outset several purposes:

  • to produce the energy needed for the schools in Tvind;
  • to be a very solid argument in the popular debate at the time for and against introduction of nuclear power;
  • to show the strength and the power of people who have come together to work together to build Tvindkraft – the power of self-reliance;
  • to show that the power from the wind in the long perspective will be rather cheap, because the wind cannot be monopolised.

Hundreds of people cooperated to carry out the wing. The entire windmill was built by teachers at the schools in Tvind, with different people from all over the country and from abroad. (Tvindkraft)

The rise of energy cooperatives after the Chernobyl nuclear disaster in 1986

The nuclear disaster in Chernobyl (Ukraine) served as a wakeup call for many citizens and caused them to act. This new wave of citizen initiatives sometimes led to the creation of REScoops, like Ecopower (1991, Belgium) and EWS (1991, Germany).


The story of ElektrizitätsWerke Schonau

German Netzkauf EWS eG (ElektrizitatsWerke Schonau, EWS) was established as a GbR in 1991 and transformed to a cooperative in 2009. As of 2015, they have 2000 members and their REScoop invests in all renewably energy sources. This story starts with their attempts to buy the local grid.

When ElektrizitätsWerke Schonau (EWS) decided to buy the grid in 1991, the energy market was not yet liberalised and financial support systems were absent. EWS purchased the grid in order to reorganise it according to sound ecological principles. To transform the grid and energy production, EWS encouraged citizens to install renewable energy production units by facilitating their connection to the grid and by paying special feed-in tariffs. Presently the energy produced by citizens is exported to the grid and the citizens are compensated via the German Renewable Energy Act (EEG). EWS proves that by taking the grid and the sale of energy into your own hands, you can change the business model to suit the needs of members. It also demonstrates the resilience of REScoops and their strength: social power, the power of volunteers contributing their expertise for free.


Grid operator not interested in energy saving campaign

In 1987, ‘Parents for a nuclear-free future’ began organising energy saving contests. ‘The idea was to show that we can do without nuclear power by saving it ‘away’.’ They asked grid operator KWR, which had the contracts to run the grid from 1974 through 1994, for support. KWR was not interested: their policy was to sell electricity, not to save it. The group realised that operating the Schönau grid based on ecological principles would be impossible with KWR.

In 1990, four years before the permission contract was to end, KWR offered the Schönau town council a new permission contract that would extend to 2014: KWR would pay 25,000 DM to Schönau to sign the contract, with a total contract value of 100,000 DM.

In an effort to prevent a new contract with the grid company, the citizens’ initiative founded Netzkauf Schönau GbR to compete with KWR. 282 citizens of Schönau made a counteroffer to the town council of 100,000 DM to not sign the contract. Despite the offer, the council extended the contract with KWR. In July 1991, the citizens’ initiative called for a referendum to rescind the decision: the referendum took place on 27 October 1991 and the citizen’s initiative won with 55% of the votes.

The citizens’ initiative had bought itself four years’ time for 100,000 DM, four years they would need to develop a company capable of operating the grid. Fortunately, the German media picked up on the activities of the ‘electricity rebels’ in the rural Black Forest. After winning the first referendum, many energy experts from throughout Germany contacted the citizen’s initiative to offer their help. By 1994 all the necessary documents had been prepared and Elektrizitätswerke Schönau GmbH (EWS) was founded, with the new company being granted permission to take over the grid just four days before the deadline. But now opponents in the town to the new arrangement called for a second referendum, to be held in March 1996. A very intensive campaign was conducted during the four weeks prior to the referendum date. Local industry warned the inhabitants of Schönau of unaffordable energy costs; the members of the citizens’ initiative made home visits to every inhabitant. Schönau was divided into opponents and proponents. On 10 March 1996 more than 80% of all citizens of Schönau voted, and EWS again won the second referendum with 52.5% of the votes.


Support from all over Germany

While EWS was now authorised to operate the Schönau electricity grid, the grid itself was still owned by KWR. According to German law, KWR had to sell the grid to EWS. The price of the grid was estimated at approximately 4 Million DM, a price EWS could afford. However, KWR asked 8.7 Million DM, which presented EWS with two problems. ‘We knew the price was excessive, but going to court to determine the right price would take years, which we could not survive as a group.’ So they decided to pay the price under the reservation of pending court proceedings. They still needed around about 4.7 Million DM extra to buy the grid, money that could not be brought in as shares due to the economic viability it had to guarantee as a grid operator. The additional money could only be brought in as donations.

EWS wrote to the 50 largest marketing agencies in Germany and requested a free donation campaign. 15 agencies were interested. The chosen agency created the ‘Störfall’ campaign for EWS. Störfall refers to a technical incident or disturbance that creates a failure or change in the normal operation of a technical system. In relation to nuclear energy, a Störfall is sequence of incidents. When a Störfall takes place, the nuclear plant must be shut down for safety reasons. The campaign showed a picture of the members of EWS saying ‘Ich bin ein Störfall’, or ‘I am a disturbance.’

Thanks to this campaign, support was received from throughout Germany, and after 6 weeks, the first two million DM had been donated. ‘KWR then became worried, since it knew about the impending court proceedings and that their price wasn’t realistic.’ KWR offered the grid for 5.7 million DM, and EWS accepted. On 1 July 1997 it took over the Schönau electricity grid. EWS still went to court in 1998, and in 2004 the court ruled that the Schönau electricity grid was worth 3.7 million DM.

EWS continued to expand after this initial success, and is now also the proud owner of the gas network in Schönau and Wembach. In the following years, grids in eight neighbouring villages were also bought.

At the middle of 2014, EWS was providing electricity that they buy on the European markets to about 150,000 households. They currently own various installations that produce about 1% of the energy they provide.


A business model that fits demand

The EWS story demonstrates that by taking matters in their own hands, REScoops can develop new business models that suit the needs of their members and the ideals of their organisation. The EWS pioneers wished to focus on saving energy and the production of renewable energy. In the 1990s, energy producers were strongly dependent on grid operators. There was no German Renewable Energy Act (EEG) with its fundamental aspects of a guarantee of bringing the energy to the grid and a guaranteed feed-in tariff. Before liberalisation in 1998, grid operators could refuse to accept energy into their grid; and if they were willing to take the energy, they could dictate the price. There was no security for the kind of investments EWS had to make.

‘So this was one of our major aims: as the grid operator for Schönau, we wanted to make it possible for every citizen to produce energy. And we wished to cover the investments made by citizens by paying guaranteed feed-in tariffs. The two main aspects of the EEG mentioned above (which came only in 2000) had already been realised in Schönau in 1998.’

Another reason to purchase the grid was the tariff arrangement. Previously, the more people consumed, the lower the price. To deal with this problem, EWS changed the tariff structure for their consumers. There would be no monthly cost, but high prices per kWh. This gave consumers a financial incentive to save energy.


Bureaucracy and regulations

The biggest hurdles EWS had to clear were bureaucracy and regulations. As a local citizens’ initiative, it was not yet aware of the necessary regulations. Thanks to the help of many volunteers from throughout Germany, it persevered. While this was a success at the time, ‘the EU and the German government are now moving in the opposite direction. There are more than 900 grid operators in Germany, including some very small ones like EWS. The EU has been asking Germany for years to minimise the number of grid operators in its energy market. Which is why the German regulatory agency, the Bundesnetzagentur, has been increasingly expanding the bureaucracy required by grid operators.’ Many small grid operators have been forced to give up because they were financially unable to fulfil these requirements. ‘Bureaucracy is the major enemy of small grid operators, and at the moment this hurdle is only becoming bigger.’ (https://rescoop.eu/system/files/REScoop%20Energy%20Transition%20to%20Energy%20Democracy%20-%20English.pdf)


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