Municipal Buy-Back of Power Grid
"In Germany, local communities are buying back the grid by the hundreds, to make sure that they operate to the benefit of the customers, and to remove the single biggest impediment to the rollout of renewable energy and energy efficiency measures. In the US, the city of Boulder recently voted to do the same."
By Giles Parkinson:
"The first to do so in Germany was Schönau, a small village of 2,500 people in the Black Forest in the south-western corner of Germany. It’s a story worth telling, because it has become a famous battle, and many of the same issues, and the same arguments and fear campaigns, are emerging all over again – in Germany, Australia, the US and elsewhere – as the traditional energy operators seek to protect their investments against the growing impact of private ownership.
The story of Schönau, however, actually pre-dates the arrival of cheap domestic solar. Like much of the energy politics in Germany, nuclear is at the heart of what happened in Schönau.
It started soon after the Chernobyl disaster, which blew radioactive fallout across much of the country. “There was an atmosphere of helplessness, nobody knew what to do,” says Sebastian Sladek, now the managing director of Elektrizitätswerke Schönau (EWS), the local grid operator that is now owned by several thousand community members. “The police officers came to the market, collecting salads and vegetables and taking them away. There was no information. The citizens had no idea how to protect themselves.”
Sladek says fear and anger were the prime motivations to start a new project. At first it was symbolic. The local grid operator sourced around 40 per cent of its electricity needs from nuclear energy, and so a newly formed community group decided to try and use energy efficiency and energy savings to reduce the town’s consumption by a similar amount, and remove the need to buy any nuclear power.
They approached the local grid operator Kraftübertragungswerke Rheinfelden (KWR) for help, but didn’t get far. “They told us it was a crazy idea,” Sladek says. “They said ‘we want to sell electricity, not save it’. They said our ideas would ruin their business.” They threatened court action if the energy efficiency campaign continued.
The community group, which was led by Sladek’s parents, quickly concluded the grid operator was not interested in a new environmental focus, so they decided to do it themselves.
In Germany, local councils are responsible for operating the local distribution networks, and usually award a 20-year contract to a professional operator to do the job. KWR’s contract in Schönau was due for renewal in 1994, so in 1990 they came to town and offered the local council 100,000 Deutschmarks if they would sign an early renewal out to 2014.
It was obviously a bribe, and one that would be illegal now. But the Schönau citizens decided the only thing they could do was to respond in kind. So they created their own co-operative. Forty people got together, with their own assets, and decided to offer a similar sum to the council.
The council still wanted to accept the KWR offer, reasoning it was a big company, so the co-op insisted on a referendum. They won 55 per cent of the vote.
This, says Sladek, was when Schönau started to attract national attention. The media came to town and instantly found a hero: Sladek’s father, a local doctor and a big bellied man with a large beard, became the face of the project. (You can see interviews with Sladek and his father here).
But KWR was not ready to give up. They forced another referendum, and what followed was a period of intense campaigning that divided the conservative town of farmers and small business people right down the middle.
The biggest employer warned that handing the grid to a collective would cause prices to rise, the lights to go out, and would force industry to move and jobs to be lost. All the local businesses sided with KWR, the local butcher placed an ad in the paper announcing he was distancing himself from the views of his wife, who supported the Co-op. Meetings of sporting and other clubs were cancelled because of the divisions.
In the end EWS won again, with 52.5 per cent of the vote. The co-op had a mandate, but had to buy the grid back from KWR. Even though it was probably not worth more than 4 million DM, KWR demanded 8.7 million DM. It was a deliberate move, because either it would leave EWS without the capital to run the network, or would provoke a long-running court campaign that would favour the incumbent.
EWS then launched what might have been the first crowd-funding project in Germany. They raised 2 million DM in two weeks. KWR took fright, admitted they had made a “mistake” in their calculations and offered the grid for 5.7 million DM. EWS took it, and still took KWR to court, where it later got the price reduced to 3.5 million DM.
So, in July 1997, EWS started operating the local network. The co-operative is now owned by 3,500 people, it has bought the networks of eight neighbouring communities , as well as two local gas networks. It has buried all the wires, and now generates more than 35 per cent of its electricity needs during the week, more than 100 per cent on the weekends.
It has built more than one dozen local co-generation plants, and when the solar PV tariffs were introduced in 2000, it added an extra premium and by 2001 it was the solar capital of the country, with more PV per capita than anywhere else. Despite all this, its prices – around 26.75c/kWh, are at the lower end of German retail prices. Most notably, it is 10 per cent cheaper than the prices offered by KWR parent company EnBW, which still relies mostly on coal." (http://reneweconomy.com.au/2013/should-australian-towns-buy-back-their-grids-75269)
By Giles Parkinson:
"One intriguing result of the election included a referendum in the state of Hamburg to buy back the lower power grid from Vattenfall, and turn it into a local municipal-based public utility.
The proposal gained a majority, despite active campaigning and a lavish budget against it by most major parties, including the centre left SDP, which rules in the state, Merkel’s centre right CDU and the FDP.
As one observer noted: “Regardless of whether this will mean much in terms of promoting renewables (almost everyone agrees it doesn’t), it is a clear signal that citizens are favouring a publicly owned, decentralised energy system with a leading role of renewables.”
That could be critical because one of the biggest issues confronting a “grand alliance” between Merkel’s CDU and the SPD is reform of the Erneuerbare-Energien-Gesetz (EEG), the renewable energy act which for the past 13 years has underpinned the transition, which has so far reached a level of 23 per cent renewables.
The EEG surcharge in 2013 rose 47 per cent to 0.528c/kWh, about one fifth of electricity costs. That burden currently falls mostly on households, and Bloomberg New Energy Finance says a new Coalition would likely seek to remove some exemptions from businesses.
HSBC says that on energy, both parties essentially aim to increase the share of renewables in the electricity mix. However the conservatives want to keep exemptions (on taxation and grid fees) for energy-intensive manufacturing industries, while the SPD is aiming for lower electricity costs for private households and also wants to completely rework the renewables law (EEG).
Other analysts say that while both the CDU and SPF have strong ties to industrial lobbies, the local support for the Energiewende – as evidenced through the Hamburg vote – could be a powerful counterweight to big business lobby.
Hamburg is not the only city in Germany to want to buy back its grid. Berlin holds a similar vote next month, and nearly a dozen other municipalities have either voted for or are in the process of doing the same.
The states will be increasingly important in energy policy as many of the progressive states with a strong interest in local energy transition have greater power in second chamber of parliament, which is decisive for energy legislation.
Some analysts expect a new ministry of energy/energiewende to be created. This may help address some of the current tensions between the environment and economy ministries, but its direction will depend on who will lead it.
The Greens also polled poorly. Some are suggesting it was due to a poor strategic decision to downplay their core themes such as environment, energy, climate, and focus on tax hikes which they want to introduce to pay for better education.
Analysts at HSBC last week suggested that the election in Germany would be critical in unblocking domestic and European policies on renewables, carbon and efficiency." (http://reneweconomy.com.au/2013/germany-votes-for-energy-transition-and-to-buy-back-the-grid-50110)