= Renewable Energy Sources Cooperatives
- 1 Description
- 2 Typology
- 3 Discussion
- 4 Business Models
- 4.1 1. Business Model 1 : A group of local citizens
- 4.2 2. Business Model 2: Regional-National REScoop
- 4.3 3. Business Model 3: Fully integrated REScoop
- 4.4 4. Business Model 4: Network of REScoops
- 4.5 5. Business Model 5: Multi-Stakeholder governance model
- 4.6 6. Business Model 6: Non energy-focused organization
- 5 More Information
"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)
"The FINcoops, also called financing cooperatives, are situated in the middle between the REScoops and the commercial developers. They do offer financial participation to citizens, but this participation is limited.
There is no democratic participation, nor is their ownership of the citizens. The difference between FINcoops and REScoops might seem minimal at first sight, but there are some significant differences.
FINcoops are often cooperatives founded by the private developers. In order to become more acceptable and in an attempt to fulfill the criteria of citizen participation, big energy players applied the strategy to set up their own energy cooperatives. These cooperatives however do not adhere the 7 ICA-principles and have a different working ethic. They are mainly used as a vehicle by the mother firm for financing projects."
Municipal owned companies
"Sometimes municipalities choose to have their own company. Depending on the political vision, the degree in which citizens are involved varies. In the case of Växjö, local politics are transparent and there is open communication between politicians and citizens, only politicians can become board member of the energy company, but there is indirect democratic participation to some extent. In Germany, the municipal owned company called “Stadtwerke” is also a popular construction.
The benefits of this collaboration is that the municipality has more control over the allocation of profits and can control more the development of the energy transition. The municipality can speed up the implementation and can make sure it has all the expertise needed by hiring the right people. The disadvantages from this approach are that it requires financial resources to do this. This construction is susceptible to political changes and when a different political party gets to power, it can easily become privatized. Another threat is that a top down approach does not guarantee citizen ownership nor participation. Even if consultation sessions and an openness to receive citizen input are present, bottom-up initiatives can become integrated, but the control remains within the hands of politicians. When there is a lack of transparency in decision making and allocation of profits, this might result in citizens distrusting politicians. This approach does not foster the development of the commons as it is still based on the old paradigm where the state takes care of the commons.
The city of Leuven has an interesting approach in implementing their climate action plan, which leans more towards to commons approach. A non-profit organization, founded and driven by local citizens, takes the lead. The city facilitates this non-profit and provides a part of the financial resources. This organization takes the role of coordinating the energy transition and facilitates the collaboration between the different players: the city, energy cooperatives, other private players, public companies, etc. The city does not directly collaborates with cooperatives or other players, but becomes a partner in collaboration.
There is an increasing tendency for municipalities to focus on its core responsibilities, and to outsource other tasks. Municipalities want to have the service, while not having to provide the service themselves. For this, suitable partners need to be available. As municipalities are representing the common good, they need to find partners who share the vision; a partner who can be trusted it will serve the common good."
(see Policy Recommendations)
The role of REScoops
REScoops "provide both the financial resources and citizen engagement. Citizens are engaged through financial and democratic participation through the cooperative. Citizens become co-owner of the project, they can decide together how the profits are allocated. If the cooperative is also a supplier of energy, its members can even decide on the price of electricity.
In some cases external funding is less needed, this is the lower left quadrant. The REScoop develops a project, the municipality finances a percentage and becomes a co-owner of the project. This is the case in Dour, where the municipality owns 50% of a wind project.
The REScoop model promotes direct participation, making the members owners and customers of the project. At the same time members have a democratic participation in the decision making. Just like the democratic functioning of politics today, is the direct participation model the economic form of our political democracy. Everyone has a say and can put themselves as candidate for the board of members. The capital is funded by the citizens and members own the project. The members decide together on the price of energy, they share in the profits, and choose how these profits are allocated."
"REScoops can have a different business model, and this defines their way of working. A study conducted by REScoops Europe, mapping different cooperatives in Europe, categorized REScoops into 6 clusters according to their business model (Rescoop, 2012):
1. Business Model 1 : A group of local citizens
The cooperative is small and mainly runs on volunteers. It is a bottom-up approach as an answer to their identified need. They develop small local projects, mainly small hydro and solar. The financial capital mainly comes from the members.
2. Business Model 2: Regional-National REScoop
This model can arise when a local group of citizens scales-up and take on bigger projects. Or when an external actor gets different actors together. The focus here is to meet local needs as well as seizing an opportunity. Both volunteers and employees work on the projects. As the projects get bigger, they rely more on partnerships for financing the investments.
3. Business Model 3: Fully integrated REScoop
These REScoops integrate multiple services: generation, supply, distribution, and others services. Often these cooperatives are already operating for a long time and are able to function independently on the different dimensions of the energy sector.
4. Business Model 4: Network of REScoops
A REScoop can have the business model of incubating new local REScoops, by giving access to capital and expertise. By replicating their best practices they scale up the REScoop model. This approach makes advantage of the economies of scale.
5. Business Model 5: Multi-Stakeholder governance model
A governance structure that gathers all the relevant stakeholders in provision and consumption of renewable energy. It does not develop projects itself but gathers project developers, cooperatives, consumers and at the same time interacts with policy makers and authorities.
6. Business Model 6: Non energy-focused organization
Typically this form arises when local actors are not mainly concerned about the energy production. For example, a farmers cooperative who put on a wind turbine on their land, or an educational institution who has a community energy program as a side project."
(see Collaboration between Local Authorities and Renewable Energy Cooperatives)