Collaboration between Local Authorities and Renewable Energy Cooperatives

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* Master of Science Thesis: Creating Collaboration between Local Authorities and Renewable Energy Cooperatives. By Simon Luyts. 2017

URL = https://rescoop.eu/research-how-do-municipalities-work-rescoops

KTH School of Industrial Engineering and Management ; Energy Technology EGI-2017 ; SE-100 44 STOCKHOLM


Abstract

"Addressing climate change has become a major challenge. To keep the rise in temperature below 2°C, by 2050, the carbon emissions should be reduced to 80% of their levels compared to 1990. In order to achieve the targets, all levels of society need to be engaged. But even if the targets are realized, there is a real concern in how they are realized. The many crises, society is facing now, are a symptom of a failing world view. Fighting the symptoms without addressing the underlining causes is merely postponing the problem. Business as usual will not be sufficient to tackle the problem at the roots.

Everywhere in the world, local authorities commit themselves to undertake climate action but often lack the capacity to implement these changes. They need partners for successful collaboration. Renewable Energy Cooperatives (REScoops) are identified as a great potential partner to address these challenges.


This thesis addresses the following research questions:

1. What are the challenges local governments face in realizing their climate action commitment? And what do REScoops have to offer?

2. What are the challenges cooperatives are facing? And what can municipalities do to facilitate cooperative entrepreneurship?

3. What are successful examples of collaborations between local governments and REScoops and which factors made the collaboration successful?


Case studies are used to gather insights and resulted in recommendations for local authorities to facilitate future collaborations. Evidence from the case studies illustrates that cooperatives provide an ample opportunity to implement local authorities’ climate action plan through the implementation of Renewable Energy and Energy Efficiency projects, while generating multiple other benefits such as unburdening the local authorities’ administration but also addressing the wider context of engaging citizens in the energy transition, fostering a long term behavioral change and fostering positive impact on the local economy through their mission-oriented business. REScoops and municipalities have great potential in collaborating when vision is aligned and mutual benefits are clear. Local authorities can strengthen REScoops in achieving their shared goals in the energy transition in multiple ways, such as adding specific criteria in the call for tender, advocating the cooperative model, facilitate networking and others."


Contents

From the introduction, by Simon Luyts:

"The topic of this thesis is the collaboration between local authorities and energy cooperatives as a possible solution to face the challenge of climate change. This collaboration has the potential of integrating multiple aspects to mitigate the crises. It does not only address the need for more installed capacity of renewable energy and energy efficiency, but tries to address the systemic failures which lie at the root of the crises. Operating from a different world view, it focusses on behavior change of citizens, a social, mission-driven and responsible economy, and fosters active and responsible citizenship. These collaborations already exist, but are rather scarce. This thesis identifies some of these successful collaboration with the intention to give them visibility and learn from them for future collaborations.


The first chapter explains the background of the thesis, the context, and the relevance of the thesis.

The second chapter explains the methodology which is used to obtain the results.

A third chapter explains some of the crucial concepts and definitions to understand the context and the starting point out of which this thesis is written. The main topics highlighted in this chapter are “the commons” and “renewable energy cooperatives”.

Chapter 4 focusses on why local authorities should collaborate with REScoops, identifying the challenges which local authorities have, and how REScoops tackle these challenges.

The fifth chapter focusses on how this collaboration can take form and which actions local authorities can do to facilitate REScoops in achieving the shared goals.

Chapter 6 takes a closer look at the success factors of these collaborations.

The seventh chapter is the conclusion, summarizing the main findings, and the final chapter contains recommendations for the different stakeholders."


Excerpts

From the Conclusion

Simon Luyts:

"Conclusion

The current communication technology enables new forms of managing organizations. Simultaneously, the neoliberal worldview is challenged. Its urge to privatize, its lack of democratic citizen participation, and the creation of many negative externalities undermine society. Citizens, everywhere in the world, unite themselves to take more control over their lives. The current crises defy our world view. A new paradigm of the commons unfolds, where not only the government and the market, but also citizens play an active role. Matters which used to be in the hands of the government or the market, are now claimed by citizens, calling on their right of self-determination. Where citizens unite to take care of a common good, and set up rules to govern this common good together, “commons” are created. If sustainability wants to become a reality, structural changes are needed. Not only structural changes concerning infrastructure and technology, but also the underlying business models, mentality and worldview.

Cooperatives are a corner stone in the transition towards this new structure. Citizens, who organize themselves in energy cooperatives, try to set up a structure to govern renewable energy as a commons. It enables to govern this resource in a democratic and socially inclusive way. They operate out of a principle of collaboration between all stakeholders. It is an organization with a mission, instead of merely pursuing profit. Cooperatives contribute to a structural change in the economy by operating in the market while exposing it to a mission-driven approach where transparency and democratic participation are crucial. By inviting the state to pursue a more participative policy it also impacts politics. Cooperatives also have the potential to help municipalities in achieving their targets. The identified challenges municipalities are facing in implementing their climate action plan are: a way to finance the implementation of their climate action plan, a need for additional human capacity, and a need for public support and commitment of citizens to realize their action plans. There is a clear reason why local authorities should collaborate with the REScoops. The REScoop model is able to address these challenges: cooperatives have the capacity and their expertise is to engage citizens and make them participate in a sustainable energy transition. They have the manpower and knowledge available to develop the project and manage to finance these projects through engaged citizens. This citizen capital allows the local community to benefit from the investments, and allows citizens to participate democratically in the cooperative.


Three elements facilitate the collaboration between local authorities and REScoops:

(1) a political commitment to address the mitigation of climate change,

(2) a political willingness to engage citizens in a participatory process, and

(3) a long term vision, internally supported over different political parties.

These elements embody the political vision, which are important for the collaboration to bear optimal fruits. When these elements are part of the local authorities’ policies and management, the vision of both partners are aligned and the other success factors are likely to be present too. Then the municipality understands the benefits and significance of the cooperative model and there is a clear win-win situation. There is trust and respect. The municipality is easily convinced of the cooperative approach and feels comfortable taking some action and fulfil its part of the deal. This strengthens the collaboration and the state takes up its role as a partner of the citizens.

Arrived at this point, the local authorities are eager to facilitate cooperatives through different actions, as they see the benefits for themselves and society. Municipalities can facilitate cooperatives in overcoming these challenges and work towards a climate mitigation and the implementation in the energy action plan in multiple ways. One important way is by focusing on citizen participation in their Call for Tender. This way, not only price is taken into consideration, but also how the project is realized to benefit the local community. Another way is that local authorities can influence the legal framework by addressing the structural challenges (such as the private company approach, which excludes local participation and undermines public support for renewable energy) at higher government authorities. On private land, project developers don’t need to involve the local community. This can undermine the vision of local authorities and undermine the public support. By advocating a better legal framework, local authorities give guidelines to private projects, while advocating the cooperative model.

Local authorities can also advocate the cooperative models amongst citizens and other municipalities. They take on a networking role, connecting different projects, people and businesses with the cooperative. Another facilitating role of local authorities is the active support for starting cooperatives through subsidies, providing knowledge, advice, and reducing start-up costs.

To summarize, it seems that a partnership between energy cooperatives and local authorities has great potential. All the essential elements for a fruitful collaboration are available and have already led to some successful examples. Having these collaborations implemented at large scale would be a great contribution to achieve the EU’s climate targets and its implementation at local level. At the same time, this partnership uses this climate challenge as a leverage to unite different stakeholders (citizens, businesses, local authorities, etc.) and collaborates towards a common goal while fostering the development of a more just, social inclusive, democratic and responsible economy. The energy transition towards renewable energy sources will happen for sure. The question is however “How this transition is going to take place?” It is up to us to decide if we maintain the status quo with the business as usual, or do we create the conditions for a new, social, inclusive and responsible economy to rise, where citizens can reclaim ownership of the energy production and actively contribute to shape the society they live in."

Policy Recommendations


Flemish response to climate change: Policy Framework

The Sustainable development goals need to be implemented on national and regional policy level. A few of the main priorities for the long term vision is the energy transition, a safe and smooth mobility plan, and a circular economy. The Flemish government is implementing the SDG’s into their policy plans for 2030 and urges cities and municipalities to also implement the SDG’s into their local policy and management planning cycles (“Beheers- en beleidscyclus BBC”). Important therefore is to form new partnerships to implement these goals (Government, 2015). The SDG goals cannot be separated from each other since they cut across policy areas. The complexity demands a multi-actor governance, collaboration with knowledge institutions, NGO’s, citizens, business and financial institutions. The specific policy plans for implementing the SDG’s on the Flemish level are still under construction but should be done by June 2017. By 2019, after the new political elections at local level, all BBC’s should be synchronized with the SDG’s.

The document released by the Flemish government “Vision 2050” focusses on the SDG’s.

Also energy is one of the main topics (Ruebens). The objective is to have reduced the CO2 emissions by 85 – 90% compared to 1990. This means big investment in renewable energy production, the energy efficiency of buildings and clean mobility.

The main challenge is to find the capital to finance the big investments needed for energy networks, the renovation of buildings and the construction of new renewable energy production capacities. Important here is a strategic planning so that the gains from the low hanging fruits can be reinvested again in measures which do not pay themselves back so easily.

In Belgium, many cities have signed the Covenant of Mayors. The Flemish region played an important role in facilitating and financing the studies to set up the Sustainable Energy and Climate Action Plan (SECAP). The Flemish region also payed for the “baseline inventory” study for all the local municipalities, providing them with the necessary data to set up an action plan. However, the implementation is still a big struggle. There is a lack of knowledge, expertise and financial resources to implement this plan."


How local authorities can facilitate REScoops

Simon Luyts:

There are several actions local authorities can take to facilitate REScoops when collaborating.

In the case studies, the main way how municipalities have facilitated cooperatives is through creating a level playing field which allows to recognize the added value of the cooperative approach. Practically this was often done through adding specific criteria when setting up the Call for Tender procedure (CfT).

Convinced about the need for citizen participation in the journey towards sustainability, additional criteria complemented the conventional criteria of price. When price is the only criteria, automatically the big corporations and multinationals are favored. The price might be cheaper, but the profits generated will flow outside the country, the local contractors will not be employed, the local community is not be involved, and additional efforts will be needed to build up public support and participation. The negative side effects do not outweigh the benefit of simply having a cheaper price. By adding specific criteria, the local authority does not only control the price, but also other elements in how the project should be realized. In the three cases where this CfT procedure was implemented, there was a specific focus on how citizen would be informed and engaged in the project; a specific focus on direct financial citizen participation and additional benefits that would be offered to the community and citizens. These criteria are in line with the vision of the municipality, and are a powerful tool for municipalities to implement their vision. Additionally, the selection criteria also favor local authorities as it enables them to implement different outcomes with the same effort, unburdening the administration of local authorities.

Another way how local authorities can support the cooperative movement and change the policy framework is by referring structural legal and policy problems at a higher government level. This allows municipalities to expand their vision beyond projects located on public property. The CfT approach is only suitable on land owned by the municipality. On private property, project developers are not required to engage with the local community. When there is no connection between the project and the local community, and the profits generated in the region, are not benefiting the local community, it risks to undermine the public support for renewable energy projects. Therefore, municipalities can address this issue at higher authorities to implement more structural changes in the legal framework. In the Walloon region, local authorities and the cooperatives have managed to push forward a regional recommendation that the wind projects need to have 50% of community participation (25% by the citizens and 25% by the municipality) (Cadre de référence pour l'implantation des éoliennes en region Wallonne, 2013). In Flanders, Eeklo presented the problem to the province’s authority, stating that the current legal framework undermined the vision of the city and the public support. They stated that they supported the vision of citizen participation declared in the Walloon region, and asked if the province could not discuss on this issue and provide a new framework. This resulted in a decision at provincial level that at least 20% of each wind project should be available for direct citizen participation. On top of this €5000 per year per turbine should go to a community benefit fund to create a connection between the local community and the projects. Although these recommendations don’t have any legal power, they are democratically supported and do have a societal and ethical power. It is not recommended for a project developer to go against the decision of the municipalities. Non-cooperation would not lead to local sustainable development but to loss of public image. This is a very sensitive topic for the project developers since it undermines their image of being a social responsible business. On top of that, even though municipalities cannot fully block a project since the permits are granted on regional level, they have enough possibility to delay a process. Project developers know that it is bad practice to try to develop something against the vision of a municipality. For municipalities to stand one’s ground and not give in on the demands of the big firms, a strong political will is needed. With the pressure of reaching targets by 2030, the long term vision of keeping the benefits into the hands of the citizens, might get blurred. Project developers know that delaying projects does not help reaching the targets, and use this pressure for the government to compromise their vision. However, once a permission is granted, the right to exploit that specific site is permanent. And thus, if a project is developed without citizen participation, it will be very difficult to reverse that process. The profit that could serve the future generations will forever get lost. This is a reason why cooperatives persist in the urgency of community energy projects, before the private corporations have privatized all potential exploitation sites. From a legal point of view, it would be possible to make implement the “wind right”. This means that in order to be able to exploit wind energy at a certain site, the developer needs to own the “wind right”. This right is only granted when a specific number of socio-economic aspects are respected (Willems, 2016). This would also lead to more public acceptance of wind energy in general, and thus a faster development of the projects.

Another way how to shape a more favorable framework for cooperatives is consulting cooperatives to get advice and reflection when new policies are to be implemented. From their perspective, they can add to the overall vision to ensure the common good. In the city of Oostende, the cooperative BeauVent is collaborating to install a district heating network. The city planners asked the cooperative for advice on which building regulation and guidelines they should implement to facilitate the connection to this district heating. Also the Flemish minister of Energy regularly meets with energy cooperatives to get their perspective on new energy policy proposals.

Eeklo is also an example of advocating the cooperative model to other municipalities. As they had a very successful first experience with Ecopower, they recommended this approach to other municipalities. Also to citizens, the cooperative model can be put in the spotlight, through promotion or inauguration at big events (cfr. Lochem). This has helped to spread the visibility and reputation of the cooperative model.

Municipalities facilitate cooperatives through networking and communication. As a city knows what is going on in its region, it can facilitate potential partners to find each other. This can be either through an online platform, where local businesses and citizens can communicate and find each other, or in person. For communication and awareness raising, they put their communication channels (website, newsletters, local newspaper, mailing list, etc.) at the disposition of the cooperative to inform the citizens about a new project. Besides municipalities assist through offering meeting places or venues to reach out to the citizens and communicate. In the case of Pajopower, a shop in the main shopping street was made available to present the pop-up sensitization campaign “adopt your streetlamp”.

Starting cooperatives received additional support, as a way to facilitate their professionalization. The case of Ghent is an example where the city provides financial support for all citizen initiatives related to sustainability. It is a way to foster bottom up approaches and allows it to increase its impact. This financial support helps to pay part of the employee’s wage, facilitating the professionalization. Additionally the municipality can support these initiatives through assisting and facilitating the meetings, taking a networking role and connecting possible partners and projects as it is aware of what is moving around in the region. It can also provide some of its internal resources and expertise: for instance an energy scan (cfr. Ghent) or juridical and technical advice (cfr. Halle). Municipalities can outsource some small projects related to energy to the cooperative, and pay for this service as an additional revenue stream for the cooperative while it is professionalizing. Municipalities can cover some of the start-up costs, like construction of a website, or cover some of the transportation expenses of the volunteers. Allocating subsidies from the regional or national level in a creative way, can also support cooperatives (cfr. Lochem). Sometimes is it complicated for a city to openly support a cooperative, as it is a business. Collaborating and supporting a non-profit is politically more correct.

To conclude, if local authorities are convinced of the cooperative model, there are many things they can do to facilitate REScoops, while receiving multiple benefits. Cooperatives have the challenges of lacking access to land and projects, the lacking familiarity of the cooperative model in society, and smaller cooperatives also face a challenge in professionalizing. Municipalities facilitate cooperatives in focusing on citizen participation in their CfT to give cooperatives a competitive advantage. They advocate the cooperative models amongst citizens and other municipalities and take on a networking role. Municipalities also actively support starting cooperatives through subsidies, providing knowledge, advice, and reducing start-up costs. So far, Chapter 4 addressed research question 1 and answered why municipalities should collaborate with REScoops. Chapter 5, has addressed research question 2 and shoyted how local authorities can collaborate. Now different examples of different collaboration are explored to make it more tangible."


Examples / Cases

EnerGent

Simon Luyts:

"The collaboration in the case of Ghent emerged out of a citizen initiative. The city was not actively looking for a partner in the energy transition, but the city has a strong culture of engaging citizens and fostering a bottom-up approach. When EnerGent proposed to contribute and complement the service the city already provides, they were seen as welcome partners. The city has already its own energy service: the “Energiecentrale”. This is a contact point for citizens to address all the questions concerning energy efficient renovation. Citizens can get a free energy audit of the house and get advice on which measures to implement. Additionally, EnerGent launched the project “Wijkwerf” (Neighborhood construction site), an initiative to facilitate the combined renovation of private houses by engaging a whole neighborhood. This project is facilitated by the city of Ghent in two ways. This first one is through technical advice: the city’s “Energiecentrale” has already the technical expertise and is freely available for its citizens. Energent uses this service, and complements it with a full support in the renovation process. Another way the city supports Energent is through subsidizing a part of the full time employee’s wage. This subsidy is part of the city’s support program for citizen initiatives which promote sustainability. Additionally, the city of Ghent facilitates the startup of the cooperative by providing a place for the cooperative to organize its meetings. The service the cooperative provides in return, is addressing a neighborhood and engaging the people to do a renovation together. This way they take advantage of better prices and are facilitated by the cooperative along the renovation process. The cooperative goes from door to door to talk to the people, and communicates the message on a very personal level. The cooperative also supports the mission of the city to become climate neutral through their “solar city campaign”, facilitating the installation of PV on the roofs of citizens. The city facilitated this by providing a map with the solar potential of the rooftops in the city. Ghent also actively promotes the “solar city campaign” by using its networks, website, and spreads flyers to reach the citizens.

Another way how the city of Ghent facilitated the cooperative is through the project “Buurzame Stroom”. It is a project which emerged out of “sustainable neighborhoods”, a support program the city initiated to encourage citizen initiatives focusing on sustainability. The project consists of balancing out the energy consumption on neighborhood level, through generation of electricity (solar PV and Cogeneration), energy storage (heat, cold, and electricity), Electric Vehicles, demand side management and demand response management to minimize the impact on the distribution network. The Cooperative was invited by the city to become a partner in the project. The city finances part of the project, assists and organizes some of meetings, and she has a networking role, connecting the different players needed to compose the consortium. The electric vehicles are provided by another cooperative Partago, an electrical car sharing cooperative. Partago works closely together with other REScoops and mobility cooperatives over Europe, such as SOM mobilitat. This too is a citizen initiative providing an answer to the challenge of clean mobility.

...

Ghent benefited from the collaboration in several ways. The lack of public support was partly countered by the cooperative as it is an additional channel to reach out to citizens. Secondly, the neighborhood approach can reach out to people who otherwise would be left out. Also the cooperative was considered as a tool to increase the public support of the city’s policy.

In addressing the lack of capacity, a labor intensive work, which could not be done by the city, is performed through active volunteers of the cooperative. Also these people helped in implementing the city’s climate action-plan through the campaign “Ghent Solar City”, which installs PV on private households and through the renovation of private households.

Energent on the other hand benefited by having an employee’s wage partly subsidized by the city. Also the operational costs were reduced as they have free access to a room to organize meetings. This facilitated their professionalization.

The lack of familiarity of the cooperative model is addressed through the city’s support in the communication of their campaign “Ghent Solar City”. Finally, the city supported the cooperative through networking and connecting with potential partners as the city has an overview of what projects happen in their region."

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