Energy in the hands of citizens. An example from Germany | Heinrich Böll Stiftung

ARTICLE

Community energy refers to informal or formal collective schemes through which local communities play an essential role and become producers-consumers, as well as owners of RES projects, energy saving activities, electromobility schemes, etc. In these schemes, in addition to citizens, small and medium-sized businesses, as well as local governments, are usually involved.

Introduction

The energy sector is undergoing a multilevel transition in three key aspects with significant environmental and social implications.

From fossil fuels to renewable energy

There is a growing international willingness to put fossil fuels behind and reduce CO2 emissions and as a result many countries have already started switching to renewable energy. In the case of Germany, we can see that the foundations of the energy transition were laid in the 1970s, partly as a result of the 1973 oil crisis.

From passive consumers to active consumers-producers

A second aspect relates to social innovation, the democratization of the energy system through direct citizen participation and the socio-political and economic implications of this transformation. Citizens, from passive consumers transform to consumers-producers, become involved in decision-making and the energy system gradually becomes more decentralized.

From the individual to the collective

A third aspect concerns the development and enhancement of collective schemes through which local communities have the opportunity to participate collectively and directly in the energy system. Examples of such models are energy cooperatives.

Conditions and Policies

The aforementioned trends can be identified in a growing number of treaties, agreements, laws, strategies and policies.

At a global level

In December 2015 in Paris (COP21), governments of 195 countries agreed to the goal of limiting the increase of the global average surface temperature below 2°C – compared to the pre-industrial era – in order to mitigate the most dangerous effects of climate change. They further agreed to empower societies to address the impacts of climate change and to provide international support to countries of the Global South.

At a European level

The “Clean Energy for All Europeans” package was launched in 2016, which includes new strategies, policies and guidelines aimed at improving energy efficiency, promoting renewable energy sources (RES) and enhancing the role of consumers and citizens. Two new complementary directives (renewable energy directive REDII and electricity market directive EMDII) further strengthen the consumer’s role and encourage the promotion and development of collective energy schemes.

In Germany

The energy transition in Germany was strengthened in 2010 with a package of policies, strategies and guidelines known as "Energiewende". It is the country's transition plan to an energy system that is environmentally sustainable, low polluting, economic and reliable. The new system will be based on renewable energy sources, increased energy efficiency and smart management systems.

Community Energy: The involvement of citizens and local communities

All policies and strategies gradually recognize the need for a transition to RES, a democratization of the energy system and the multiple benefits of directly engaging citizens in production, saving, distribution, management and participation in decision-making processes.

A new paradigm

These collective schemes mainly use their financial surplus as a tool to meet members' energy needs, the progress of local communities and the protection of the environment.

In contrast, the dominant economic model of energy puts economic profit over human needs, the society and the environment. In many cases these corporations risk resources to achieve short-term profits, but are usually unprepared to take responsibility for the potential economic, environmental and social consequences in case of failure. In addition, they usually lack any organic relationship with local communities and often become associated with them only when economic benefits arise. An analysis of the United Nations International Labor Office (ILO, 2015) on cooperative enterprises and a series of reports by the International Cooperative Alliance (ICA) provide relevant evidence and data.

History of community energy in Germany

Already in the early decades of the 20th century, energy cooperatives were created in Germany, becoming the main agents of Community Energy. From 1895 to 1932, more than 6,000 electric power cooperatives were established and their main activity was the management of the electricity networks. It is noteworthy that the peak of their activities took place in the difficult years 1918-1925, after the end of the First World War.

From 1932 they began to decline in number due to many factors. Among them were the increasing and intensifying centralization, the change of the institutional environment and economic difficulties.

EGR was one of the first electric power cooperatives: Elektrizitätsgenossenschaft Röthenbach. It was established in 1918 and is still active.

The development of wind power cooperatives after the 1973 oil crisis

The 1973 oil crisis stemmed from the decision of the Arab oil producing countries of the Organization of the Petroleum Exporting Countries (OPEC) to increase prices by 70%, cut production and stop exports to countries of the western world that backed Israel during the Yom Kippur war.

This led Europeans to realize how dependent they were on petroleum imports. The result was that the issue of renewable energies entered the political dialogue and started to constitute a new research field. At the same time, citizens at a collective level began to build and install wind turbines in the Netherlands, Belgium, Denmark and Germany.

The development of Energy Cooperatives after the Chernobyl disaster in 1986

The Chernobyl nuclear disaster led many citizens to take action through the creation of renewable energy cooperatives. Notable examples were the Ecopower in 1991 in Belgium and the EWS in Germany the same year.

Community Energy in Germany today

Buergerenergie (citizen energy) is a concept that describes the direct or indirect involvement of citizens. Direct participation is mainly realized through energy cooperatives and collectively owned photovoltaic parks. Indirect participation takes the form of the community share-holding model in photovoltaic parks, participatory initiatives of local municipalities, mutual funds, as well as informal projects and networks.

Energy cooperatives

Although there is a large range of legal forms that community energy schemes take, the most popular legal form is energy cooperatives. These are democratic models where each member has one vote (no matter how many shares he or she holds). They are based on the seven cooperative principles as defined by the International Cooperative Alliance (ICA) and operate on the basis of cooperative values.

There are approximately 965 energy cooperatives in Germany, most of them established after 2010. This was partly a result of the Fukushima accident and the decision to de-nuclearize by 2022. At the same time the clean energy transition policies ("Energiewende") provided favorable conditions for RES, the development of which was supported by appropriate financial instruments and credit mechanisms

The DGRV / Deutscher Genossenschafts und Raiffeisenverband e.V

Energy cooperatives, and other types of cooperatives in Germany, are represented by the DGRV (German Cooperative and Raiffeisen Confederation / Deutscher Genossenschafts und Raiffeisenverband e.V).

Fields of activity

According to the latest data, about 60% of energy cooperatives operate in the field of photovoltaic parks, 31% in heating and biomass, 20% in wind energy, 15% in energy trading, 9% in biogas, 4% in hydroelectricity and 8% in consulting (note: The sum is greater than 100% because multiple activities are possible).

New activities include the provision of Internet services, car-sharing, electromobility as well as the construction and management of electricity networks.

Challenges

In recent years, electric energy cooperatives using RES have faced significant obstacles because of the loss of access to supportive financial instruments, due to new tendering processes that do not favor cooperative schemes, and due to a series of unfavorable legislative revisions in 2012, 2014 and 2017.

Number of new energy cooperatives in Germany 2008-2016

Activities

Among the activities that Community Energy collective schemes can develop are the storage of electric energy and its generation from RES available locally, such as wind, sun, biomass etc.

They can also offer their members services related to increased energy efficiency, energy saving and electromobility.

Electric energy cooperatives can also operate as electricity suppliers to their members, while also being able to create and manage their own community microgrids.

Particularly in Germany, the production and distribution of thermal and cooling energy by energy cooperatives to their members are particularly widespread.

Environmental and Social benefits

Both at national and global levels, community energy collective schemes create multiple social and environmental benefits, including:

Training and capacity building in saving and producing energy from RES. In addition, these schemes usually function as open schools and hubs of information and discussion on issues related to environmental protection and climate change.
Promotion of social cohesion at the local level as these schemes foster cooperation, both internally within members, and with other local businesses, and organizations.
Strengthening of social capital and trust. Full transparency of energy cooperatives and access of members to all data, processes and information, increases trust among members and also citizens' trust in structures and organizations such as energy cooperatives. These qualitative traits permeate the energy cooperative, diffuse into the local community and strengthen social bonds.
Change in the energy behavior of members and citizens. Comparative surveys and analyses show that citizens' behavior and attitudes towards energy saving and environmental issues improve when they become members of energy cooperatives. Participation in community action schemes contributes to individual and collective confidence, self-responsibility, independence and resilience. This is because citizens become responsible for meeting their energy needs, thus limiting their dependence on third parties (such as the state or private companies).
Enhancement of accessibility to energy. They ensure that energy and other services are provided to their members at affordable prices, while efforts to facilitate repayments are continuous so that no member feels excluded.
Fighting energy poverty through the support of vulnerable members, but also through their cooperation with Municipalities.
Social acceptance of RES projects is strengthened when citizens and local communities are actively involved in them, as experience from Germany and other countries shows.
Promotion of local development and fighting unemployment. Developing local power projects, instead of using fossil fuels which are usually coming from other countries, utilizes local resources leads to the creation of employment opportunities.

The multifaceted activities of community energy schemes, their organic relationship with the local community and their multidimensional involvement in environmental, economic and social issues as well as in democratic governance, reinforces a systemic approach and develops proper holistic tools that help address the multiple and interconnected social and environmental challenges of our time.

Best practices

Bioenergy village - the example of Jühnde

Jühnde's bioenergy cooperative supplies the village with heat generated in the cooperative's CHP (Combined Heat and Power) unit, which runs on biomass. At the same time, the cooperative has been operating a district heating network since 2005. More than 80 villages in Germany are now following its successful model.

ElektizitatsWerke Shonau (EWS), Germany

EWS Schonau was founded in 1991 by a local energy cooperative with the aim of acquiring the local electricity network. During this process, it faced multiple obstacles, reactions, lack of funds and inability to access credit. However, after a successful public fundraising campaign, it managed to raise the necessary funds to acquire the network in 1997. At a time when there were no supportive mechanisms for developing citizens’ consumer-consumption models (prosumers), EWS not only managed to supply its members with electricity, but also gave them the opportunity to sell power. EWS developed significantly and managed to also acquire the natural gas network, the network of eight neighboring villages, as well as to install RES plants. Today EWS supplies more than 137,000 people with electric energy.

For a truly sustainable energy system

The transition to an energy system that is characterized by active citizen participation, clean energy and decentralized and democratic operation, has to be realized through business models that possess these qualities and characteristics.

Energy cooperatives and other community energy schemes are the ideal models for this purpose, as the aforementioned features constitute their core features. In these schemes, the citizens are not just participants but also co-owners. At the same time, these schemes invest in RES, they become integral part of local communities and their governance is totally democratic. This full compatibility between the features of the new energy model and the features of the community energy schemes is an important guarantee for a successful transition to a more equitable and environmentally and socially sustainable energy system.

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