Co-operative energy models — locally owned and controlled energy

Renewable energy is booming. Now is the time to create locally owned and resilient energy systems.

In a time of economic uncertainty, declining rural jobs and climate change, more community-owned renewable energy could prove pivotal if we are to move towards sustainable prosperity.

Renewable energy is booming. Now is the time to think about how to ensure we create locally owned and resilient energy systems. Co-operative or social enterprise models, aggregated Power Purchasing Agreements and community investment schemes are just a few ways we can achieve this

International research and inspiration

Denmark and Germany are the top two producers of renewable energy per capita in the world, as noted in the REN21 Global Status Report.

These two countries also have the highest community-owned renewable energy in the world — in Denmark, approximately 70-80% of wind turbines are under community ownership models. In Germany, approximately half of installed renewables capacity is.

Data suggests a strong correlation between the proportion of a country’s renewable energy production and the proportion of its community owned renewable energy. In other words, if we increase the level of community ownership of our energy systems, we’ll increase the amount of energy we produce from renewable sources.

Indeed, it was investment in local community initiatives overseas that kick-started research and development of early stage renewable energy technology — in response to the global energy crises in the late 1970s, Danish citizens created what are known as the Wind Turbine Guilds. These grassroots strategic associations invested in early stage wind turbine technology in Denmark, providing crucial funds and testing grounds to develop modern wind turbines.

A report by the University of Cambridge Centre for Sustainable Development states that community ownership offers technical benefits through creating a more context-appropriate, responsive and innovative energy system. The report states that electric co-operatives require fewer subsidies than private investor-owned or municipality-owned utilities.

In the US, it was through community-owned rural electric co-operatives that access to electricity was made possible for most of the country. Before the first rural electric co-operative was developed in the 1930s with support from Roosevelt’s New Deal, 90% of rural homes had no access to power. Within 20 years, this was completely reversed, with 90% of rural homes connected to the grid.

A similar scheme was recently created in Bangladesh. Mr Cruickshank, an expert who wrote a paper in the journal Energy Policy, regards this scheme as “one of the most successful rural electrification programmes within developing countries”.

The Australian context

Large scale renewable energy in Australia is largely not owned by the community. Research published in Energy Policy shows about 92%  of wind farms with more than 10Mw of capacity are foreign owned and 100% are investor owned.

With the widening gap between city and rural economic prosperity, the lack of locally owned energy developments is a missed opportunity.

Why Australia should get behind community owned energy

US States Government Accountability Office research in 2004 found that, in the US context, community-owned energy generates about three times more jobs and about four times more local dollars than investor-owned energy does. A US Department of Energy evaluation of community-owned renewables supports this finding, citing increased use of local labour, businesses and materials, dividends paid to local shareholders and servicing of local bank loans.

And these figures may underestimate the true value, with more recent research showing more positive figures.

Research from the UK Department of Energy and Climate Change in 2014 found the local benefits may be 12-13 than 100% commercial models because of re-investment in local areas.

Community owned models

There are a range of new and emerging community owned energy models in Australia.

For example, Enova Energy Limited is Australia’s first community owned energy retailer. According to Enova’s constitution, the primary purpose of the unlisted public company is to reduce greenhouse gas emissions. Enova is also constitutionally required to have most shareholders locally owned to the Northern Rivers region, deliver local socio-economic benefits and increase renewable energy generation.

The Sydney Renewable Power Company is an unlisted public company set up with the specific purpose of driving local investment into community owned solar power projects. The company, run by volunteers, made a public offer and now has a portfolio of local investors in the solar rooftop system on top of the Sydney International Convention Centre.

The Sapphire Wind Farm, a 270 MW project due to commence in late 2018, is led by CWP Renewables in collaboration with other stakeholders and is set to deliver a range of local economic developments.  CWP Renewables plans to establish a micro-grid at Canberra’s Institute of Technology, education awareness though the Australia National University and a Community Fund financed by Sapphire Wind Farm that is estimated to deliver $3.75 million to community projects and initiatives over the life of the wind farm.

Country Wide energy is a small company in Yackandana, in country Victoria. It recently completed construction of a new solar farm. Country Wide Energy is solving the local problem of over energy shortages, which unfairly hurts local people and businesses. By building locally owned, renewable generation facilities that sell to the grid and also connect directly to businesses, the local company is increasing energy independence and economic prosperity.

ClearSky Solar is a solar financing vehicle. A group of passionate volunteers run this humble enterprise with great success. ClearSky finds suitable small scale solar generation facilities with ‘behind the meter’ clients and links small scale investors to investment projects through an investment trust vehicle.

And the growth in local energy business models is being pushed along by social movements. For example, Totally Renewable Yackadanda, a 100% volunteer run community group, has the big goal of powering this small Victorian town with 100% renewable energy and achieving energy sovereignty by 2022. Solar Citizens is a people-powered movement bringing together millions of solar owners and supporters to grow and protect solar in Australia.

Call to action

The energy system is in transition. The cost of solar and wind is cheaper than new coal projects. The developments will happen, but will they be owned locally? Will local people prosper with the investment and participation?

We need more community owned energy enterprises in Australia to tackle our big challenges of energy resilience, local economic activity and emissions reductions. The Sustainability Law Lab is here to provide legal support, broker legal services and run workshops to help design legal aspects of community ownership models. 

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