Europe is leading the world in the development of community energy. In countries such as Denmark, communities have lead the development of the modern wind power sector world-wide. By 2004 over 150,000 were either members or owned turbines, and about 5,500 turbines had been installed. This is truly an amazing effort.
Throughout Europe, many different models of community energy have emerged, based on the different social, cultural, legal and political contexts of the individual communities. Below is an overview of the current status of community energy in some of the European countries seen as pioneers in the sector.
Main topics covered in this article include:
The European community energy model
Community energy in Europe usually takes the following form:
- A group of people form a legal structure (a co-operative, partnership or company)
- They pool enough money to pay for all or most costs
- They establish the project
- They sell the electricity they produce to the local energy utility at a profit
- These funds are then distributed back to the share holders according to their level of investment.
This often involves the community group contracting a third party to help them through the development and establishment phase and to do the on-going maintenance.
These community groups may be communities of locality (where they all live close to each other) or communities of interest (where people from geographically dispersed places share a common interest). Sometimes communities also form partnerships with wind development companies and electricity utilities to build co-owned projects, often at a larger scale.
Wind power is by far the most common technology in community energy, but there are also significant examples of hydropower, district heating through cogeneration heat and power, farmer-owned biomass and some solar.
Please note that this summary of the current status of community-owned renewable energy in Europe is not comprehensive. Many other countries, such as France and Austria, also have notable community energy projects.
Denmark has a long history of community ownership of modern wind turbines, dating back to the late 1970s. Early community support of modern wind technology development played an important role in making the wind industry what is today (See History of community energy).
Community energy sector size
Denmark currently gets 20% of its electricity needs from wind, and aims to get 50% of its energy from renewable energy sources by 2020. By 2001 over 100,000 families belonged to wind turbine cooperatives, which had installed 86% of all the wind turbines in Denmark. By 2004 over 150,000 were either members or owned turbines, and about 5,500 turbines had been installed, although with greater private sector involvement the proportion owned by cooperatives had fallen to 75%. Wind co-operatives range in size between one and 10 turbines, both on and off shore dotting the landscape with small clusters of turbines.
Over the years, government has supported the establishment of community-owned wind farms in Denmark (see History of community energy). However, Denmark has dramatically changed policies over the past 10 years, and many of the government policies that help to establish the wind industry are no longer available. For example, the subsidy for set-up costs and the guaranteed profitable price for wind energy (available under the governments previous feed-in-tariff laws) have both been removed.
Fortunately, a clear grid connection policy giving access to renewable energy still remains. Under this arrangement, turbine owners pay to connect to the nearest technically suitable point of the grid and utilities pay if the grid needs to be reinforced to take the extra load.
Under Danish Law, co-operatives are not able to own wind turbines, so communities had to devise a new way of common ownership under the legal guise of a partnership. Although not legally co-operatives, these partnerships operate in much the same way as a co-operative, hence commonly being called wind co-ops.
In these partnerships, individuals pool their funds to purchase turbines. Shares are generally sold in lots of 1000kWh, with people usually buying enough shares to offset their yearly electricity consumption (normally 5 shares). The average investment is around $2,920.
All community owned wind is financed completely through the sale of shares; no debt is taken on by the partnership. In this way, the joint and several liability of the partnerships doesn't pose a risk, as each member is only liable for the amount they invest. Individuals may take on debt to finance their wind shares where need be.
Revenue from the community owned wind farms is distributed according to how many shares a members holds, and returns on investment are usually between 6-9%.
The future of community energy
In Denmark, corporate and utility ownership now surpasses co-operative ownership of wind power. In Denmark's 2009 Renewable Energy Act imposes an obligation on all new wind projects to offer a minimum of 20% ownership to local people, such as wind co-operatives (DV 2009a: 3). It is likely that this law will once again encourage local ownership in wind projects, though future projects are more likely to occur in partnership with electricity utilities or commercial wind developers. See the Middelgrunden Wind Turbine Co-operative Case Study as an example of what this model looks like in operation.
Like Denmark, Germany is a leader in community energy project installations, but unlike Denmark, they have actively pursued both wind and solar projects.
In 2009, Germany met 7% of its electricity needs through wind power, with over 25,700MW of installed wind capacity from 21,160 wind turbines across the country. It aims to meet 30% of its electricity and 14% of its heating from renewable energy by 2020. Paul Gipe, a wind power researcher, believes that as much as one-third of all wind capacity in Germany has been built by associations of local landowners and nearby residents and that over 200,000 people in Germany own a share of a nearby wind turbine. (Gipe 2003)
In 2009, Germany installed a world record of 3,800 MW of Solar photovoltaic (PV), with small roof-top systems dominating the market. Paul Gipe calculates that 7,200MW of Germany's total of 9,000MW of installed solar PV capacity are community-owned, roof-top systems of 100kW or less.1
Germany aims to install 2,500MW of solar PV each year.
The German government has had policies to support the development of wind power (including community-owned wind) since 1991, when it introduced a feed-in-tariff for wind. The 2000 Renewable Energy Sources Act increased this support, giving renewable energy priority grid connection. Grid operators are required to purchase power from renewable energy generators and to extend and reinforce the grid where necessary to provide access for renewable energy generators.
This Act also updated the feed-in-tariff to be at a fixed rate for at least the first five years, with up to 20 years if the wind yield is lower than expected. These policies have helped to create a stable and profitable market for wind energy, where people feel safe to invest.
Community ownership of wind turbines in Germany often occurs in partnership with electricity utilities or bigger wind developers. These partnerships usually take the form of a limited partnership (KG) with a limited liability company (GmbH) as a general partner.
The limited liability company is usually the wind developer, who holds unlimited liability and organises most of the logistics behind getting the wind farm approved and installed. The limited partnership is made up of the local people wanting to invest in wind power; they often initiate a project in their area and do much of the local consultation. Members of the limited partnership (the share holders) can be from anywhere in Germany; often 20-30% are local people.
The revenue from the project is distributed according to level of investment (number of shares). Generally, shareholders contribute 25% of the finance and 75% is debt held by the company. A number of banks, including government bank, offer low-interest loans for wind project development.
It isn't uncommon for these projects to be as large as 10, 2MW turbines costing in the range of $30 million. This model of wind development enables local ownership of wind, diversifies sources of finance and allows for bigger projects with better economies of scale to go ahead. This is the most common form of community energy in Germany, and a creative way to achieve local peoples goals and make significant in-roads to wind development (see Hollich Citizens Wind Farm Case Study).
Like Australia, Swedish electricity is very cheap due to abundant energy sources. Unlike Australia, Sweden has a relatively clean electricity generation industry as a result of readily available hydropower (rather than coal). This has tended to slow down the installation of other forms of renewable energy at the commercial and community levels. The Swedish government, however, has invested in world-class renewable energy research programs.
Development of community energy
Following a public referendum in 1980, the Swedish government decided to close all nuclear power plants by 2010. The wind sector has developed in the gap caused by the decommissioning of nuclear power plants. By 2000, Sweden had installed 240 MW of wind power, 25 MW of which is community owned.
Community-owned wind has existed in Sweden since 1989, first taking the form of Real Estate Communes and later as Consumer Co-operatives2
Both operate on a local level with local investors (share-holders) pooling their funds to establish the wind farm then selling the electricity they produce to the local electricity utility.
In Sweden, government support for wind power has included:
- feed-in-tariffs to wind generators smaller than 1.5MW
- an electricity tax that is passed on to renewable energy producers as a bonus
- some start up subsidies
- clear grid connection responsibilities shared between the wind turbine owner and the electricity utility.
Because it was sometimes hard to raise enough funds locally, some community-owned wind ventures have teamed up with the local electricity utility, resulting in part-ownership of a bigger wind farm than would have been possible on their own.
In 1998 the Swedish Wind Power Co-operative (Svergies Vindkaftkooperativ) established a new model for national community-owned wind power selling electricity directly to their members, all over Sweden. This co-operative has redefined the scope of community-owned wind in Sweden, made possible through a unique relationship they forged with a national electricity utility, Falkenberg Energy (See Swedish Wind Power Co-operative Case Study for more details).
Spain is a leader in the development of solar technology and large-scale solar farms. At least 2.8% of electricity demand was met by solar power in 2009.
Spain has a target of 12% renewable energy by 2020 with 3000 MW of solar installed (both PV and thermal). In 2004 the government removed economic barriers to renewable energy grid connection and set up guaranteed feed-in-tariffs for renewable energy, creating a high degree of security and predictability in renewable energy market and encouraging investment. These conditions have fostered community-owned wind and solar farms.
Spain also initiated policies to encourage wind energy in 1994, and since this time it has become a leader in European wind generation. Although not community-owned in an independent sense, Spain has many small to medium wind farms that are owned by local government. Examples include the 3.2MW Es Mil wind farm in Menorca and the 26.4MW El Puerto wind farm in Sierra de San Just.
Community-owned solar energy in Spain is often in partnership with renewable energy developers, electricity utilities or local government. Acciona Energy, for example, has been working with local communities to develop a new model for community-owned solar, called solar gardens. Here, the company accepts investments from individuals wanting to support solar power, pools these funds and sets up a community solar garden.
Once the solar garden is producing electricity, the investors receive electricity credits proportional to the amount they invested, with adjustments for maintenance, administration and with government renewable energy incentives rolled in.
Acciona Energy has a total of 3,500 private investors participating in its solar gardens program, with an investment of 456 million Euros into 18 different solar garden developments, totalling 61.5 MW of installed solar photovoltaic capacity. An example of one such installation is in Milagro: a 9.5 MW Solar Garden with 950 owner-investors, who get a 8-10% return on their investment. (See Ellensburg Community Solar Case Study ).
Bolinger, M. (2001) Community Wind Power Ownership Schemes in Europe and their Relevance to the United States
Foundation for the Economics of Sustainability (FEASTA) (2004) To Catch the Wind: the potential for community ownership of wind farms in Ireland
Danish Wind Turbine Owners Association (DWTOA) (2009) Co-operatives: a local and democratic ownership to wind turbines
Gipe, P. (1996) Community-owned Wind Development in Germany, Denmark and the Netherlands
DWTOA (2009 a) Past and Present: successful developments followed by stalemate, Danish Wind Turbine Owners Association
Gipe, P.(2003) Community Wind: The Third Way
Srenesen, H.C, Hansen, L. and Larsen, J (2002) Middelgrunden 40MW offshore wind farm Denmark Lessons Learned
German Wind Energy Association (2009) Wind energy in Germany current market situation and future perspectives
WELFI (2003) Paderborn Case Study, Wind Energy Local Financing
The Swedish Wind Energy Co-operative
Acciona Energy (2009) Acciona: Photovoltaic 3,500 customers
European Union Energy Portal
Massachusetts Institute of Technology's Technology Review (2008) New Technologies in Spain
|1||Gipe, P. (2010) Germany to Raise Solar Target for 2010 and Adjust PV Tariffs|
|2||Bolinger, M. (2001) Community Wind Power Ownership Schemes in Europe and their Relevance to the United States|