Including local residents in the ownership of renewables not only increases acceptance but can ease funding and permitting headaches
NEIGHBOURHOOD WATCH
Predictions that nearly a fifth of wind and solar projects could be owned by by local residents by 2030 CONSUMER OWNERSHIP
New business models are providing an opportunity for lower-income households to back clean energy projects KEY QUOTE
When you look across the landscape and you see a wind turbine where there wasn’t one before, you feel you’ve lost something. But if you own it yourself, you perceive it in a different way
“Wind turbines in the landscape are pretty ugly, but when you own them yourself, they’re pretty beautiful,” quips Danish community energy advocate Halfdan Abrahamsen.
Abrahamsen is the project manager of Ærø EnergyLab, which manages energy projects on the Danish island of Ærø, south of the mainland. Ærø island was a pioneer of community energy in the 1980s when interest in energy self-sufficiency was high following the 1970s oil crisis.
The island has 11 wind turbines, more than enough to power its own needs, including an all-electric car ferry; and three district heating systems. The system is owned by residents of the island, who buy shares in it when they buy a home there. Ærø was one of the first community-owned energy systems, but many others have since been developed, particularly in Europe.
There is no official record of community projects, but a 2019 report by the European Commission’s Joint Research Centre estimates the number at 3500 across the continent, while the International Renewable Energy Agency (IRENA) cites 4000 globally.
Neither is there a single definition for community energy. Many different models exist, including co-operatives, partnerships between developers or utilities and local people, non-profit organisations and community trusts. But what they all have in common is that they involve communities in decision-making and benefits sharing in energy projects.
Neighbourhood watch Community involvement in renewables can attract investment and fast-track permitting
REDUCE DELAYS
Proponents cite many benefits of community energy, including empowering and uniting local communities, keeping investment within local areas and promoting a better understanding of energy consumption. But one of the main reasons the idea has the support of many governments and energy companies is that they are perceived as reducing local opposition to developments and therefore delays and expense from legal cases.
Whether a community opposes or accepts a renewable energy development is often a matter of perception, Abrahamsen believes. “When you look across the landscape and you see a wind turbine where there wasn’t one before, you feel you’ve lost something. But if you own it yourself, you perceive it in a different way—you sacrificed a bit of your view, but you’ve gained independence, security, and if you own a share in that wind turbine, you actually also earn a bit of money,” he says.
Research on the impact of community ownership models on community reactions to renewable energy projects is patchy. A 2020 study by Oslo’s Center for International Climate Research and the Free University of Berlin’s Environmental Policy Research Centre concluded that wind farms owned by farmers, landowners, individuals and municipalities often experienced higher levels of trust than those solely promoted by commercial developers.
“Community ownership models help to strengthen local identification with the wind farms, to generate local/regional added value (in terms of income/profits, tax revenues, jobs). Particularly, energy co-operatives contribute to a more democratic energy system and social economic development by creating employment and benefits at local level,” it states.
A 2019 study of the contribution of Danish community owned energy projects to the energy transition found that there was significant importance of such models in terms of investment in, and implementation of, decentralised energy technologies.
However, trade body WindEurope says that the benefits of such models on community acceptance is well recognised by governments and developers.
“There is less opposition because the community has been taken along with the project—they’re aware of what’s going on, they might have participated in the decision-making stage and they’re benefiting from it. So whatever model you use, it usually has a positive effect on public acceptance. Fewer cases end up in court when these models are applied,” says Guy Willems of WindEurope.
MORE OPPORTUNITIES
In countries where community ownership is common, contributions to investment in renewable energy can be significant. A paper examining community energy in Germany found that citizens were responsible for 31% of total investments in 2012, or around €5 billion. However, investment in community energy has suffered in recent years, even in Germany and Denmark, as auction-based systems made it difficult for them to access funding.
The European Commission now wants member states to boost opportunities for community energy.
It believes that by 2030, communities could own around 17% of installed wind capacity and 21% of solar. In addition, while most remain engaged in generating energy, their roles are expanding into energy supply, energy efficiency and electro-mobility, and is likely to continue to disrupt activities traditionally held by energy and car companies.
Under the new European Green Deal, the European Union has become a champion of community energy, with an EU directive stipulating that all member countries enact laws that make community energy not only possible, but also profitable. This states that community energy projects have delivered economic, social and environmental benefits to the community that, “Go beyond the mere benefits derived from the provision of energy services”.
“This Directive aims to recognise certain categories of citizen energy initiatives at the union level as ‘citizen energy communities’, in order to provide them with an enabling framework, fair treatment, a level playing field and a well-defined catalogue of rights and obligations,” it adds.
In 2022, the European Commission approved state aid guidelines for climate, environmental protection and energy that allow member states to exempt renewable energy projects owned by communities and SMEs that are below 6 megawatts (MW) in capacity from competitive bidding requirements in auctions. They can also develop wind projects up to 18 MW without competitive bidding.
LOCAL BENEFITS
A social science research project funded under the EU-Horizon 2020 programme has studied community owned energy in the Netherlands, Sweden, UK, Germany, Italy and Slovenia to identify the most effective ways for the EU, national and local governments to support new projects to help them meet their potential.
The project, completed in 2022, urged politicians to recognise the advantages of community ownership, which include social benefits and energy independence. The researchers also encouraged lawmakers to prioritise energy communities in supportive policies and formal legislation, starting with a clear definition of the term “energy community” to provide legal clarity and to have policies and legislation explicitly targeted at energy communities, including dedicated incentives.
Lawmakers should also remove bureaucracy, and legislative and administrative burdens that block community energy, especially those initiated by volunteers with limited finances and capacities to seek legal advice, they said. Some countries have recently changed rules around community energy ownership. In Denmark, developers were mandated to offer at least 20% of turbine ownership shares for sale to neighbours living within a 4.5 kilometre limit under its Promotion of Renewable Energy Act (2009).
However, this was abolished in 2021 and replaced by rules mandating developers to provide cash benefits for residents and municipalities. Residents living at a distance equal to up to eight times the tip height of the turbines will receive cash annually.
Municipalities will receive DKK 125,000 (€16,000) per megawatt installed for onshore, and DKK 165,000 (€22,000) per megawatt for offshore, paid up front when the project goes online. While it is up to the municipalities to decide which local projects to support, they must have environmental benefits.
Willems believes that the new rules are an improvement in terms of getting projects developed, since people did not necessarily have money to invest in a project, meaning it could not go ahead. “Community ownership is not necessarily the solution in every situation. It might work here and there, but other forms of benefits are better in some communities or geographical regions,” he says.
Community energy around Europe
Westmill Solar Park
—
England
Westmill claimed to be the first and largest community owned solar park in the world when it opened in 2012. Set on 12 hectares, the 20,000 PV panels generate 4.8 gigawatt-hours per year. It is run by a cooperative, which also offers grants for community projects within 40 kilometres of the project site. The project was unanimously approved by the local council’s planning committee, having received no objections.
Clos Neuf —
France
The 12 MW Clos Neuf community-owned wind farm opened in September 2022. Developed by German renewable energy developer BayWa. Local and regional residents invested €1 million into the project, contributing €500,000 as shareholders and another €500,000 as bondholders, alongside financial institution Banque des Territoires and partner Quénéa. Two-thirds of the investors live within 10 kilometres of the wind farm. Citizen investors are also directly involved in decisions about the management of the wind farm. Two community representatives sit on the project’s committee.
Zeewolde Wind Park — Netherlands
The Netherlands boasts a wind farm that is both the world’s largest to be community-owned and the country’s biggest onshore wind project. The Zeewolde Wind Park has just been repowered, rising from less than 200 MW generated by 220 turbines, to 322 MW from 91 larger turbines. The repowering was initiated by the municipality, following complaints about the landscape impact of the older turbines, which were scattered unattractively, alongside a desire to produce more renewable energy, explains its director Sjoerd Sieburgh Sjoerdsma. The project is owned and operated by more than 250 residents of the area.
Earlsburn Wind Farm — Scotland
Scotland’s first wind farm with shared ownership was built by Falck Renewables. Citizens of the nearby village of Fintry requested they install an extra turbine as part of the 37.5 MW development that they could own. Profits from the project, which began operations in 2008, are reinvested in the community, for example, paying for household electricity consumption and energy efficiency measures. The Fintry Development Trust which owns the turbine has 200 members out of an adult population of around 500. Energy bills reduced by £90,000 reduction of household energy bills across Fintry.
UNINTENDED CONSEQUENCES
In the Netherlands, the government around four years ago stipulated that there must be local participation in wind farm development. However, this is having unintended consequences, according to Sjoerd Sieburgh Sjoerdsma, director of the Zeewolde wind farm.
Sjoerdsma says that people who are wealthy or retired claim to be cooperatives so that the aldermen [on the local council] believe there is local participation. In reality, they behave in exactly the same way as a project developer, keeping most of the profits and giving just a little to the people living near the wind farm.
“This is a worrying development. The benefits should stay with people in the vicinity of the turbines, as they are the ones that have the hindrance from the project,” he says.
In the UK meanwhile, community energy has had its “most challenging year ever” in 2021 with only 7.6 MW of electricity generation installed, and almost 70 MW of projects in limbo, according to non-profit sector organisation Community Energy England in its annual State of the Sector report.
Support mechanisms such as the feed-in-tariff and an urban community energy fund that had previously boosted the sector have all now ended, it pointed out.
The government has ignored calls to support the sector’s growth—supported by a cross-party Parliamentary Committee—for example by creating a national community energy fund to mobilise community energy and promote community energy through local permitting, it complained. Despite these setbacks, the community energy sector still raised £21.5 million investment for new projects across the UK in 2021, it said.
CONSUMER OWNERSHIP
However, new models of community ownership are finding success in the UK. Clean energy ownership platform Ripple Energy has developed three wind farms under what it calls “consumer ownership”. They are developed and managed by Ripple Energy, but owned by a cooperative society made up of project shareholders that can buy into the project, regardless of where they live in the country.
Its pilot 2.5 MW project in Wales began operating in March this year. More than 900 people jointly own around 75% of the site, while a private investor owns the remainder. Ripple has also developed an 18.8 MW wind farm in Scotland, which is 57% owned by 5600 people and 18 business members. A property company owns the rest of the share. It is now working on its third project, for which some 1000 have already reserved a share.
All of Ripple’s projects are on a commercial scale. Being able to sell shares all over the country via an online platform enables much larger projects to be developed using investment from the public, explains Ripple’s Sarah Merrick.
“We see absolutely huge potential in community energy. It doesn’t need to be just about small-scale projects. If you have a minority stake in a wind farm or a solar park, then there’s no cap on the potential that consumer ownership can have,” she says.
The fact that they genuinely part-own a project is what makes it tangible and appealing to people, she says. Merrick would like to see community ownership formally taken into account in permitting decisions. Ripple became involved with its projects after they were consented. It is now actively looking at other markets it could move into, having been contacted by people in other countries who are interested in the model, she says.
“The potential of community ownership is huge, but it’s really important that it steps out of being associated with just small, local projects. We want to get it into the genuine mainstream of the energy market,” she says. •
TEXT Catherine Early ILLUSTRATION
Luke Best PHOTO Haytem Gataa and Pop & Zebra