Across the Pond: Renewable Energy Co-ops in the UK

Credit: UNDP

You wouldn't expect that losing the only pub in the village would bring a community together, but that's exactly what happened in Hermon in West Wales. When the local pub closed down, shuttering the doors on the last group space in the village, the community took matters into their own hands and collectively bought a marquee to rent out for big community events. The success of the social enterprise triggered a spiral of community action - from schools to arts festivals to economic development. With this community momentum, they formed Cwm Arian Renewable Energy to co-operatively pursue the development of their local renewable energy resources.

The renewable energy co-operative sector is growing vibrantly in the UK according to a report commissioned by The Co-operative Group. The first wind turbines owned by a community co-op went up in 1997 in Cumbria, but in the last five years thirty co-ops have been registered and nineteen of them are actively offering investment to their communities. The momentum appears to be building, with a pipeline of twenty four more co-ops in the planning and launch phases of development.

These community renewable energy co-ops wholly own 19.6 MW of generating capacity in the UK and partly own an additional 1.22 GW through investment in commercial development, which the authors of the report Rebecca Willis and Jenny Willis adroitly point out is a drop in the bucket in terms of the overall energy needs of the UK. What they represent, however, is a revolution in the way that we generate our energy.

7000 individuals investors own a piece of renewable energy in the UK through a co-operative. Together they have invested 16 million GBP of their private money in renewable energy generating projects and make a return on their investment. The leveraging of private investment in a shared electricity system isn't a new concept - Germany has been paving the way for years with over half of its renewable energy generating capacity owned by regular citizens - but it is a revolutionary transition for the UK.

With such growth in the last several years in the community energy sector in the UK, there are a lot of lessons learned for community energy sectors the world over.

Part of the Community

The authors of the report found that the presence of an existing community initiative or network was instrumental in the success of the co-op projects. Like the village of Hermon with the marquee rental business, a community that was already meeting regularly, talking about shared values, and investing collectively had a lot more social capital in its pocket that it could spend on a renewable energy co-op initiative.

The successful projects happened in an atmosphere of community. Regardless of what project they were working on previously, when a community that had been working together already took hold of a community energy project it was clear that the community was better able to source volunteers, solve problems, and steam ahead through a complicated and technical planning process. Working together builds the strength of the community.

Knowing Where They're Going

Clear motivations also contributed to success. Communities that had talked about why they were pursuing a community energy project and what they hoped to get out of it had strong commitment from group members. With their eyes on the long-term prize, they could see why they were wading through the details and set-backs that can plague projects that are as complicated as renewable energy generation.

Skillful Help

Renewable energy co-operatives depend heavily on the skills of volunteers, especially during the initial stages where the feasibility of the project is being tested and applications are being submitted for permitting. The projects require a range of expertise from project management to marketing to legal to engineering. It was absolutely key to the successful groups that they had a committed volunteer base with these skill sets.

Well-Matched Money

The report also found that the success of renewable energy co-operatives in the UK was tied to the availability of institutional support and grant funding. During the difficult early stages of project development, the future of a renewable energy project is highly uncertain. Commercial bank financing isn't available for such a risky stage and co-operatives don't have the resources to speculate on unsuccessful projects like multi-national energy companies. The co-operatives accessed funding earmarked for low carbon projects and renewable energy to make their projects possible.

Credit: Green Energy Futures
"...People were more likely to support a co-operatively owned wind energy project, rather than one in private or commercial ownership, because it is run by local people and supports the community." 
Willis and Willis, Co-operative renewable energy in the UK

Some people in the UK had concerns about specific projects that were going to be built near them, like many other places making the transition to renewable energy. The co-ops found that they were better able to connect with concerned people (who were their neighbours after all) to tell them more about the projects and answer their concerns. Valley Wind, one of the co-ops in Yorkshire, found both through research and experience that people were more likely to support a co-op owned wind project because it was run by local people and supports the community. When they found out that someone had concerns, they could successfully invite them out to an event to listen. The UK experience shows that co-operatives can be champions for renewable energy.

The co-operative model does have a number of challenges for renewable energy development as well. Co-operatives have a combination of social and commercial characteristics that can be mismatched to many standard financing solutions. Charitable funders can be thrown off by the for-profit orientation of some co-operatives and commercial banks tend not to place value on the social benefits of a co-operative project. This can make shepherding a renewable energy project through the phases of development and construction financing a significant challenge. The co-operative model also places a large burden on volunteer support, which can be difficult to sustain over a multi-year technical project.

Renewable energy co-ops in Ontario have drawn remarkably similar learnings from the early years of expansion in the homegrown sector. Like their fellows in the UK, Ontario co-ops have struggled to explain the model to traditional lenders and have depended on the valiant commitment of phalanxes of volunteers. The shifting regulatory environment is challenging in both locales as co-ops struggle to stay on top of shifts in policies and incentives that often change with little notice. Depending on volunteers with limited time, the administration involved in overcoming planning and legislative hurdles as well as getting access to grid connection have been headaches for co-ops across the board.

Both sectors are growing, however, and the Co-operative Group report projects a bright and vibrant future for renewable energy co-ops in the UK. As they expand, communities grow stronger and the energy system grows more sustainable.

The Cwm Arian Renewable Energy co-op in West Wales intends to offer community shares with a minimum investment of 250 GBP when the 2.4 MW wind project is installed. They have plans to keep going after this project, but for now they have a meteorological tower in the proposed site to track just how much wind the community has to offer. Losing the village pub led the community down an economic development path that was never anticipated, but has a bright future.

This blog written by Laura Tozer originally appeared on the Community Power Fund blog.