The interest of people and businesses to participate in energy production has been felt for some time and the interest has increased exponentially due to the rise of electricity price. The market of renewable energy poses enormous business opportunities for companies. In many countries, like in Estonia, the energy sector has been controlled by major corporations for a long time, because the electricity has come from a central location. Renewable energy offers the possibility for many smaller service providers to enter the market and such shared approach to the market allows citizens and communities to participate. Energy cooperative enables citizens and communities to actively participate in energy generation. The pioneers of energy cooperatives are Denmark, Sweden, the Netherlands and Germany.1
The importance of energy cooperatives lies in the possibility to democratize (we produce and decide ourselves, and wise investments will result in lower energy bills), decentralize and decarbonize (the local community will contribute to the reduction of CO2) production. For example, in the 1970s when a number of countries reviewed its energy policy in the light of the oil crisis, Denmark has decided to move towards a decentralized and efficient energy model and is now becoming one of the best countries in terms of energy security.
The formation of Energy cooperatives allows people to produce and consume green energy themselves, flexibly and by spreading risks, providing an alternative to individual small-scale production and to the dependency on large producers. A number of beneficial effects for both society and natural environment come from this. Citizens have the opportunity to actively decide how much and what source of energy they use for production. By taking the energy production to where it is also consumed, it will reduce network losses and dependence on centralized production, which will improve energy security in the entire country.2
More than half of the renewable energy production in Germany and Denmark is owned by the community. Energy cooperatives have an important role in order to allow citizens to actively participate in energy generation. European models are mostly local community-centered and the majority of energy cooperatives have been formed for the purpose of earning financial income to their members. However, for example in Sweden the energy cooperatives are community-centered and mainly serve their own needs; the country contributes to their activities (for instance tax breaks). Germany, on the contrary, has experimented with a wide variety of business models, in which local government has a key role to play, unlike in Scotland where public legal institutions generally do not participate in cooperatives created by communities.
Energy Cooperatives in Estonia
Today, the Estonian energy sector is largely based on fossil fuels, but there has been a steady increase in the proportion of renewable energy in recent years. In 2012, the share of renewable energy in final energy consumption was 25.2%. Government’s target of 23.6% was already achieved in 2010. Estonia’s long term goal is to reach a renewable energy share of 25% by 2020, which, seeing from the recent years’ developments, requires maintaining the level reached in 2011. Most notably, the high share of renewable energy is contributed by the support mechanisms provided by the Electricity Market Act for electricity and heat cogeneration plants running on renewable energy sources. The greatest renewable energy potential is revealed in the electricity and heat cogeneration based on biofuels and in wind power. 3
At the moment, no energy production organization has yet been established according to the criteria of cooperatives in Estonia. A positive aspect has to be noted that initiatives can be found (see mapped energy cooperative initiatives). A regulatory environment is needed to implement the ideas, both allowing as well as supporting the establishment of energy cooperatives and finding equity and funding for energy production facilities. The Energy Cooperative website addresses everything mentioned. It is very important to have a simplified and affordable access to the grid, or the possibility to create your own network. The current website enables people interested in creating an energy cooperative to have better knowledge and possibilities for advice and assistance. In the light of growing electricity prices and global environmental changes, energy cooperatives are a cost-effective investment for the future of its members as well as the society as a whole.
Energy Cooperative in Estonia – whether, how and by whom?
One way to ensure energy supply and heat security supply for Estonian residents in the most beneficial and sensible way is energy cooperatives whose goal is to save costs, to achieve the security of supply, and a cleaner and more pleasant living environment, as well as to use new and clever solutions and to involve other people in the community into all this.
The main course of action for energy cooperatives is to produce electricity and distribute it to consumers, using for example the wind and the sun, and also to produce heat and distribute it to consumers (individual heating). It also includes combined heat and power production and its distribution to customers. One of the goals also pursued is the sale of the surplus to the grid.
There are several reasons why energy cooperatives could be implemented just today and from now on. People’s incomes are still low, but the price of electricity is still in an upward trend. There are also relatively high heating costs in Estonia (for additional information read energiatalgud.ee – District heating price), which may vary in ~ 27…90 €/MWh (+VAT). All things considered, the date of origin for the equipment and grids used is from 20th century, which unfortunately, in today’s standards, is not high-quality production. The biggest factor is the limited availability of thermal economy – it is not guaranteed for everyone.
A variety of activities have been implemented to promote the establishment of energy cooperatives. Different studies, manuals, reports and analyzes have prepared, which are available for review in the section “Studies carried out”. Also, a variety of events have been organized, which are available for review in the section “Events”. It is possible to check out both current and future events, as well as retrospectively examine the events that have already taken place.
The types and main courses of action of energy cooperatives
Energetic communities, which by very definition is a broader term than energy cooperatives, are divided into two main categories – location-related energetic communities and energetic communities related to a common purpose.
In location-related energetical communities, the decisive significance is the localization of the energetic community’s members (a municipality, an apartment building, a village, an island, an industrial park, etc.). Local people, businesses, and local governments collectively contribute to the implementation of energy projects, and will also benefit from it themselves.
Common purpose related energetic communities involve their members through common interests, which for example can be earning profit, cost savings, technological development, investment, research and development. Generally, in such cases, relation by location does not exist or is secondary.
A hybrid model is also common where both locals as well as investors participate in energetic communities and both can benefit from the project. Often the mixed variant is conditioned so that ownership and structure determine the access to the capital needed to implement the project. Regardless, developers need locals in order to reduce problems in the planning and construction process, and the approval of locals will contribute to the success of the project’s implementation. In Denmark, the developer has an obligation to provide locals with at least 20% of shares. One such hybrid model example is Dundalk in Ireland, a 4 km2 size residential, leizure and business area, where the objectives are to produce 20% of both heat and electricity from renewable energy sources and to achieve 40% energy savings in selected buildings – all this by year 2020. 4
The main courses of actions of energetic communities
- Establishment of energy production – in order to satisfy own needs, or to earn income;
- energy (electricity and / or heat) production, sales and distribution – whether to/by members or non-members of the communities;
- construction and operation of micro-grids – isolated regions, integrated areas;
- activities related to achieving energy savings – renovation or insulation of buildings;
- advisory services;
- joint procurement.
1. Energiaühistud ja nutikas mikrovõrk. 2013 ↩
2. Eesti Taastuvenergia Koda Kuukiri, jaanuar 2013 ↩
3. Statistikaamet KE36: Energia efektiivsuse suhtarvud. (12.01.2015) ↩
4. Glimstedt, uudised. September on energiaõiguse kuu. (11.09.2013) ↩