REScoops Breed Innovation

14.08.2013 Blog

A Renewable Energy Sources Cooperative (REScoop) is a group of citizens who collectively invest in renewable energy. There are approximately 3.000 REScoops across Europe. They work together on a local, regional or national basis and seek opportunities to make their direct environment greener and more sustainable. They don’t do this by hugging trees, but rather through innovative entrepreneurship. A recent study executed by the REScoop 20-20-20 project identified 15 best practises across Europe and clearly pointed out that REScoops are to be considered a highly innovative niche. Hence, REScoops deserve as much respect and attention as every other niche in the economy.

On the homepage of the Dutch Ministry of Economic Affairs we read the following text: “The Ministry represents an entrepreneurial country that pays attention to sustainability. We strive for competitive entrepreneurship by creating an environment that allows entrepreneurs to innovate and grow”. Starting Renewable Energy Sources Cooperatives (REScoops) in the Netherlands perfectly fits this definition. It is the new generation of cooperative enterprises that innovate and improve the energy market. Therefore they deserve our full attention.

Social acceptance

An important improvement of the energy market is the fact that REScoops allow the direct participation of citizens to renewable energy projects. This cooperative approach enhances the social acceptance of citizens towards renewable energy installations, wind turbines for instance. The fact that REScoops are organisations with people from the same geographical area has several advantages. The people are often better placed to identify the difficulties and know better who should be involved. They know the local culture of the project and are better placed to share correct and comprehensive information with citizens. The cooperative promotes transparency and is democratically owned by its members. Everyone can get involved and participate. It turns out that open membership and transparency are important success factors for the successful development of renewable energy installations.

One of the examples is the Hvidovre Wind Cooperative in Copenhagen (Denmark), a cooperative that intended to construct two 150 metres wind turbines near the coastline. Obviously the wind turbines would be visible for the whole community. The Danish government thought it would be impossible to find social acceptance from the local citizens, but the offshore wind cooperative Middelgrunden did not agree with their point of view. They were convinced that the local citizens would accept the wind turbines as long as they were involved from the beginning and if it would be possible for them to become a co-owner of the project. In collaboration with some NGOs and a district heating cooperative, Middelgrunden started an open and transparent communication program in the local area. They organized some meetings and explained the cooperative model to the local citizens. They used Middelgrunden, a professional and legitimate Danish REScoop in order to convince people. They organized an open debate in the local newspaper and organized meetings where people shared thoughts and concerns. The project turned out to be a great success. The wind turbines were installed in only 18 months, an absolute record. Within five months the cooperative had gathered 7.8 million euro from 2.248 cooperative members.

Alternative business models

Co-operatives bring new business models to the energy market. They often pop up where people want to change things. REScoops want to consume less energy and produce renewable energy. That’s a completely different business model than the traditional one. The traditional energy companies are established to generate growth and profits. Their business model is directly linked to selling electricity: consumption directly leads to more profits. Many REScoops however have adapted their business model to make sure their goal is in line with the needs of members. Elektrizitätswerke Schönau (EWS) in Germany for instance was established in 1986 as a reaction to the nuclear disaster in Tsjernobyl. Their primal goal was to consume less energy. EWS asked the local grid company to join efforts in order to convince people to consume less electricity. The latter refused because it would lower their profits. EWS immediately realized that if they wanted to give people incentives to lower their energy consumption they would need to take over the grid. After a 10 year battle the “energy rebels” finally succeeded. They set up their own REScoop and took over the local grid in 1998. EWS immediately changed the energy prices: nuclear energy became more expensive and EWS paid higher prices for the sustainable energy that was sold to the grid. This business model was installed two years before the German government introduced the system of feed-in-tariffs. Furthermore, EWS developed an invoice where energy costs were calculated including the distribution cost. This means that people who did not use the grid (because they were able to produce their own electricity) did not have to pay a distribution fee. It made renewable energy an interesting investment. A simple tariff per kWh easily also allowed people to calculate their advantage of saving energy. Changing the prices and invoices immediately lowered the energy consumption of the co-operative members. And that was exactly what EWS wanted.

  Demand driven

REScoops have two main advantages regarding technological innovation: they are demand driven by their customers/members and they can often count on technically educated volunteers. This unique combination allows them to breed technological innovation in the energy market. The primary goal of a REScoop is to satisfy the needs of its members. While many regular energy companies need to invest a lot of time and effort in understanding their customers, REScoops automatically know what their customers want through the co-operative business model. They are demand-driven. A second advantage of REScoops is that many of them can count on technically educated people which allows them to develop ambitious projects at minimal costs. Innovation in REScoops is less hindered by cost effective considerations than in regular energy companies.

Examples of this kind of innovation can be found easily with the local smart grids in Italy. E-Werk Prad for instance is a REScoop in the Italian region of Bozen-South Tirol. Although it was established in 1926 in order to exploit a hydro-power installation, it now produces electricity using several renewable energy sources: water, sun, wind and biomass.  However, the investments in solar energy projects caused some congestion problems with the grid. In order to solve these problems the Italian REScoop developed a smart grid that can balance energy production and energy consumption more effectively. According to the president of E-Werk Prad the citizens did not mind this technological change because they realized that the investment would have both technical and financial advantages for the members. Because the members are directly involved with the REScoop (e.g. they own cooperative shares and they buy energy) they consider the innovation as something good.

Potential

To see what the future energy market will look like, we need to have a look at the activities and projects of the current REScoops. We have to understand their objectives, activities and their way of working. This means that the Dutch Ministry of Economic Affairs, universities and even regular companies need to turn their attention to REScoops and that they have to start thinking of potential collaborations. Only by doing so, way we will be able to create “an environment that allows these entrepreneurs to innovate and grow”.

Originally published on 06-08-2013 by http://www.energieplus.nl
Original text: Siward Zomer. English translation: Daan Creupelandt
Available in Dutch at http://www.energieplus.nl/energiecooperaties_broedplaatsen_voor_innovatie%20?page=1#navigation