Both Boulder and Hamburg are remunicipalizing their grid. What do the two cases have in common? How far did the specific national context help or impede the efforts to buy back the grid? In the final part of our series, Charleen Fei and Ian Rinehart compare the two cities and the conditions for their success.
(Photo by baden03 and Jesse Varner, both CC BY-NC-SA 2.0)
In Part One of this series, we highlighted efforts to buy back the grid in Boulder, Colorado. In Part Two we described the remunicipalization in Hamburg. In this final part, we compare the two developments.
From a small, progressive American city nestled in the Flatiron foothills of the Rocky Mountains to a bustling German Hafencity with a wind-turbine dotted coastline, citizens and their local governments have come together to decide the future of energy procurement and distribution in their respective cities.
On the surface, the end results of both initiatives look similar. However, we illuminate some important differences, which may affect the future outcomes of the grid buyback in Boulder, Colorado and Hamburg, Germany.
In both cases, the campaign for municipalization was cast by competing parties—rhetorically and literally—as a battle for ownership over the energy grid. In both cases, well-organized grassroots initiatives, along with engaged, energy-educated citizens, buoyed the case that controlling the grid infrastructure would empower citizens and the city to achieve accelerated climate goals. Utility providers, on the other hand, focused on traditional media campaigning and struggled to connect directly with citizens.
While the importance of the campaigning and voting demographic cannot be understated, it is also important to stress that there existed in both cases the legal and regulatory backdrop necessary for a successful grid buyback.
In Boulder, the existence of a franchise renewal model for energy service providers allowed the city to refuse to renew Xcel’s franchise agreement. This offered Boulder citizens with a window of opportunity to pass a ballot measure, which ultimately granted the city of Boulder the right to purchase grid assets from Xcel and form its own municipal utility.
In Hamburg, stipulations included in the original agreement to privatize the grid left the city with 25.1% ownership and the ability to end the contract following a referendum. The successful passage of the referendum included language that legally obligated the city to re-purchase the grid from private hands. Currently, several providers are bidding to administer the grid. Regardless of provider, the city will be able to dictate the terms of the contract and incorporate the stipulations from the referendum in a public-private partnership model.
At the same time, the very different political and cultural contexts in which these municipalization initiatives have occurred will greatly affect the implications in their respective countries.
In Germany, major utilities have found themselves on the losing end of a renewable policy that has empowered a number of other actors to enter the market. As citizens continue to support the goals of the Energiewende and concurrently seek energy providers that are aligned with these values, German major utilities will either have to update their business models or struggle to create value in this new energy landscape. For these utilities, the success of the Hamburg grid buyback is yet another confirmation of the new business environment to which they must adapt. In other words, while Vattenfall was the target of ire in the case of Hamburg, any large German utility would have faced a similar attack on the basis of its environmental record and inability to connect with German consumers.
In the United States, the future landscape for energy providers is less clear. There have been a few notable municipalization initiatives similar to Boulder, CO, where citizens feel utilities are not moving quickly enough. The city of Austin, Texas, as well as that of Sacramento, California, are testaments to this growing sentiment. However, these cases remain outliers. In the dialogue about energy provision and the future of renewables in the United States, there is a significant absence of a unifying concept as emblemized by the Energiewende.
As a result of this lacking federal guidance, utilities in the United States retain significant latitude both to influence local policy decisions and to design systems, which could benefit both consumers and producers. This has led to a patchwork progression of the energy sector, in which some states have seen their utilities trying to stop renewables through tariffs and surcharges, while utilities in others embrace them as the future.
Hope for a more coordinated approach may lie in the very American emphasis on choice and self-reliance—values that can be embraced by parties across the entire political spectrum. In Georgia and Arizona, the desire for increased energy competition brought Tea Party Republicans alongside Sierra Club environmentalists to oppose tariffs on new solar panels. Even the co-founder of the Atlanta Tea Party Patriots acknowledges the uniqueness of the situation: “We agree on the need to develop clean energy, but not much else.”
The American general public has yet to fully enter this debate, which is why cases such as Boulder are being watched so closely both domestically and overseas.
If Boulder is successful in what it has promised its voters—access to an increased renewables portfolio without an excessive increase in electricity prices—its accomplishment could be one more convincing argument for other cities looking at energy provision alternatives. If Boulder succeeds at creating innovative programs with regards to demand side management, trimming peak loads, and distributed generation, the success would not only be for Boulder’s citizens, but for all those seeking to learn from its example. Let the trial and error begin.
“Taking Back the Grid: Municipalization Efforts in Hamburg, Germany and Boulder, Colorado” was written by Charleen Fei, graduate of Northwestern University currently living in Germany, and Ian Rinehart, Fulbright Research Scholar at the University of Hamburg. The full report is available as download at us.boell.org.