Proponents of renewables (including this website) often praise “energy democracy.” Nonetheless, hard data on the benefits are few and far between. Now, a new study provides an overview. Craig Morris reports.

Do community projects provide greater returns to locals than utility projects? (Photo by naturalflow, modified, CC BY-SA 2.0)

The Germans often speak of Bürgerenergie, which translates literally as “citizen energy.” There is no clear definition. The term encompasses residential solar, community biogas, and wind farms (partially) funded by citizens and businesses. The more these investors are local, the closer the project becomes to Bürgerenergie.

The assumption is generally that such projects produce local jobs and generate tax revenue locally. But how much? Such projects are not required to publish this information, and there has never been a systematic analysis of Bürgerenergie in Germany.

Now, BEEN, the new umbrella organization for German renewable energy cooperatives, and Greenpeace have published a study by research Institute IZES (PDF in German). The investigation mainly reviews existing data, though interviews were also held with owners of community projects.

Take biomass, for instance: 95 percent of all biogas units in Germany source their feedstock from local farms. The main exceptions were bioenergy units that burned solid wood (generally pellets, wood chips, and wood waste), which comes from forestry and wood processing. In terms of capacity, 42 percent of all bioenergy systems fell under the category of Bürgerenergie at the end of 2012.

Energy experts and the German government itself often talk about citizen participation as a necessity – a way of increasing acceptance of the Energiewende. For instance, involvement in a project allows citizens to “get their feet wet”; as the study puts it, “in addition to the positive effects of concerns proving unfounded, there are the positive effects that lead to a more favorable assessment.” This rationale is fine as a justification, but it is not the reason citizens get involved. So what about the benefits?

The study lists the feeling of self-worth among the people involved, the acquisition of new skills, greater competence in dealing with local government, and a general increase in public willingness to be involved as citizens and politically, thereby strengthening democracy. In addition, many of these projects go up in rural areas, thereby strengthening these economically struggling communities. But these are largely outcomes as well, not drivers.

Do community projects provide greater returns to locals than utility projects do? The literature shows for PV in 2012 that regional added value came in at just under 300 euros per kilowatt initially, and roughly half that amount annually for each year of operation in the form of local labor, taxes, and profits. But PV was still expensive that year; one wonders what the figure is now. For wind power, the figure was 65 euros initially per kilowatt, followed by roughly the same amount annually. In contrast, biogas cogeneration units generated just over 300 euros per kilowatt of electrical output, with more local payback annually during operation. But the ranges given are wide and not expressed in terms of the total investment.

Mainly, the study addresses experts and policymakers among whom it is trying to garner support for community energy. In total, depending on the definition of Bürgerenergie, some 3.2 to 5.4 billion euros in added value was initially generated in such projects in 2012. These investments had created a total of around 70,000 to more than 100,000 jobs that year, both for construction and operation. In contrast, some 370,000 jobs have been created in the field of renewable energy overall.

Talk to citizens behind such projects, however, and one main reason for the project is something not really mentioned in the study: making friends. People volunteer with their neighbors in local fire brigades, schools, etc. Citizens take part in renewable energy projects to develop a sense of community.

The study praises this volunteer spirit for moving certain projects ahead that professional investors and planners would not have been interested in because of high transaction costs. That’s a good outcome macroeconomically, but not the driver.

In short, the study is a valuable review of existing literature, and it demonstrates that we need better data about community energy. Perhaps the BEEN could conduct a survey of its members to see how much of the money invested stays within the community. But we should also not focus solely on convincing experts of the benefits. A full description would include mention of community-building as a main driver behind such projects. Western societies are increasingly isolating. Community projects bring people together again. That benefit can be a major selling point, so it is good to know if you are a project developer. You can go into a community, ask them what they need, and see how your renewable energy project could help.

Craig Morris (@PPchef) is the lead author of German Energy Transition. He directs Petite Planète and writes every workday for Renewables International.