Creating community-supported energy

By Greg Pahl

posted September 1, 2006

The rejection of the East Haven Wind project in the Northeast Kingdom by the Vermont Public Service Board and the more recent negative preliminary finding by the state Department of Public Service regarding the proposed 20-turbine wind farm in Sheffield are the latest in a series of setbacks for wind power in Vermont that has put the breaks on most large-scale proposals in the state.

This might be a good time for the renewable energy community in general (and the wind power sector in particular) to step back and consider another option.

This other option, that falls in between the large-scale commercial wind farm and the small-scale backyard wind turbine, has been described as “The Third Way.”

This middle strategy, also referred to as “community supported wind,” relies on somewhat smaller scale projects that are developed, sited, and owned by members of the local community rather than out-of-state corporate entities. These projects could fill a huge developing gap, and this approach is not limited to wind power, but can be applied to virtually any type of local renewable energy project such as solar panels, biogas digesters, a variety of biofuels, and small-scale hydro.

When applied to a wide variety of renewable energy technologies, this strategy is known as community supported energy (CSE). CSE projects are somewhat similar to community supported agriculture. The main difference, however, is that instead of investing in potatoes, carrots, or cucumbers, with CSE, local residents invest in energy projects that provide energy security and a variety of other benefits.

Many advantages

A cooperative or community-owned energy project offers many advantages. It stimulates the local economy by creating new jobs and new business opportunities for the community while simultaneously expanding the tax base and generating new income for local residents.

Another advantage of CSEs is that they can be owned cooperatively or collectively through a variety of legal mechanisms — limited liability corporations, cooperatives, school districts, municipal utilities, or combinations of these models. Sometimes a partnership with an existing utility is helpful.

The main point is to identify the project as belonging to the community, which may avoid (or at least minimize) the usual conflicts between local residents and developers, whose large-scale, commercial proposals are often viewed as primarily benefiting absentee owners.

CSE projects offer yet another advantage: They retain a greater amount of income in the local area and increase the economic benefits substantially over projects owned by out-of-area developers, according to a study conducted by the National Renewable Energy Laboratory. The study found that local ownership yields an average of $4 million in local income annually, more than three times the $1.3 million produced with out-of-area control, while job creation was more than twice as large in the local model.

A European model

With benefits like these, why aren’t there more CSE projects? For one thing, it’s a relatively new concept in this country, although it’s a well-established strategy in many European nations.

In Denmark and Germany — world leaders in wind energy development — many commercial-scale wind turbines are installed as single units or in small clusters distributed across the countryside, or sometimes in or near urban areas. And many of these turbines are either owned by the farmers on whose land the turbine stands, or by groups of local residents. This idea has spread to many other nations as well and is beginning to catch on in North America, especially in states like Minnesota and Iowa.

The main barrier to wide-scale implementation of CSEs in Vermont is a regulatory environment and process that does virtually nothing to encourage these types of projects.

For the most part, CSEs are not on the radar screen of most regulators, and the typical high cost of the approval process (often $100,000 to $500,000 or more) halts most community-based initiatives before they even get started.

One of the best regulatory models in North America at the present time is the new standard offer contracts (SOCs) in Ontario, Canada. Announced earlier this year, the contracts (also called advanced renewable tariffs) are an historic step toward creating a sustainable energy future.
SOCs allow homeowners, landowners, farmers, co-operatives, schools, First Nations, municipalities, and others to install renewable energy projects up to 10 megawatts in size and to sell the power to the grid for a fixed price for 20 years.

CSE in Vermont

Vermonters currently spend more than $1 billion to heat and light their homes and businesses. If just 5 percent more of the state’s energy needs could be met at the community level, it would keep $50 million circulating in the local economy, rather than flowing mainly out of state as it presently does.

In Addison County, a new community based-group, the Addison County Relocalization Network (ACoRN) is actively engaged in developing or supporting a number of CSE projects. Several other community groups in other parts of the state are considering similar projects as well.

But in order for these initiatives to succeed, the regulatory environment needs to be streamlined for smaller projects, group net metering needs to be expanded further, and some changes to the state’s cooperative laws also need to be made by the Legislature. In addition, a comprehensive set of financial, contracting, and permitting incentives directed toward community projects need to be developed and implemented by the state.

CSE is an idea whose time has definitely arrived, and I am convinced that if this strategy were to be adopted across the state that it could fundamentally alter the entire debate about most renewable energy proposals. Almost every city and town in Vermont has the potential for one or more CSE projects. Perhaps in your community.

Greg Pahl is a writer and a founding member of the Addison County Relocalization Network (www.acornvt.org). His next book: The Energy Survival Plan: Personal and Community Solutions for a Post-Oil World, will be published in January. He lives in Weybridge.