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ORGANISATIONAL STRUCTURES
Organisational structures of community energy initiatives may
be in the form of partnerships, co-operatives, community trusts
and foundations, limited liability companies, non-profit customerowned
enterprises and housing associations. 23 The choice
of structure often is determined by the interest or goal of the
particular community as well as the regulatory framework. There
is a general lack of analyses about organisational structures of
community energy, especially in developing countries.
Partnerships generally are governed by a management
board, with the ownership rights linked to the financial stake of
each partner. In Germany, partnerships with a private limited
company are a commonly used legal entity for community
renewable energy ownership. In Denmark, partnerships also are
referred to as co-operatives, because of their role as a typical
form of “association”, and come with different liabilities and tax
implications.
Co-operatives are democratic structures that follow a set of
internationally agreed principles and make decisions on a “onemember-one-vote”
basis; day-to-day operation is governed
by an elected board. Renewable energy co-operatives exist
in Europe, North America, Africa and parts of Asia and Latin
America. 24 Although the structure varies from one country to
another, co-operatives tend to be the most common structure
for community renewable energy initiatives. 25 In the developing
world, co-operatives historically have played a role in other
sectors as well, such as in the agricultural sector.
Community trusts and foundations share benefits from
community renewable energy projects with citizens that do
not have enough money to invest, ensuring that returns on
investments are used for specific local or community purposes. In
the United Kingdom, “Development Trusts” may take a number of
different legal forms: a charity, a company limited by guarantee, a
community interest company (CIC) or an industrial and provident
society (IPS). In Scotland, Development Trusts have become
a popular form of community ownership of wind projects. 26 In
Denmark, the community foundation model has been used to
create a community pot of money where generous profits from
renewable energy production can go towards funding local
development. 27
Public and private limited liability companies (LLCs) are
based on a legal framework that limits the liability of investors,
protecting their private assets from losses. LLCs are becoming
increasingly common instruments for implementing community
energy projects, particularly in Europe and North America. 28 One
example is the University Park Community Solar LLC, formed
by residents in the US state of Maryland to reduce their reliance
on local utilities. Their efforts were facilitated by the state’s net
metering policy and tradable renewable energy certificates,
which created revenue-generation opportunities for the local
community. 29
Non-profit, customer-owned enterprises are similar to
co-operatives in structure but add particular rules: for example,
ownership might require grid connection, or votes may be capped
to limit the power of individuals who own multiple properties. This
type of structure is ideal for community power projects that rely
on grid networks that are small or independent. 30 It is particularly
popular in Denmark's district heating sector. 31
Housing associations are private, non-profit organisations that
can finance community renewable energy projects by adjusting
tenant rents. They are highly regulated in many countries and
can form a number of different legal structures. In the United
Kingdom, for example, housing associations may be in the
form of an IPS, a co-operative society or a company limited
by guarantee. In Denmark, tenants living in the social housing
estate are members of a housing association and are in charge
of managing the estate. Usually such community energy projects
succeed only if there is a high degree of acceptance among local
tenants.
Local governments also are important actors in community
renewable energy. Under municipalisation (as it is called in the
United States), or Stadtwerke (Germany), local governments
– often in collaboration with community co-operatives –
manage and operate local power utilities to provide a not-forprofit
electricity service. In Germany, local governments own
and operate 1,428 utility companies. Similar efforts are being
undertaken in South Asia by panchayats (rural local governments).
For example, the Indian village of Odanthurai has been investing
in renewables since 2005. It has installed 65 solar street lights,
a biomass gasifier to pump drinking water and a 350 kW wind
turbine, creating a power surplus that allows the village to sell
excess power back to the state electricity board. 32
DRIVERS AND BENEFITS
There are multiple reasons for the upward trend of renewable
energy-based community initiatives. Drivers include potential
economic benefits, increased control over energy generation, and
social and environmental benefits. In most cases, the rationale for
a given project involves a combination of drivers.
The cost of renewable energy technologies (especially solar PV
and wind power) has fallen to such a degree that implementation
has become economically viable in many locations. For some
community groups, the potential for revenue generation is a key
reason to become involved in a renewable energy project.
This revenue can be spent on other projects within a community,
helping to make it more resilient and its future more sustainable.
Renewable energy projects also can provide a second revenue
stream for local farmers, offering them sustainable and profitable
investment options. As seen with community solar projects in the
United States and with onshore wind in Denmark, community
ownership has been able to protect consumers from volatile
energy prices, while guaranteeing a long-term return. 33
Another driver is the growing interest in citizen control over
energy production, which enables communities to choose the
technologies and resources used, and to keep investments
local. 34 In an increasing number of communities, people have
become dissatisfied with the inflexibility of the traditional
centralised model of energy production, which provides them
with little-to-no influence over the sustainability of their energy
supply and generally does not reinvest profits locally. 35 For some
communities, sending a political message is a key motivation. 36
Environmental concerns – ranging from local air pollution and
health impacts to global climate change – often are important
drivers for community energy initiatives. Community projects can
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