Wind Energy requires broad local acceptance. Hvide Sande: 100% Community-owned Wind Turbines

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1 Wind Energy requires broad local acceptance. Hvide Sande: 100% Community-owned Wind Turbines By Preben Maegaard, director emeritus, Nordic Folkecenter for Renewable Energy; Senior Vicepresident EUROSOLAR; Founding president of WWEA, World Wind Energy Ass. The necessary technological building blocks for a 100% decentralised supply with renewable energy already exist in the form of decentralised cogeneration plants, wind turbines, large and small biogas plants, hydropower, geothermal energy, solar energy and various types of biomass. Now, the primary task is integratiion in order to achieve maximum utilisation of renewable energy sources in creating future fossil fuel free communities. It is necessary to combine and integrate technologies, as no single renewable energy source is able to stand alone. Onshore wind energy has become the cheapest source of supply of electricity and will be a key technolology. While biomass and hydropower are limited resources, solar and wind in principle are unlimited compared to any future global energy needs. Solar and wind are fluctuating energy forms; when available they will cover the total demand of energy for electricity, heating/cooling and mobility, while biomass and hydropower is easy and cheap to store and should be used only when solar and wind is not available. Increased use of wind power, however, is often blocked by citizens that protest against the installation of the new big wind turbines. According to a number of concrete local experiences the often discussed opposition against wind power rather seems to be psychological. When ensuring broad local ownership to the benefit of all of the citizens, the necessary local acceptance of new, big wind turbines has been obtained in communities that earlier with reference to visual appearance, noise etc. stopped investor initiated windmill projects. The community: We determine what we have on our land! (Illustration: Anna Krenz/NFC). Recently this has been demonstrated in the Danish fishing town, Hvide Sande, that in December 2013 will receive the European Solar Prize for its pioneering achievements. In Hvide Sande the NIMBY (Not In My Backyard) effect was replaced by the POOL (Please On Our Land) effect when the citizens small fishing town in 2011 welcomed three new 3 1

2 MW wind turbines. See below. Later other local Danish communities, like Hanstholm have adopted the principles of Hvide Sande. Time for Energy Democracy. In 2010, in order to demonstrate that power from wind turbines should be as economical as possible, the Folkecenter launched a project Time for Energy Democracy. The main elements were that wind turbines for collective supply should Be installed onshore to ensure low-kwh prices Be run by local consumer-owned companies in the same way as for the supply of district heating, power distribution etc. Ensure that the profit would go to a public green trust to benefit the entire local community Impose a change in the planning laws in order to define wind power as a source of energy for supply rather than an investment Following these principles would result in some winners and some losers in the future development of wind power in Denmark. As low-income and degraded rural areas and communities are in possession of the greater part of the onshore wind resources, they would gain important economic advantages from a new wind power policy. The entire municipality would experience new wealth and progress. For that reason, even if wind turbines are very visible and make a strong impact on the landscape, they would again be accepted by the people, just as other infrastructure improvements are accepted when they benefit the community. Folkecenterʼs Time for Energy Democracy : People should have a right to produce and consume clean energy from renewable energy sources (Illustration: Anna Krenz/NFC). 2

3 The losers in this new wind power policy would be the present commercial investors and the national power utilities, none of which would be able to comply with the requirement that they should be locally anchored. On the other side, the question is whether these players would have had any real prospect of realising their projects considering the opposition from citizens initiatives that such commercial projects are confronted with. In 2012, there are more than 200 local initiatives opposed to wind power projects in Denmark. Another loser will be the offshore sector that has experienced a boom because local opposition from the citizens has been busy with making major onshore wind power projects impossible. It is quite evident that the offshore is linked with very big economic interests, not least with big industry, which also has the best political contacts. Often external investors or speculators are not welcome in the local communities and wind energy projects get shelved. The residents protest. Income harvested in their village may be invested in tax shelters while the community vanishes. The choice for Denmark and other countries as well of how to proceed with the development of wind power will have very significant economic consequences, depending on whether it will be offshore or onshore. On 22 March 2012, the Danish government published an energy plan, which is more ambitious than that of any other country worldwide with regard to wind power. In % or 9 TWh of the total 36 TWh of the national power consumption come from wind. In 2020, the target is for 50% of the consumption to come from wind energy. As a consequence, the annual production from wind power must increase to 17 TWh by As offshore wind power costs about EUR 0.09/kWh, or 160% more than power produced onshore, the offshore alternative will cost the Danish society an additional EUR 900 million on power annually. On account of the countryʼs international competition, it is important that the costly offshore should have a marginal role in the transition to renewable energy by

4 At the same time, the development of noncommercial, onshore wind power would create new sources of income and new dynamics in the Danish low-income rural areas being particularly beneficial for about 20% of the inhabitants of the country in addition to lower wind power prices. Progress and renewed optimism among a considerable share of the citizens is crucial. The importance of having the experience of going from recession to a future with new opportunities is important for the cohesion in a society that aims to have equal development and the same opportunities for all citizens. If the intentions of the Folkecenter project Time for Energy Democracy are realised, wind power will once more be owned and run by the citizens of the area where the turbines are erected, like it was during the breakthrough years in the 1980s. It would mean the end of the commercialisation, which dominated development for the 20 years since Energy for the common good. Renewable energy is still young. Technology and tariff aspects have found reasonable solutions, but it is time to develop generally accepted organizational structures for decentralised ownership for the common good. Here, local consumer owned companies including cooperatives are particularly important. These are autonomous associations of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through jointly owned and democratically controlled enterprises. All over the world, millions of people have chosen the cooperative model of business enterprise to enable them to reach their personal and community development goals. Cooperatives provide 100 million jobs worldwide, more than multinational enterprises. The cooperative movement brings together over 800 million people around the world. The United Nations estimated in 1994 that the livelihood of nearly 3 billion people, or half of the worldʼs population, was made secure by cooperative enterprises. These enterprises play significant economic and social roles in their communities. Cooperatives create and maintain employment, providing income. In addition to being responsible for producing and supplying products and services to their members, they also serve the communities in which they operate. Cooperatives are autonomous, self-help organizations controlled by their members. If they enter into agreements with other organizations, including governments, or raise capital from external sources, they do so on their own terms, ensuring democratic control by their members and maintaining their cooperative autonomy. By putting cooperative principles and ethics in practice, they promote solidarity and tolerance, and as schools of democracy, they promote the rights of each individual. In many countries, and in a variety of activities, cooperatives are significant social and economic actors in national economies and contribute to the well-being of entire populations at the national level. The common good solution should be given a key role in the decentralised autonomous future providers of heat and electricity. These will implement combined solutions of solar, biomass, wind energy and storage of energy, as no renewable energy solution can stand alone. Wind power has been profit-driven in Germany and Denmark since A new class of ʻgreenʼ investors has emerged and they are often not residents in the communities where they make their investments. In the pioneering stage of implementation, this may be a workable procedure but for the total transition to a renewable energy society, the local residents must take leadership in order to secure the necessary local support to wind power and collect benefits as well. The ownership and operation of autonomous renewable energy systems for community supply should ideally be a service that is provided by local cooperatives; similar to the supply of water, local district heating, public transport and other parts of the 4

5 public infrastructure, cooperative ownership will re-establish the necessary general acceptance of especially big wind turbines at the local level. As in many other aspects of society, decentralised ownership of energy solutions by cooperatives will be seen as generally acceptable organizational structures all over the world. In Scandinavia, ownership that satisfies the common good is the dominant form of ownership for the supply of water, district heating, public transport and similar part of the public sector. However, until now, windmill ownership primarily has been through private investors and socalled guilds that are cooperatives where people invest in order to make a profit that lands in their own pockets. Therefore, the Danish version of windmill cooperatives does not belong to the common good category, while the Hvide Sande windmill project is to the benefit of all of the citizens. Hvide Sande demonstrates real innovation within wind energy By ensuring broad local ownership to the benefit of all of the citizens, the necessary local acceptance of new, big wind turbines can be obtained. This has been the case in the Danish fishing town, Hvide Sande. Hvide Sande has demonstrated that when properly organized and with respect to the attitudes and emotions of all of the local citizens, the supply with renewable energy can become a harmonious part of a contemporary society with its social, administrative, cultural and industrial structures and institutions. It is in itself a precondition for achieving 100% renewable energy supply for a local community. POOL, please on our land, replaces NIMBY, not in my backyard. POOL leads to the necessary local acceptance of the windmills when everybody in the community realizes their importance for local development and job creation. Wind power as a lever for regional development The regions of Denmark with the best wind resources have in fact the lowest per capita income and the highest rural exodus. Degradation of local communities in villages and smaller townships leads to increased inequality and represents special development challenges at the national level for creating sustainable income in the country's marginal areas. Instead of protests that blocked a previous investor project in Hvide Sande, a pro-active initiative from a group of local players has shown, that the Danish government's ambitious target of MW new onshore wind energy by 2020 can be realized when the necessary support and acceptance by the local population is obtained. 5

6 This, however, requires new types of ownership and organizational solutions. When the income is re-invested in improved community infrastructures that all citizens benefit from, with improved employment, income generation and quality of life, even big windmills installed close to the town will irrespective of their strong visual impact meet broad local acceptance. In national opinion polls 80% of the population supports more wind power, however, due to the NIMBY effect at the local level rather 80% of the residents are against the real wind energy projects. This dilemma has been overcome in Hvide Sande by applying a new ownership model that appeals to the local population. When ensuring that income from renewable energy electricity generation is activated locally, the economical basis for improved development in marginal areas in Denmark is provided as well, in addition to an accelerated transition to renewable energy supply. In this respect, Hvide Sande paves the way as well. National target of 50% wind power by 2020 With the Energy Agreement of March 2012, 50% of Danish electricity production must come from wind turbines in 2020 while in 2013 the share is 28%. According tot he government s plans by 2020, MW onshore, 500 MW near-shore and MW offshore wind turbines is required to fulfill the target. Due to substantial opposition and protests against onshore wind energy projects, offshore wind energy during the last decade has obtained broad political support even if offshore is a much more expensive option. Investments per kwh may be 2 to 3 times higher offshore than onshore. With the expansion of the share of onshore wind turbines very big amounts can be saved compared to the same amount of electricity produced offshore. Therefore, the more turbines that can be established onshore the lower the electricity prices to the benefit of consumers and competitiveness of renewable energy. The socio-economical dimension With a total of MW new onshore wind energy there is a very significant socio - economic potential. Each MW, as installed in Hvide Sande, produces kwh/y. The local spin-off is 2 to 3 EUR/cents per kwh. With the capacity factors achieved in Hvide Sande, the planned MW new onshore windmills will produce 8 TWh per year. With 100% community ownership 200 to 300 million EUR will annually be available for investments in infrastructures as a lever to the common good in the regions with the lowest per capita income. 6

7 The marginal regions, often called the rotten banana, represent 15 to 20% of the population of Denmark. Average income is low and rural exodus high. With the best wind resources of the country, new legal framework can determine that only local common-good utilities can harness the wind to generate local development and employment. The marginal regions, often called the rotten banana, represent 15 to 20% of the national population of Denmark of 5,5 million inhabitants. In case if the MW new onshore wind power was private investor-owned, the amount mentioned, 200 to 300 million EUR/year new maney, would not be available for leverage of regional development but may even land in tax-shelters abroad. Thus it is clear that the Hvide Sande model has a wide societal perspective that can serve as an example for many countries and communities. Overcoming the NIMBY effect Many of the members of the 200 protest groups in Denmark organized windmill cooperatives in the 1980s. Therefore they are well familiar with wind energy and how to organize themselves at the community level. Now the same persons protest against financial investor projects that have no or little relationship to the communities where they plan to install their wind farms. Thus, the political target of 50% wind energy by 2020 cannot be fulfilled unless there are ownership solutions applied that allow the local residents to benefit from the wind energy projects. The alternative would be a much more costly offshore wind energy. According to the Danish law, any group of persons or organisations can initiate a Trust Fund by raising a minimum founding capital of EUR The founders themselves and specific individuals cannot benefit economically from the outcome of the fund. Thus, the statutes explicitly have to mention to which general purpose (allgemeingenützliche) the outcome of the fund can be donated. As a lever for the transition to renewable energy, a Trust Fund s beneficiaries shall be groups, associations and organizations that represent community interests with broad local purposes that can support local employment, income generation, culture and infrastructure. Examples of beneficiaries are commercial and industrial associations, 7

8 agricultural associations, sports clubs, theatre groups, civic associations, trade unions, tourism associations etc. These could have an interest in creating Trust Fund-owned wind power projects when the purpose of the fund s beneficiaries coincides with the associations' interests. Associations are the key part of the Danish culture, especially in the marginal low-income regions. Here local associations' participation in wind energy projects could contribute to the development of cultural, sports and business while ensuring local acceptance of wind energy projects. Local utilities can also be included in the Trust Fund. The Hvide Sande project Hvide Sande is a small fishing town in Jutland, Denmark, directly at the North Sea. The town has a population of about and is the fifth largest fishing port in Denmark. It is also a popular tourist location. In 2010, the Holmsland Tourism Association initiated a Trust Fund "Hvide Sande Business Development" with the aim to install three wind turbines each of 3 MW on the site owned by the Hvide Sande harbour. In December 2011, three 3 MW Vestas V-112 wind turbines were installed in the area near the port. The turbines went into operation in January They each produce 15 million kwh annually (with a capacity factor of 0.50, which is in line with offshore wind turbines where the investment per MW can be more than double). 3 MW Vestas V/112 wind turbines in Hvide Sande. Each produces kwh/y. The capacity factor is 0,52. 8

9 Ownership structure - Hvide Sande Trust Fund The Hvide Sande wind power trust fund was founded by four parties: The local Federation of labour unions The local Confederation of Danish Industry The local utilities The tourist association The Hvide Sande Trust Fund owns 80% of the wind energy project. As per the guidelines set by the Danish Renewable Energy Act the remaining 20% of a wind project must be offered to local individual residents living within a 4.5 km radius from the wind turbines. The local individuals that own 20% are organized in the North Harbour Windmill Cooperative with approximately 400 shareholders from Hvide Sande and the nearest region. Hvide Sande has demonstrated that local ownership leads to general acceptance of the windmills as they generate new income and development for the harbour, tourism etc. Required acceptance For several years, private project developers planned to erect wind turbines in the same location. Because of local protests their project was not realized. In this context, the Trust Fund's objectives and positive impact on the community in Hvide Sande has been crucial for local acceptance. Economical details The investment in the three Hvide Sande wind turbines was EUR 12.2 million, financed with a loan from two local banks with the three wind turbines as the only collateral for the loans. With the annual return of 9% to 11%, the Hvide Sande Trust Fund is expected to repay the loans in approximately 6 to 8 years. The port owns the land where the turbines are installed. The annual rent of the 30 years contract for the three sites of DKK 4.8 million per year (approx. EUR ), is paid to the local harbour, thus creating an annual operating grant to support the development of the port. It will be seen that the capitalized value, EUR , of the three sites is around 50% more than the costs of the 3 wind turbines. 9

10 After the repay of the loans the income from the turbines will help to finance the necessary modernization and future development of the harbour. The Trust Fund is further used for energy renovation of local public buildings, local public e-mobility and other new business initiatives for the benefit of the harbour, tourism and the local municipality. This is in the interest of all of the citizens and explains their unison acceptance. The three wind turbines, Hvide Sande harbour and town, at the West coast of Jutland. 10