The next big thing or too big for us? New business models for renewable energy cooperatives – barriers in the perception of cooperatives’ members.

Prof Carsten  Herbes, Nuertingen-Geislingen University, Germany

Mr Vasco Brummer, Alanus University,Germany 

Ms Naomi Gericke, Alanus University, Germany

Mrs Judith Rognli, Nuertingen-Geislingen University, Germany

Prof Susanne Blazejewski, Alanus University,Germany

Community energy projects and especially renewable energy cooperatives (RECs) have become an increasingly important element of energy markets in various European countries (Viardot et al. 2013). Especially in the German energy market, they have changed the long unaltered market structure. As of end of 2014, 973 RECs (Holstenkamp, Müller 2015) were operating in Germany with the 772 RECs founded since 2006 alone accounting for a total capacity of approximately one Gigawatt (DGRV 2015).

However, most RECs have relied on an easily scalable, simple and low-risk business model: producing electricity with photovoltaic (PV) systems and receiving feed-in tariffs (FIT) stipulated by the Renewable Energy Act (REA) (Yildiz et al. 2015). With the recent disruptive changes in the REA, especially the tendering system increasingly replacing fixed FIT, RECs have to look into new business models which has already led to a steep decline in the number of newly established RECs in 2014.

New business models that have been implemented by some RECs include marketing energy to consumers, developing wind power projects and e-mobility. For the RECs to implement these models, member acceptance is crucial. Therefore the key question is: which new business models do REC members consider and which barriers to implementing these models do they perceive?

Methodology and first results

After initial desk research and the analysis of ca. 100 REC’s websites, we performed a participant observation in the annual general meetings of 15 RECs and conducted 38 qualitative interviews with their members. All interviews were transcribed (total:  more than 2.700 pages) and are now undergoing a qualitative content analysis with MAXQDA (content analysis software). The below mentioned results are based on a first analysis of 12 interviews. Should the abstract be accepted, we will present a full analysis of all interviews at the BIEE research conference.

New business models mentioned in the interviews we analyzed so far included:

•           New renewable technologies not in the REC’s portfolio so far: wind, hydro, biogas

•           New revenue models based on energy production from renewables: direct marketing at the Energy Exchange and to local households, organizations and REC’s members

•           New services connected to renewables: contracting (e.g. street lighting for communities), financial participation in municipal utilities’ projects, e-mobility, energy efficiency consulting, services for other RECs, power storage

•           New services not connected to renewables: village shop, telecommunications network

Our interviews also voiced a number of barriers they see with the new business models.

•           Risk (legal, operating risks)

•           Requires additional resources (time, know-how, financial resources)

•           Is not local (e.g. offshore wind power projects in the North Sea)

•           Environmental issues (e.g. with using energy crops for producing biogas)

•           Complexity

Not surprisingly, new business models were a frequent conflict topic in the AGMs we observed and were also mentioned by our interviewees as potentially sparking strong conflicts. The fact that most REC board members in Germany perform their duties on a voluntary, i.e. non-salaried basis exacerbates the problem further.

Conclusions

The results of our analysis will help to get a deeper understanding of the barriers that REC members see in the transition to new business models. This in turn will provide the prerequisite for devising potential countermeasures to these barriers, such as cooperations between RECs, professionalization of RECs management etc. As community energy and especially RECs are also intensively discussed in other countries in Europe, our results from the German market may also be a useful element in developing the REC sector in those markets.