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January 1, 2004
Paul Gipe

Community Wind:The Third Way



Portions of the following have been adapted from Wind Power: Renewable Energy for Home, Farm, and Business, published by Chelsea Green, 2004.

Wind can be-is today-a producer of bulk electricity by the massing of tens, sometimes hundreds, and occasionally thousands of wind turbines in large arrays. These wind power plants are the visible manifestation of wind energy's remarkable progress during the past two decades. But wind energy can be much more. Wind energy can become part of the community by offering farmers, as well as both rural and urban residents the ability to build, own, operate-and profit from-their own renewable source of electricity. And by doing so wind energy can provide communities with a more reliable and resilient power system, one not subject to embargo, and one less susceptible to disruption than the centralized and sometimes fragile network that exists today.


The Third Way

Unlike conventional power plants, wind energy is modular; each wind turbine is a power plant unto itself. Wind power plants can be of any size and located anywhere. A wind power plant can contain from one turbine to one thousand. They can be concentrated in large arrays or dispersed across the landscape. They can be installed at the end of long transmission lines or employed where the electricity is needed. Wind turbines, for example, can be placed in one's backyard, near a factory, on a farm, at a harbor, within cities as in Toronto, or even offshore from cities as near Copenhagen.

North Americans have been exposed to only a few of wind energy's many possibilities. For most North Americans, wind energy is either giant wind farms at the end of long transmission lines great distances from the cities they serve, or small wind turbines found at a few rural homesteads.

There is, however, a third way. 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 scattered around and sometimes within urban agglomerations. And many of these turbines are either owned by the farmers on whose land the turbine stands, or by local residents.

It is the modularity of wind energy that makes possible the generation of electricity where the electricity is most valuable, minimizing the need for long high-voltage transmission lines. Each wind turbine, though physically large, is small relative to fossil-fired and nuclear-fueled power plants. This modularity enables placing wind turbines nearer the load than possible with large, centralized power plants, providing the resiliency necessary for stable electricity networks that was identified twenty years ago by Amory and Hunter Lovins in their book Brittle Power.

Wind energy's modularity also permits local participation in the ownership and operation of the wind turbines. With ownership comes a sense of control and a stake in the future. To farmers and villagers buffeted by globalization and the industrialization of agriculture, wind energy can offer a ray of hope for rural communities.

Local ownership also offers a path around the deregulation bottleneck that has stymied the growth of decentralized sources of electricity across North America. With electricity rates capped in the province of Ontario following deregulation, and the absence of a retail market for green power, community wind projects are one of the few means for people to express their desire for renewable energy.


Community Wind

Community wind, as Wisconsin activist Mike Mangin calls it, is wind development on a human scale. Mangin, promotes small clusters of medium-size wind turbines, like those found in Europe. To Mangin, community wind signifies local turbines, locally-owned.

They may be owned individually, cooperatively, or collectively through numerous mechanisms. The key, says Mangin, is for the community to identify the turbines as their own. Doing so may avoid the all-too-common conflicts encountered when developers, viewed as outsiders, propose projects that primarily benefit absentee owners. As one Dutch farmer has said, "your own pigs don't stink."

Wind energy's general acceptance in Denmark and Germany has often been attributed to the dispersal of the wind turbines across the landscape and the distribution of ownership across hundreds of thousands of individual participants. One-fourth of the wind generating capacity in Denmark, equivalent to an investment of more than one billion Euros1, has been developed by windmill guilds (vindmølleaug) or what are called in the anglophone world as cooperatives. An equivalent amount has been installed directly by farmers themselves. As much as one-third of all wind capacity in Germany--the world's single largest market--has been built by associations of local landowners and nearby residents (Bürgerbeteiligung). Individual German investors have installed as much as 4,000 megawatts of wind generating capacity, nearly as much as total installed wind capacity in the entire United States in 2002, an investment exceeding four billion Euros! More than 100,000 households in Denmark, and another 200,000 people in Germany own a share of a nearby wind turbine or shares of one in their community.

Community wind development can never guarantee total community acceptance, or financial support, but it does offer a means to take full advantage of wind's attributes while maximizing wind's public acceptance.


Working Together

Europeans and North American have used several different mechanisms for developing community wind projects. All require working together. It's an approach common in northern Europe, particularly in Denmark. Collective action is a way for small investors to combine their financial clout. Joining together enables Danes to acquire the most cost-effective equipment possible, whether it's to process cheese, bake cookies, or generate electricity.


Cooperatives-The Danish Approach

Cooperative wind development is a natural outgrowth of Danish cultural and agricultural interests says Asbjørn Bjerre of Danmarks Vindmølleforening (the Association of Danish Windmill Owners). The objective of the Folketing, or Danish parliament, in providing incentives for wind cooperatives, says Bjerre, was to encourage individual action toward meeting Danish energy and environmental policy. Through this program nearly any Danish household could effectively generate all its own electricity with wind energy without necessarily putting the wind turbine in their backyard. It worked, and the concept caught on in Germany and the Netherlands.


Kennemerwind is an example of one Dutch cooperative.

Danish law encouraged mutual ownership of wind turbines (fællesmølle) by exempting owners from taxes on the portion of the wind generation that offset a household's domestic electricity consumption. A wind coop would then buy a wind turbine, site it to greatest advantage, sell the electricity to the utility, and share the revenues among its members. This enabled a group to buy the most cost-effective turbine available, even though it may have generated more electricity than any individual member needed.

The term cooperative is used loosely. In the Danish context, many cooperative ventures were assembled as limited liability companies-investment coops-in response to the vagaries of Danish law and tax policy. These associations funded installation of single turbines, clusters of turbines, and sometimes small wind farms, such as the Lynetten cooperative that owns four out of the seven 600-kilowatt wind turbines on a breakwater within Copenhagen's port. (The other three turbines are owned by Copenhagen's municipal utility.)

Danish wind turbine cooperatives have had a profound effect on the development of wind energy. Until 1995, most wind turbines in Denmark were installed cooperatively. About 5% of the population now own a stake in a windmill guild.

The success of Danish coops and risk-taking farmers can best be seen in the township of Sydthy in northwest Jutland where winds sweeping from the North Sea across the great Limfjord produce 130% of the electricity consumed by the township's 12,000 inhabitants. The area's wind turbines, all cooperatively or individually owned by local residents, are net exporters of wind energy. During blustery spring months, the turbines produce three to four times the amount of electricity consumed locally.

Sydthy Kabellaug is a good example of Danish cooperation in action.

Despite changes in Danish policy toward renewable energy, cooperative action remains an important avenue toward local ownership. Half of the Middelgrunden wind farm of twenty 2- megawatt turbines installed just offshore from Copenhagen were developed cooperatively. (The remaining ten turbines are owned by the municipal utility.) Organizers believe the project would not have been built without the public support engendered by local ownership. Despite numerous obstacles, the cooperative sold 40,500 shares for 570 Euros each, a price set as low as possible to enable broad participation. All together, 8,500 in investors bought shares.


Cooperative Net Billing

Innovative Canadians and Vermonters have attempted other approaches. The Toronto Renewable Energy Coop had hoped to install two medium-size turbines on the city's lake front using what board member Jim Salmon calls cooperative net billing. The coop would deliver electricity from the turbines to Toronto Hydro, the local utility. The turbines' production would then be used to offset the retail rate on coop members' electricity bills in proportion to the amount of investment each had in the turbine. Instead of coop members installing small turbines on their own property, says Salmon, the coop would have bought large turbines and installed them at good sites where they would be most productive. In this way, members gained economies-of-scale by using more cost-effective turbines at more productive sites.

Toronto WindShare at ExPlace

However, for a host of regulatory reasons, the Toronto Coop had to abandon the concept in its infancy. They adroitly changed direction and turned toward an investment coop, selling shares to their 500 members for the construction of two turbines. The first machine, a 750-kW Lagerwey turbine, was installed in a prominent location on the city's harbor front at the end of 2002. The second turbine will follow in a similarly prominent location.

In Vermont, renewable activists proposed what they called "group net metering" as a way for home and condominium owners to share in the cost of installing a wind turbine sited to best advantage. The Vermont proposal would have permitted condominium owners to install a wind turbine and connect it to the grid. Electricity from the turbine would then equally offset electricity consumed by each condominium. Likewise, in rural areas where homes are more widely dispersed, a group of neighbors could band together and install a turbine, offsetting their individual consumption. As in Toronto, implementation of the concept was thwarted, but the dream remains alive.


Limited Liability Associations

Where tax policy and legal restrictions preclude formation of cooperatives in the North American sense, farmers and landowners have formed limited liability companies or investment coops. This is the model of community wind development seen most often in Denmark and northern Germany. The association may be limited only to landowners participating in the project or the project may be opened to investors from neighboring communities, or possibly investors nationwide.

Renewable advocates on both sides of the Canadian-U.S. border have struggled to replicate the European model of community ownership on this side of the Atlantic. Few have been as successful as the Toronto Renewable Energy Cooperative and the Ontario Sustainable Energy Association, the provincial organization of which the Toronto coop is a part.

The investment coop format enabled Ontario renewable advocates to create a limited liability corporation to sell electricity from their two turbines in Toronto to the grid at the prevailing spot price, currently higher than the retail rate capped by deregulation. The investment coop was also then able to take advantage of Canada's Wind Power Production Incentive. Individual investors-the coop members-could further increase the return on their wind investment by eventually selling the green "tags" or certificates for new renewable sources of generation on the North American market. Should they choose to do so in the public interest, members could retire the green attribute from their investment rather than selling it. In either case, coop investors enabled the construction of renewable sources of distributed generation in Ontario that otherwise would not have been possible under then existing market conditions.

Working with municipal utilities, other renewable energy advocates, progressive businesses, and community activists, the Ontario association is building a grass-roots demand for dispersed, community-owned wind generation. They hope to duplicate Toronto's success elsewhere in the province either as small clusters of turbines for individual communities, or as mini wind farms developed by pooling together the interest of several communities.

MinWind is an example of farmers pooling their interests.

Energy for Life

The 19th-century Danish theologian, N.F.S. Grundtvig, expounded upon a philosophy that has had a profound and lasting effect on Danes and the cooperative movement in Denmark. More than a century ago Grundtvig said that all public policy, in fact all human endeavors, should be life-affirming. Denmark's development of wind energy is built upon this foundation. It was not just a question of abstract economics. Danes believed using wind energy was the right thing to do.

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