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Community-Owned Wind Farms Bring Added Local Value

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Originally published on Renewables International.
By Katharina Wolf and Craig Morris

Often talked about, rarely quantified – how much more revenue does a community-owned wind farm bring in for the community, as opposed to a project by out-of-towners? A study conducted by the Institute for Distributed Energy Technologies (IdE) on behalf of Stadtwerke Union Nordhessen (SUN) took a look at the issue. It found that the local financial benefits were eight times greater.

SUN is an umbrella group that brings together six local municipal utilities. Recently, it developed a community shareholder model to keep as much of the profits from wind farms at home. The state of Hesse plans to be 100 percent renewable for electricity by 2050, and it also has recommended that citizens be allowed to invest in order to increase acceptance.

But SUN discovered that citizen ownership and a high level of local added value only play a minor role when decisions about priority wind zones on land owned by the state are made. The result, the organization fears, could be a lack of winning bids among community projects, with international project developers winning out when the German wind sector switches over to auctions in 2017. Income from wind farms in the state would then be paid to international investors. SUN therefore wanted to see how much of this revenue could be local to begin with.

The IdE study (PDF in German) found that a focus on land leases does not go far enough. A closer look revealed that international firms sign fewer contracts with local service providers, do not get funding from local banks, generally do not operate wind farms themselves (instead, selling them turnkey to other international players), and do not provide investment options for local players, be they cooperatives or municipals.

The IdE found that the level of local added value varies according to a number of factors:

  • Who owns the land?
  • Who owns the wind turbines?
  • Who financed the project, and were local governments and citizens allowed to purchase stakes?
  • Did tenders give preference to local service providers? How are profits distributed?

For a wind farm with seven 3 MW turbines, only 7 million euros would flow back to the community if the project were developed by an international player, compared to 58 million if the project developer were local.

SUN says the total amount could add up to around 3 billion euros of lost revenue in this region alone, which has a potential of around 270 wind turbines worth 1,350 MW. None of this is likely to sway current legislation, however; both German and EU lawmakers and courts prefer to promote EU-wide competition, partly out of fear of local corruption.

Reprinted with permission.

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