The energy transition is a unique possibility in history to shift from centralised, fossil fuel based energy production to decentralised, sustainable energy production. The interesting part of this transition, though, is not so much in the switch from fossil fuels to renewables – it is in the switch from centralised to the decentralised production. This transition is multifaceted and comes with a variety of possibilities – indeed, this transition could represent one of the most fundamental social and economic changes in modern history. We call this a transition to an “Energy Democracy”.
The two key pillars of an energy democracy are the democratisation of capital invested and the shift in energy ownership from large corporate entities to democratic organisations in the direct hands of the people. This is a power transfer from one group in society to another. Energy, because of the way in which it was produced, needed large capital investments for nuclear or coal fired plants. These tasks were so large that it mostly fell to governments to supply their people with energy.
Control of the energy industry not only means control of its sustainability but also influence over a large pillar of the economy. Over the last 30 years, during a short-lived wave of neo-liberalism, we have largely sold this control to international corporations. Governments and their citizens thus lost direct influence, something only compounded by governments’ loss of control over the direction of capital used to finance these sectors. Governments’ last bit of leverage to influence markets and steer industry into a more sustainable direction has been the use of taxpayer money for state aid and subsidies. Even this, however, can only be achieved with great effort and large sums of money.
The current energy transition and the information technology revolution of the last twenty years have placed us in a more promising situation which allows the people to regain control of the energy industry in a democratic way. This is critical if we are to steer our energy sector into a direction that is beneficial for the people instead of benefitting only the “a-moral” (neither moral nor immoral) steering mechanism of shareholder value. This does not mean that the power should be returned to the hands of governments, for the liberalisation of the energy industry was not without its reasons. Governments, with all their varied political interests, are in essence not well positioned to run industries. However, we do need to take back democratic control of the energy industry and the capital financing it.
This is where energy cooperatives in cooperation with the crowdfunding platforms come into play. The co-ownership and democratic control energy cooperatives facilitate give people control over energy production and, increasingly, energy distribution and supply.
The direction of capital is also critical and until recently, individuals (apart from some cooperative banks and credit unions) had no direct control over how their savings were turned into investments. This led to massive investments in the fossil industry. Ethical banks, pledging only to invest in renewable energy, slowly came into being, but this still is far from democratic control of capital. Crowdfunding platforms give people the power to choose how their capital is being used. They facilitate democracy by allowing people to, in a sense, vote with their money. In combination with local cooperative ownership, crowdfunding is thus democratising capital flows and the ownership of energy.
We should not underestimate these opportunities. We now have the possibility to democratise a large part of the energy industry. The investments needed for a full energy transition are enormous, but that does not mean the system should not be democratised. By envisioning layers of finance, the opportunities become endless. When we deal with small, local projects, the local ownership and investments of the local people through cooperative structures will be sufficient; when we move to larger projects, the combination of the local population supported by platforms with national or even European reach allow for the financing of large installations (which may have otherwise only been possible via multinationals). Combine several local cooperatives with several crowdfunding platforms, as Citizenergy does, and we can even move to larger scale investment of 100 MW windparks or go off shore. Once the ethical banks and the pension funds begin to support this movement, any investment that is needed for any size of decentralised renewable energy production project, transition network, smart grid or energy storage is within the reach of the people.
By Siward Zomer, De Windvogel | www.windvogel.nl
This article was originally published on Citizenergy.eu