COMMUNITY BASED ENERGY:
ISSUES AND RESEARCH

by

Steven M. Hoffman
University of St. Thomas

Presented at:

Kyungpook National University
Research Institute for Energy, Environment and Economy
School of Economics and Trade

March, 2004

The blackout of August 14, 2003 created a virtual tsunami of concern about the reliability of the nation’s electricity system and in particular, the transmission system.  From the U.S. Secretary of Energy on down, all parties seemed to agree that the loss of electricity to millions of business and residential consumers signaled the need for a major overhaul of the power lines that crisscross the country.  Some commentators, however, offered a radically different analysis of the electricity problem.  According to David Morris, for instance, “[I]nstead of spending tens of billions of dollars to expand the transportation of electricity we should spend that money to expand the distributed generation of electricity”  (Star Tribune, August 25, 2003, P. 11A).  Arthur J. O’Donnell offered a similar line of argument, saying that  ”[I]t's time to rethink and reinvent our electric grid . . . Distributed generation and direct use of solar panels reduce the need for extended transmission lines and will simplify the network in the long run” (San Diego Union-Tribune, August 24, 2003, P. G1).

Improvements and innovation in a variety of distributed generation (DG) technologies, including wind turbines, solar panels, fuel cells, and other small, modular power-generating technologies that have resulted in significantly lower costs for smaller-scale systems are making the ideas enunciated by Morris and others a realistic possibility.  For the most part, however, DG is seen as a complement to the current.  The truly revolutionary possibility for DG, however, is their ability to serve as the foundation for a community-based energy (CBE) system that, when fully articulated, could fundamentally alter the electricity system.  Rather than augmenting the grid, community-based energy predicated on a variety of DG technologies could become the principal electricity provider with the grid serving as a back-up source of electricity available whenever locally-produced and owned energy might be momentarily unavailable.

In addition to the changing economics of generation alternatives, CBE initiatives have also been driven by issues of citizenship and community empowerment as reflected in specific institutional structures.  David Morris again argues that “customer-owned utilities are more democratic, located closer to customer-citizens and therefore more responsive to their values” (2001: 7; see also Ridley, 1998).  From this perspective, the question of how to power society is primarily about social norms and values rooted in issues of democratic governance and community empowerment. 

CBE advocates have also claimed that the wider use of distributed technologies would be a major step forward in bringing about a more environmentally-benign electricity system (Fenn, 1999).  California Public Utilities Commissioner Carl Wood has merged these latter two perspectives, arguing that a “people’s energy movement,” built on the back of decentralized and environmentally benign resources such as wind and solar technologies, will be needed to fix the coming energy crisis.

Community-based energy therefore offers a unique opportunity to explore a number of related issues revolving around questions of civic participation, institutional structures, sustainability and technological.  CBE advocates, for instance, routinely claim that investment in DG assets necessarily implies a more robust form of public participation and a greater degree of understanding on the part of the public as to the nature and consequences of their energy decisions.  Despite the rhetorically compelling arguments, however, there is very little evidence to show that a distributed energy path necessarily requires or even recommends decentralized or participatory decision making.  At the same time, more robust and broader forms of public participation may not necessarily yield more environmentally benign energy decisions.   Some evidence exists, for instance, that citizens tend to rank environmental impact below reliability and price when thinking about their energy choices (Hoffman and Matisone, 1997).  The history of green pricing programs, and the dissonance between expressed preferences versus actual participation in such programs, also calls into question the claim that citizens naturally gravitate towards green choices.

A careful examination of CBE initiatives therefore opens up a whole host of questions for examination, including:

• What meanings do CBE initiatives attach to the idea of “community” and under what conditions have community-level energy projects developed; who are the key actors, how have they interacted with existing institutions, and so on?
• To what extent do CBE initiatives inform wider understandings of the optimal means of support for and adoption of sustainable technologies?
• To what extent does CBE help us conceive of and/or operationalize “citizenship”; how much does citizenship require of community members?  How do various institutional options , i.e., co-operative or municipal utilities, counties, IOUs, grassroots organizations, etc., structure citizen participation?
• Which of the institutional options are or would be most successful in bringing about a technological shift?
• How important is the structure of CBE initiatives and is there a size limit in determining successful CBE initiatives, i.e., must we have small, individual applications (i.e., fuel cells, microhydro systems, small turbines, and rooftop solar systems) owned and operated by individual residents or businesses to label something as CBE?  Or can we have large machines (i.e., 1.2 MW wind machines assembled as a so-called ‘wind farm’) and still call it CBE?
• What is the nature of the interplay among the goals of citizen participation, local ownership and technological change and the manner in which competition among the goals is resolved;
• How important is governance and community involvement? If local involvement is limited to a few landowners receiving lease payments can we still consider this a local or community-based project?
• Are the norms of CBE satisfied by so-called “green pricing” programs, the effect of which is to limit citizen participation to that of being a consumer? Examples of such program might include “community-based green marketing programs” and “community-based energy-efficiency” programs as practiced to date under many restructuring –induced “aggregation” programs;
• How effectively do various types of CBE initiatives communicate scientifically complex ideas to involved publics?
• How important is the link between local generation and local consumption? 
• How are potential conflicts between the goals of citizen participation, local ownership and technological change resolved?
• What is the effect of a “top-down” versus “bottom-up” approach?  For example, the Minnesota-based Regional Sustainable Development Partnerships program argues that the program must be generated from the community and is attempting to create a structure that acts on community initiatives rather than imposing programs in communities.  This is in contrast to the United Kingdom’s Community Renewables Initiative, organized under the auspices of the Countryside Agency and the Department of Trade and Industry, the aim of which is to create “community enterprise structures.”

Two examples of community-based energy drawn form the state of Minnesota illustrate two, competing if not contradictory, motivations that inspire CBE, namely, community empowerment and/or citizenship and economic development.  The first of these cases is a collaborative between Great River Energy and TIMONT, LLC (Limited Liability Corporation).  TRIMONT was a proposed partnership of some 40 local landowners that is negotiating a contract with Great River Energy, the state’s largest G&T cooperative utility that supplies electricity to 28 distribution cooperatives.  In a brief press release announcing Great River Energy’s selection of TRIMONT for its 100 megawatt wind energy project, dated August 2003, there are five uses of the word “local”, two in the first paragraph, and then one in each of the following paragraphs, for a total of five uses of “local” in a seven paragraph press release.  TRIMONT is described as a “coalition of local interests,” as well as “local landowners” and “local citizens” and the part of the reason TRIMONT was selected by Great River Energy was that the developer is “locally owned.”  Also mentioned is the belief that this will be the “largest, locally-owned wind project in the nation.” 

A second case is that of RENew Northfield, a grassroots organization created by a local activist attempting to install and operate a number of small-scale wind projects in the community.  The origins of the organization can be traced to a March 2001, editorial that appeared in the community newspaper.  The piece was written by a local activist, articulating his vision of Northfield as a clean-energy community, and inviting other interested citizens to join him for a public discussion of these ideas.  Contextual analysis of this and other documents, including the organization’s strategic plan, minutes of meetings, e-mail communication between members (there are 100 subscribers on their listserv), presentations to other organizations, and RENew Northfield’s website, indicates a clear emphasis on community participation in decisions about how Northfield should develop sustainability in the area of energy policy.  In the “About RENew Northfield” section of the website, for instance, the organization is self-described as “an ad-hoc grass roots organization comprised of local citizens interested in exploring the options available to promote local development of renewable energy resources.”  The broad community support for the concepts advanced by RENew Northfield is noted, as is the fact that the initial organizational meeting was attended by “23 area residents from all walks of life” and that the board of directors “reflects the diversity of our community.” 

RENew Northfield’s strategic plan states that the organization is guided by the values of environment, community, and social justice.  The value of community is further defined as “Economic benefits from the production and use of energy should accrue primarily to the local community.  The community should determine, and share responsibility for, how its energy is produced and consumed.”  An examination of other documents shows that RENew Northfield’s emphasis on community participation extends beyond the words of their strategic plan to their deeds.  The organization has engaged in local public education efforts such as making presentations to schools and civic and religious groups, as well as co-hosting forums with other local groups such as the League of Women Voters.   RENew Northfield hosted a community wind conference, with the purpose of “providing citizens and public officials with the information necessary to feel comfortable in making the decision to invest in wind energy.”  More than 200 people attended that conference in April 2002. 

More informal indicators of RENew Northfield’s emphasis on community participation appear in minutes of the organizations’ meetings.  At one meeting, for instance, considerable time was spent coming to an agreement that “[T]he group agrees that if people in Northfield are going to get interested in alternatives and renewables, they need to see something to know what we’re talking about.  The Middle School wind tower would be such a ‘demonstration’ project.”   Another example of an informal indicator is found in a memo from RENew Northfield’s president to its members, which stated that:

Some of you may like some of what I have proposed, but not other elements of it.  Whatever your opinion, if you have one, talk to me!  In person, by phone, by e-mail to me individually or to the group as a whole – which is what I would prefer – I think we all have a lot to gain by keeping this discussion and process as open and transparent as possible.” 

This emphasis on process as well as outcome indicates that RENew Northfield’s goals include more than technological change.

This very preliminary examination of these two cases clearly illustrates two competing if not contradictory, motivations that inspire CBE, namely community empowerment and/or citizenship and economic development.  RENew Northfield, for instance, is strongly resistant to projects beyond a certain scale.  According to the groups’ leadership, once a project gets beyond a certain, albeit hard to specify size, the project becomes something other than a community-based system, a conviction party rationalized by pointing out that a larger project will more likely be grid-connected.  Yet even a single windmill tied into a community asset, e.g., a school, might, if it is net metered, feed into the grid.  More likely, what the larger project seems to violate is a norm of community empowerment that is predicated on some sense of community control.  That is, a small turbine or a single roof-top solar installation can be understood, monitored and controlled by a competent individual.  To understand, much less be in effective control of, a 100 MW wind farms is perceived to be beyond the capacity of most people.

At the same time, the TRIMONT proposal is of interest to Great River Energy because of its link to GRE’s historic relationship to local, democratic systems.  Whatever its size, Great River is, after all, a co-op.  But here we can ask just what does local ownership imply or require?  In this case, there is minimal community involvement.  That is, while there is a formal board of directors there is NO community involvement outside of the participating landowners.  At best there is a community of interest based upon shared economic benefits.

The difficulty of pinning down the exact meaning of community-based energy is further illustrated by a recently announced Community Wind Rebate offered by Minnesota Department of Commerce.  The Department is looking to give money to new grid-connected community owned wind energy projects of 750 kW or larger to be installed, interconnected and operating with a MN electric utility by June 30, 2005.  Examples of community ownership include educational institutions, non-profit organizations and units of government as well as multiple, non-taxable owners operating multiple turbines.  Thus, there are many forms of ownership only some of which may meet the objective of community empowerment.  Further, while this is a wind-only proposal, therefore meeting the environmental objective common to many CBE projects, there is no necessary linkage between local ownership and local consumption.  Indeed, the requirement that it be grid-connected seems to be directly contrary to what many CBE advocates see at the heart of their thinking about displacing the primacy of the grid.

So we have lots of questions and many fewer answers.  With the hope of trying to provide some answers, we are in the early stages of two projects designed to further our understanding of these issues.  The first is an evaluation of a CBE program is the Minnesota-based called the Clean Energy Resource Teams (CERTS) Project; Dr. High-Pippert is literally constructing the survey instrument as we speak.  CERTS, which is funded with grants from the state of Minnesota, seeks to engage regions and communities in planning and determining their energy futures. It will bring together citizen-led regional planning teams and technical resources from the University and elsewhere to develop comprehensive regional renewable energy action plans and possible pilot projects. Regional team members will include a diverse group of stakeholders including citizen leaders, farmers, local businesses, utility boards and companies, local governments, among many others. The goal is to design plans for a mix of renewable energy and conservation strategies that are appropriate to each region.  The outcome of this project will be a comprehensive and strategic renewable energy plan and vision for each region that reflects a mix of energy sources, such as biomass, solar, hydrogen, and wind. This plan will lay the groundwork for funding and implementing renewable energy projects that meet regional needs in a systematic and comprehensive way.  Each CERTS team will consist of 30 to 60 members and will be directed by a professional staff director.

Our theoretical perspective and the structure of the research, is framed in part by the ideas developed in Albert O. Hirschman’s Exit, Voice and Loyalty: Responses to Decline in Firms, Organizations, and States.  In essence, we are interested in why people join, stay and leave movements, in this case, grassroots movements.  Our argument will be that a person’s perspective of their role, the reason they join or participate, and their primary interests will dictate their behavior in this regard.  Given the diversity of interests and roles, the CERTS program might have a very difficult time in maintaining coherence and therefore group loyalty.

Our initial questions will simply ask participants about their role and level of participation in the program.  Our interest here is to see how various stakeholders define their roles and how this self-identity might affect the nature and extent of their participation.  So we will ask them a few basic questions and then ask them to define their role in the project:

• How were you recruited for the group?
• Why did you join?
• Level of engagement/time commitment?  More or less than expected?
• what stakeholder role do you play in CERTS; check all that apply:

                              --citizen
                              --farmer
                              --utility manager
                              --local government official
                              --federal/state agency staff
                              --academic
                              --community leader

• define your role in the group, i.e., technical expert, community voice, landowner
• are other stakeholders well-represented in your team?  If no, please explain.

We will also look at some preliminary perceptions of the program:

• is this program valuable? 
• is the program serving the stated purpose?
• is the program sustainable? 
• what are the challenges associated with sustaining the program?

We also expect that participants will have different ideas about some basic concepts, in part, determined by how they see their role in the project.  Thus we will ask them:

                              --what does ‘community-based’ energy mean to you?
                              --what does ‘distributed generation’ mean to you?
                              --what does ‘locally-owned’ energy mean to you?
 
    We are also interested in the role of technical information and how it might influence civic participation.  For many clean energy advocates, the technical requirements of any energy system represent a fundamental barrier to effective civic engagement.  We will therefore ask participants about this issue, though the question of “method” is a difficult one to conceptualize and frame.  At this point, the question is not very satisfactory:
 

• do you have sufficient technical knowledge to effectively participate in CERTS? If no, please explain.
• what type of technical assistance do you need to effectively participate in CERTS, i.e., legal, engineering, economic, public relations, community development, communications, etc.
• what do you think is/are the best method(s) for developing technical competency for the CERTS members
• what do they think is/are the best method[s] for developing technical competency in the community?

We are also interested in how much people know about technical matters, though we are again having a difficult time framing this particular question.  At this point the question is self-assessed and reads:

• how much do you know about (1 = a great deal; 2 = some; 3 = very little):

                              __ the current electrical system
                              __ wind technology
                              __ solar panels
                              __ biomass energy
                              __ fuel cells

Of course, people participate for various reasons.  Indeed, in our view, the reasons for participation in CBE initiatives and the impact that this has on group cohesion and ultimately the success of CBE initiatives is of paramount importance.  Thus, we have a series of questions about priorities and those factors that might draw people into working on a CBE initiative.  The factors we enumerate are:

                              __ construction of clean energy technology
                              __ construction of locally-owned energy systems
                              __ construction of small-scale energy technology
                              __ construction of community-owned energy technology
                              __ opportunity for community participation in reshaping the energy system
                              __ personal involvement in the affairs of the community
                              __ lower electricity costs
                              __ opportunity for personal financial gain
                              __ the development of strong communities
                              __ other (specify and explain)

We are also very interested in when and under what conditions people will withdraw, or exit, from a community-based project.  We speculate that one of the main determinants is whether or not people feel like they are working with like-minded others.  So we ask a couple of questions to get at this issue:

• Do others share your priorities?  Explain.
• Why would you continue/discontinue participation?

At the end of the day, of course, there is no easy separation of the incentives.  It might be that a tangle ideas about clean energy technology, democratic participation and community development that drives the success of CBE initiatives.  So we ask a few wrap-up questions:

• What are barriers to the development of clean energy projects?
• How might citizen teams overcome these barriers?
• Have your views on these changed as a result of your participation in CERTS?

As we see it, the evaluation will allow us to address a number of important issues, including:

• the definition of ‘citizen’ and who participates as a ‘citizen’ versus other types or categories of stakeholder;
• whether those that participate as a  ‘citizen’ typically have a larger sense of community and what people generally understand by the idea of ‘community’;
• the links among the various goals enunciated by CBE advocates, i.e., citizen participation, community development and empowerment, the adaptation of specific technology, and the potential for individual financial gain, among others;
• what people understand by the terms ‘locally-owned’, ‘CBE’, and ‘distributed generation’;
• what incentives for participation exist on the part of various participants, i.e., civic gratification, that is participating in a civic venture is simply the right thing to do; interest in a specific policy outcome such as getting alternative/clean energy technologies in the ground; social gratification, that is, they like being part of a group; or even support for existing institutions, for instance, a utility representative might see CERTS as helpful in maintaining the role currently played by their local utility in their community; and
• how particular technical issues are being framed by whom to which various participants.

A second project that we are working on is a collaborative, comparative study soon to be undertaken with colleagues at De Montfort University in Leicester, England beginning this summer.  This work aims to address all of the issues we discussed above within a comparative framework.  While both the United Kingdom and the United States have experimented with privatization and deregulation, and therefore the decentralized approach represented by the CBE movement, the institutional contexts within which these policy changes have occurred are very different.  Unlike the United Kingdom, the United States has significant experience with decentralized public power, including a century-long history of municipal and cooperative utilities.  As a result, the UK has tended to put an emphasis on “top-down” approaches while many US CBE projects tend to percolate upwards from grassroots initiatives. 

By carefully considering unique historical and institutional differences the project will be able to address (1) the similarities and differences that exist between community approaches in the UK and the U.S.; (2) the extent to which the various institutional histories affect the potential for CBE initiatives; (3) the extent to which country-specific options may be transferred across countries; and (4) the impact of a “top-down” versus “bottom-up” approach on community acceptance of CBE initiatives.

My hope is that we can soon add a third country to our list of cooperative ventures, namely South Korea.