It is a fact that non-renewable energies will, by definition, run out. It is also a fact that in the meantime, dependence on these energy sources is causing multiple existential global crises. If human beings are to preserve modernity and planetary habitability, we must soon shift to 100% renewable energy in all sectors. A fossil-free energy system is the only way forward as it results in socio-economic development and regional value creation.
The world's leading scientists have issued a mandate that we must change our energy system to a sustainable one based on conservation, efficiency and renewable energy in the near future or risk losing planetary habitability. The energy transition is not a lifestyle choice; it is an essential way to combat climate change and save our planet. Fukushima and BP's Deepwater Horizon catastrophe are only the most recent reminders of the hazards of our current energy system. Energy infrastructure is outdated and much of the world's power generation capacity is nearing the end of its life. Major investment decisions to modernize the world's energy system are unavoidable. Now is the time for the energy transformation.
There are many people who would consider themselves supporters of renewables but doubt the feasibility of 100% in the near future. Indeed, it is one of the biggest challenges humanity has ever faced. In times of economic crisis and budget cuts in most parliaments people are mainly concerned about jobs and price increases in their daily lives. However, the evidence shows that investments in renewable energies actually tackle these issues. Energy is a cross-cutting issue.
Looking at countries like Germany and Denmark that are successfully moving towards 100% renewable energy, we see that high citizen participation and regional value creation from decentralised renewable energy production are the key success factors.
In Germany renewable energy deployment has already resulted in more than 380,000 jobs. Especially in 2008 - the year of the global economic crisis - the sector proved its importance for growth and employment with an increase of more than 10%. By reducing costs for energy imports by € 6 billion in 2011, renewables enabled politicians to spend the limited resources on local development. A study from the German Renewable Energy Agency (2010) calculates that German municipalities can expect at least € 1.2 billion a year in tax revenue from the use of renewable energies by 2020. The more job-intensive a system technology or a value creation chain is, the more tax revenue municipalities can expect from their shares of the income tax.
The successful development of renewable energies has been a decentralised phenomenon in Germany. In almost every municipality in the country, a wide variety of stakeholders have in recent years brought many thousands of renewable energy systems into operation. Currently, over 80,000 citizens hold shares in collectively run systems for the generation of regenerative electricity and heat. Over 500 of the energy cooperatives founded in recent years have already invested a total of around € 800 million in renewable energy sources.
Across the country there are over 100 regions that have understood the enormous potential of renewables and therefore implemented - and even, in some cases, already achieved - a 100% renewable energy (RE) target. These so-called 100 RE regions encompass about a quarter of the country's population.
In a number of ways, municipalities have played an important part in the development of renewable energies in Germany and will continue to do so in future. They have far-reaching instruments of control with regard to the authorisation and installation of systems. They partially fund the installation of renewable energy systems and may even be involved in their operation as lessors through their municipal departments of public works. Increasingly, they are adopting their own renewable energies development goals and trying to attract companies active in the renewable energy industry to invest in them.
One may wonder how this is linked to the problem of empty coffers. The fact is that municipalities profit from positive regional economic development generated by the use of renewable energies by:
- saving fossil fuel costs
- creating jobs
- obtaining tax and lease revenues
Germany has undoubtedly raised the bar in terms of strategising energy sourcing, and setting the pace for renewable energy policies. Feed-in tariffs (FiTs) brought the country on this track as it acts as a connecting policy, linking people, policy, energy and economy.
However, Denmark is the only European country that has committed itself to 100% renewable energy in the electricity, heat and transport sector. Since the first oil crisis in 1973, the main objectives of Danish energy policy have been the security of energy supply, diversification in use of energy sources, environmental and climate aspects of the use of energy as well as cost effectiveness of energy supplies. The Danes obviously understood even back then that renewable energy technology can drive local development. In 2002, the Liberal-Conservative government tried to cut the renewable energy programs. However, renewable energy is so deeply rooted in the Danish population as the only realistic long term solution, six years later the prime minister declared the fossil-free society - meaning 100% RE - by 2050.
In this small Nordic country, € 16 million from local residents are being invested in renewable energies. Over 100 wind turbine cooperatives have a combined ownership of three-quarters of the country's turbines. The price per kWh for electricity from community-owned wind parks is not only competitive with conventional power production, but is actually half the price of electricity from off-shore wind parks. As electricity and heat are by law non-profitable goods, this enabled local community-based cooperatives to lead the energy transition.
Moreover, Denmark has also found an answer to the key challenge of integrating wind energy fluctuations: its solution is to combine heat and electricity generation (CHP) and implement decentralised district heating infrastructure, thus tripling energy efficiency and achieving decentralised storage. Solar and wind therefore do not stand alone. The Danes have managed to combine and integrate district heating and cooling, CHP and renewables to create truly autonomous systems.
Local CHP creates the basis for a decentralised energy structure. In many countries this infrastructure is already in place. With modest investments its fuel can easily be changed from fossil fuel to local renewable energy sources. With high total efficiency and two energy products from the same fuel source, cost of power and heat can be reduced. As an example, in 2007 Denmark had the fourth lowest power prices (before tax) for GWh-consumers in Europe according to Eurostat, trailing only Sweden, Norway, France and Finland being lower.
The town of Hvide Sande on the Danish west coast shows how investments in renewables result in an immense development process on the local level. In December 2011 three wind turbines at the Hvide Sande harbour were set up. By Danish law, 80% of the turbines is owned by the Holmsland Klit Tourist Association foundation, a local business fund which initiated and financed the project. Hvide Sande's North Harbour Turbine Society I/S pay an annual rent of €644,000 to the local harbour. The other 20% is owned by local residents living within a 4.5 km radius, as per the guidelines set out by the Danish Renewable Energy Act. This wind co-operative has 400 local stakeholders, and with an annual return of 9 to 11% the turbines are expected to pay for themselves in 7 to 10 years. The fund is used to initiate new business initiatives for the benefit of the harbour and local municipality.
Winds of change are blowing through the European energy sector. As we observe in Denmark, Germany and other countries, the cooperative enterprise model is highly successful, allowing people, local communities and regions to be the driving force of the biggest transformational process in Europe since the industrial revolution. In order to see these developments elsewhere in Europe, we need national political frameworks that enable citizens and municipalities to profit from this transition.
Powering a region with 100% renewable energy has been technically and economically feasible for a long time and is becoming reality all across Europe today. Feed-in tariffs kick started this development. Our task now is to adapt policy frameworks on all governance levels to this reality and to further develop best policies, like the feed-in tariff, because enabling policy frameworks on the national level trigger citizen participation and action on the local level. In order to set the scene for 100% renewables, the following policy principles are needed:
- provide market access for newcomers like citizens
- provide investment security to enable people to put their money on the right technology
- ensure direct benefits to communities
- increase efficiency of the energy system by combining heat and power
- create a level playing field between the renewable energies sector and fossil fuel industry
To that end, knowledge transfer and exchange between policy makers are vital. Networks between trailblazing countries must be established all over the continent to realize the implementation of a European energy transition to 100% renewable energies. Despite numerous good practices and successful policy instruments, this message does not always get through to policy makers in governments. We need to facilitate dialogue so that countries can learn from the invaluable experiences of other countries in order to avoid wasting scarce resources.