This article was published by The Energy Mix on April 3, 2024.
By Roger Peters
Stable, affordable electricity prices for all! Local, sustainable investment opportunities! Increased community wealth and good local jobs! Cleaner air and lower greenhouse gas emissions! A more resilient, reliable local energy system! No NIMBY! These are some of the benefits of community-owned and -governed “distributed” power generation.
Lower prices for renewable energy and battery storage means that local generation of electricity, right where it’s needed, has become the most beneficial and cheapest way to meet demand, replacing the traditional utility model of centralized generating stations at the other end of long transmission lines.
And if the energy is produced at facilities that are owned and governed locally, those energy payments stay in the community and new power facilities can be self-financed with community capital. It gives everyone a chance to benefit, including people who can’t afford or can’t install their own renewable energy systems. And nobody objects to energy facilities they own or subscribe to in their own neighbourhood.
Community ownership of local generation has been thriving in Europe and some U.S. states for over a decade, with government policies and programs to support it. But Canadian provinces, which have jurisdiction over electricity generation and distribution, have been slow to adopt distributed power generation, and even slower to recognize the multiple benefits of community ownership.
But lately, finally, there is some progress. Nova Scotia recently introduced a new community solar program modelled on similar efforts in the United States. On March 7, Ontario’s NDP Opposition tabled the Affordable Energy Act, a private member’s bill that includes many of the community energy policies used in Europe and the U.S. and calls for changes in the regulations governing local generation.
Meanwhile, Canadian renewable energy co-operatives are ready to step up. Over the past decade, they’ve built a small but well-supported sector in several provinces, and are poised to expand community ownership if these types of measures are introduced. They recently formed Community Energy Co-operatives Canada, a new national organization, to promote community ownership.
Community Ownership in Europe
Since the early 2000s, community ownership by renewable energy co-operatives in Europe has grown significantly. There is now a network of over 2,250 cooperatives represented by RESCoop.eu. As a result of their ownership stake in these co-operatives, over 1.5 million people in the European Union are active in the energy transition. and represent a powerful constituency. A study by the University of Delft [pdf] showed that half of all EU citizens could be producing their own electricity by 2050, either individually or through an energy cooperative, thereby meeting 45% of the continent’s energy demand. A recent survey of EU countries showed that:
• 86% of Europeans support new wind and solar projects in their local areas;
• 77% of people who live near wind turbines would support additional turbines nearby if they were community owned;
• 61% of Europeans would join a renewable energy co-operative if one were set up in their local area;
• 79% of Europeans want their governments to provide more financial support for communities to generate their own solar and wind energy.
To support growth of the community sector, the European Union’s 2018 Directive on Renewable Energy enshrined the rights of consumers to generate, store, and trade their own electricity, and to form “renewable energy communities”, including co-ops and other models such the UK’s community benefit societies.
The EU defines a renewable energy community as “a legal entity which is based on open and voluntary participation, is autonomous, and is effectively controlled by shareholders or members that are located in the proximity of the renewable energy projects that are owned and developed by that legal entity. Renewable Energy Communities have the right to produce, consume, store and sell renewable energy, including through renewables power purchase agreements; and share, within the renewable energy community, renewable energy that is produced by the production units owned by that renewable energy community.”
As result, many European countries (including the UK) have support programs for community energy, and a new REScoop Manifesto is calling for additional measures. The UK’s Gower Power is an example of a co-operative that provides both an investment opportunity for those with savings, and the option of buying local renewable power for all residents. UK community energy is supported by strong organizations such as Community Energy England.
Community Solar Boosts Local Benefits
U.S. states, like Canadian provinces, have jurisdiction over electricity. But in the U.S., community solar programs have been in place for over a decade and have installed close to 3,500 MW of community-subscribed local solar generation. In a community solar project, consumers subscribe to a generation facility in their neighbourhood, and receive credit on their electricity bills for their share of the solar power generated. The credit per kilowatt-hour paid to the consumer is set at the retail rate, or based on a “value of solar” tariff set by the state government.
Community solar programs can be designed to favour community ownership of the generation by a local renewable energy co-operative, with set-asides to ensure that subscriptions are available to low- and middle-income households. The approach has led to the development of strong renewable energy co-operatives like Minnesota’s Cooperative Energy Futures.
A Foundation to Build On
So how do the new Nova Scotia and ONDP initiatives compare? Are we on the right track?
Nova Scotia’s community solar program will allow community groups and businesses, including non-profits, co-ops, First Nations communities, municipalities, businesses, universities, and colleges to set up “solar gardens” and sell their renewable electricity to subscribers who can’t install their own solar panels. Consumers will be able to subscribe to a share of the solar energy generated by the solar gardens, receiving a credit on their electricity bill of two cents for each kilowatt-hour generated by their share. The subscription rate will be set by the solar garden owner, so that consumers save money compared to the grid price.
While Nova Scotia is to be congratulated for designing this program for community owners such as co-ops, non-profits, and First Nations, the low credit of just 2¢/kWh does not necessarily reflect the true value of solar to the province. Nor does it match the retail tariff credit available to consumers who own their own solar systems.
The Ontario NDP bill is more comprehensive. Like the EU directive, it would enshrine the right of all consumers to generate, store, and share their own power through net metering, the first Canadian legislative proposal to do so. The legislation would extend the benefits of net metering to sub-metered tenants in multi-residential buildings and allow several buildings in a community to share the benefits of the best solar locations through “virtual” net metering.
The Ontario bill also mirrors the EU directive by enabling consumers to invest in or subscribe to community-owned and -governed renewable energy facilities. That provision would allow all consumers, including tenants, to benefit from a community solar subscription program similar to Nova Scotia’s, while favouring ownership by co-operatives and community organizations.
The private member’s bill would establish a new agency, Affordable Energy Ontario, to develop these programs and support rapid development of deep energy retrofit supply chains, including modular components and a fully trained retrofit and renewable installation workforce. The agency would also support capacity building to deliver these programs.
A 2023 report by Dunsky Energy + Climate Advisors showed that Ontario could install enough financially viable distributed energy resources to meet all new electricity demand this decade. With community ownership, all of this new capacity could be self-financed with local capital, at no cost to the province.
Canadian renewable energy co-operatives have been active for several years. But they have been prevented from expanding to their full potential like their European, UK, and U.S. counterparts by provincial regulations and policies that favour centralized generation, or measures that unfairly penalize renewable generation, such as Alberta’s new siting regulations.
So while the Nova Scotia and Ontario initiatives are a good start, there is a lot more to do. Canadian provinces all have different regulations and markets governing the ownership and sale of energy. Support for community ownership will need provinces to update their regulations and policies, and build capacity to deliver distributed energy through legislation like the Ontario NDP is proposing.
It’s time to give community energy the support it deserves so that the benefits of the energy transition are available to everyone.
Roger Peters is a member of the community sounding board for The Energy Mix’s Heat & Power edition and a founding member of the Ottawa Renewable Energy Co-operative.
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