A renewable energy cooperative is a decentralized, non-governmental initiative of local communities and citizens to promote the production and consumption of renewable energy. It is formed by a group of community members that shares a common long-term goal for a sustainable future of energy and works to advance the transition through active citizenship involvement. This way, the citizens are prosumers: they act as both producers and consumers in an attempt to democratise energy supplies by shifting away from relying on large companies. This type of ownership primarily benefits its members.
Cooperatives follow the basic principles: voluntary and open membership, democratic member control, economic participation by members, autonomy and independence, education and training, cooperation among cooperatives, and concern for the community. In the energy field, cooperatives can have different focuses, e.g. categorised by the type of energy source (e.g. biomass energy, wind energy, solar energy, etc.), added value (e.g. consumption, production, distribution, trading, etc.), and the type of business model (e.g. local group, regional, fully integrated, network, etc.) or type of energy (e.g. housing cooperative, electricity cooperative, heat supply cooperative).
The legal form of energy cooperatives is very common and fast-growing in several countries. It is popular in countries where renewables and community energy are relatively advanced.
Advantages of energy cooperatives
- High level of citizen engagement
- Members can vote and jointly decide
- Members profit
- High level of investment security for members in Germany protected by the cooperative law
Disadvantages of energy cooperatives
- In Germany the foundation of a cooperative is strictly regulated by law
- High level of control and the cooperative law limits the flexibility of this legal form