Governance Models and Culture

I have not unpicked the precise legal systems that best support community energy because the Australian system will support slightly different legal forms.  The reality is that these groups exist on a spectrum from private organisations with a community orientation (but no community decision making) to cooperatives and local government ownership also represents a form of community ownership.

This report[1] by the British Academy highlights that different circumstances give rise to different possibilities for community organisations:

“The report suggests that a tradition of social enterprise or co-operation affected how easily a community energy group was established, whilst some projects also arose out of a ‘resistance spirit’ to large commercial energy projects, and the desire to do things differently. The authors also suggest that government financial incentives are important to encourage the development of community energy groups, but a long-term, predictable government policy on community energy is equally necessary to allow projects to thrive.”

Australia’s culture and energy traditions does not lend itself to easily create cooperatives or local government ownership. Nevertheless businesses and community groups are looking at ways to capture the benefits of local power. Some templates for community energy already exist from the pioneers in this space. (Embark and the Coalition for Community Energy are good places to start exploring)

The community shares model in the UK and the model used by AI Power in Japan both split the relatively simple project finances (profitable) from the community decision making. In the case of community shares, determining how to spend community funds from renewable energy projects becomes a job for community representatives and is quite separate from the governance of the project. The ability to obtain project finance may rely on the organization taking certain legal forms.

Some forms of community energy create a lock-in effect where every coop member has to participate in a project for it to be successful. (this is particularly the case with district heating or the rural electricity coops in the USA). This suits some cultures more than others and certainly runs counter to the Australian energy market’s choice mantra.

The challenge for the Australian Energy Regulator (AER) is to allow some experimental forms to emerge and be tested. It also needs to consider when community decisions are adequately democratic to be superior to the principles passed down through electricity market design. Light handed and appropriate level regulation for smaller organisations should also be on the agenda for the AER.

In setting up any organization, the fundamental purpose and the decision making structure need to be chosen to reflect the aspirations of everyone that the organization hopes to serve.