Thousands of German Cities and Villages Looking to Buy Back Their Power Grids
Oct 11, 2013 - Matthias B. Krause - greentechmedia.com
What do Boulder, Colorado and Hamburg, Germany have in common?
Boulder, Colorado and Hamburg, Germany don't seem to have too much in common. One is a small, green-minded city at the foothills of the Rockies, the other one is the second biggest metropolis in Germany with almost 1.8 million people, defined by its busy harbor.
But both cities share motivations to switch off their private utilities and switch on municipal power providers.
Both would like to see more clean energy delivered to the customers. Both strive to take back control to better serve the will of their citizens, opposed to the will of some distant stockholders. While Boulder's city council remains entangled in a struggle with Xcel Energy to form a municipal utility, a referendum in September has forced the reluctant Hamburg city council to re-acquire a controlling stake in the local electric power grid which is currently run by Sweden's Vattenfall and German utility E.on.
This may not be the last blow that Vattenfall, E.on and other investor-owned utilities in Germany will have to suffer. In November, Berlin residents will be voting on the very same question of taking back control of the local electric grid. Of the 20,000 German municipalities that franchised their power grids in the 1980s and 1990s in order to fill rampant budget holes, 8,000 will decide this year whether to buy back the right to run their local grids. And the trend is distinct: many of them wish to do so.
In fact, the investor-owned utilities have started to commission studies to show that the goals that cities and villages set out to achieve have little to do with who runs the local distribution grid. While grassroots organizations claim that the municipalization of the distribution grid will give people a chance to actively take part in the energy revolution known as the Energiewende and that it will lower costs for consumers and diminish the influence of big corporations, German laws actually set very narrow limits for what a grid operator can and cannot do.
One of the things a grid operator cannot do is actively promote investments in PV, wind or other clean energies. The German federal public utility commission, the Bundesnetzagentur, specifically forbids grid operators from discriminating against any form of energy generation. Or, as another example, the rate for the feed-in tariffs, which made renewable energy so popular in Germany, is determined by the federal government in Berlin, not in Hamburg, Titisee-Neustadt or Schönau, just to name a few cities and municipalities that are seeking to become independent.
Nevertheless, places like Schönau, a village of 2,300 situated in the picturesque Black Forrest, serve as role models for many municipalities today. Driven by a strong opposition to nuclear power, Schönau's citizens managed not only to buy back the franchised distribution grid in 1994, but also to establish their cooperative as a provider for clean energy, thanks to a hydro power plant. The “Schönauer energy rebels,” as they were dubbed, were the first to take on this issue. In the process, they proved another point: a well-run public utility can count on a healthy return on investment. That's money for the community that otherwise would have ended up in the pockets of the investor-owned utility.
Which, of course, sounds like music to the ears of the citizens of Hamburg. A study, financed by the proponents of the municipalization process, estimates that in a best-case scenario, the city can count on a ROI of 10 percent. But that assumes that the city is able to buy back the distribution grid for a fair price that reflects its actual condition. Determining and then technically executing on the separation between the distribution and the transmission grid is a major sticking point in the negotiations that will follow the referendum. It may take years to work out the details. Which is, again, something very familiar to the energy rebels of Boulder, Colorado.