13 Sustainable Energy for All. Available at: sustainableenergyforall/. 14 World Bank: Rural electrification in the developing world: A summary of
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Copyright © International Labour Organization 2013 First published 2013 Publications of the International Labour Of˜ce enjoy copyright under Protocol 2 of the Universal Copyright Convention. Nevertheless, short excerpts from them may be reproduced without authorization, on condition that the source is indicated. For rights of reproduction or translation, application should be made to ILO Publications (Rights and Permissions), Inter -national Labour Of˜ce, CH-1211 Geneva 22, Switzerland, or by email: pubdroit@ilo.org. The International Labour Of˜ce welcomes such applications. Libraries, institutions and other users registered with reproduction rights organizations may make copies in accordance with the licences issued to them for this purpose. Visit www.ifrro.org to ˜nd the reproduction rights organization in your country. Providing clean energy and energy access through cooperatives / International Labour Of˜ce (ILO), Cooperatives Unit (ENT/ COOP), Green Jobs Program. – Geneva: ILO, 2013 ISBN 978-92-2-127528-2 (web pdf) International Labour Of˜ce; Cooperatives Unit electric power distribution / biomass / wind power / power plant / cooperative / cooperative development / sustainable development 08.11.2 ILO Cataloguing in Publication Data The designations employed in ILO publications, which are in conformity with United Nations practice, and the presentation of material therein do not imply the expression of any opinion whatsoever on the part of the International Labour Of˜ce concerning the legal status of any country, area or territory or of its authorities, or concerning the delimitation of its frontiers. The responsibility for opinions expressed in signed articles, studies and other contributions rests solely with their authors, and publication does not constitute an endorsement by the International Labour Of˜ce of the opinions expressed in them. Reference to names of ˜rms and commercial products and processes does not imply their endorsement by the International Labour Of˜ce, and any failure to mention a particular ˜rm, commercial product or process is not a sign of disapproval. ILO publications and electronic products can be obtained through major booksellers or ILO local of˜ces in many countries, or direct from ILO Publications, International Labour Of˜ce, CH-1211 Geneva 22, Switzerland. Catalogues or lists of new publications are available free of charge from the above address, or by email: pubvente@ilo.org Visit our web site: www.ilo.org/publns Designed and photocomposed in Switzerland CPG
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TABLE OF CONTENTS ACKNOWLEDGEMENTS ..IVFOREWORD .VABBREVIATIONS .VIINTRODUCTION .VII CHAPTER 1 ENERGY COOPERATIVES: THE MODEL AND ITS SIGNIFICANCE 11.1 What are energy cooperatives? ..11.2 The cooperative advantage in energy production and distribution ..11.3 Size and prevalence of energy cooperatives ..41.4 Types of energy cooperatives 4CHAPTER 2 THE DIVERSITY OF ENERGY COOPERATIVES: SELECTED CASE STUDIES .7 72.2 Power centres or energy hubs ..142.3 Biomass .162.4 Wind power and photovoltaic (PV) cooperatives ..19CHAPTER 3 PROMOTING ENERGY COOPERATIVES: ENABLING CONDITIONS ..253.1 Promotion of energy cooperatives by the state 253.2 Promotion by the cooperative movement 283.3 Promotion by international organizations ..29CHAPTER 4 OUTLOOK AND RECOMMENDATIONS .31
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IV ACKNOWLEDGEMENTS This working paper has been prepared by the Cooperatives Unit of the International Labour Of˜ce (ILO). The Unit would like to thank Constanze Schimmel, Maria Elena Chavez Hertig and Waltteri Katajamäki for their work on researching, writing and ˜nalizing the paper. ILO COOP is also grateful to Marek Hardsdorff of the ILO Green Jobs Programme for his substan – tive comments and inputs as well as to Michael Gertler, Martin Lowery and Anna Schreuer for their inputs as peer reviewers and experts in the ˜eld of energy cooperatives. Richard Cook from Book Now Ltd helped with editing the publication.
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VFOREWORD Access to clean, affordable energy remains a major challenge in the world today, with 1.3 billion people without access to electricity and 2.6 billion people without clean cooking facili -ties. Not surprisingly, the poor are the most affected. It is mainly those living on less than a dollar a day who lack access to modern energy. At the same time, poor families spend a much higher proportion of their total income on ‚poorer™ energy sources than richer families spend on more modern energy because it is a basic need. The share of their income the poorest households spend on energy can be up to 20 times higher than for the richest. Ironically, poor energy sources – such as kerosene for lighting – are also often more expensive than electricity or solar lighting. Contrary to widely held believes, the obstacle to ending energy poverty is not the ability or the willingness of the poor to pay for modern energy sources. Nor is it a question of affordable technology. Off-grid and mini-grid solutions pow -ered by renewables are the least costly option in remote areas and widely available. Ending energy poverty hinges on how to enable the poor to access modern energy services in the places where they live. In many countries and localities where government do not provide modern energy services to the poor, the poor themselves can breach the gap through the creation of enterprises. Energy cooperatives can provide access, generating and distributing affordable clean power. The cases studies assembled in this publication demonstrate how cooperatives not just provide access to affordable clean energy. They also create local jobs and allow people to decide on power generation and distribution. As value-driven, membership based organizations, cooperatives can empower and give voice to those who have previously been excluded from services and decision making. The ILO™s Enterprises Department presents this collection of case studies on cooperatives in energy production, distribution and consumption as a contribution to the on-going search for ways in which the goal of Sustainable Energy for All proclaimed by the Secretary General of the United Nations and endorsed by the international community can be turned into a reality. Energy cooperatives are a powerful way to achieve this goal. They should therefore be given due consideration in the discussions about a post-2015 development agenda and the means for implementing it. Peter Poschen Director, Enterprises Department
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VII INTRODUCTION The year 2012 was both the United Nations International Year of Cooperatives and the United Nations International Year of Sustainable Energy for All. As a result, the attention paid to these two themes was increased. Accordingly, at the United Nations Conference on Sustain -able Development (fiRio+20fl), which took place in June 2012, both of these themes were highlighted: cooperatives as drivers of sustainable development, social inclusion and poverty reduction, and access to energy as a critical issue for development processes, including for eradicating poverty and helping to provide basic human needs. 1 This paper addresses some of the important issues related to the role of cooperatives as producers and providers of clean energy, and shows how cooperatives can both improve access to energy as well as increase production of sustainable, renewable energy. Energy is a development issue, and ensuring that people have access to an adequate supply of high-quality energy is fundamental to achieving sustainable economic, social and envi – ronmental development. Energy is not included as a Millennium Development Goal (MDG) as such, however it is related to the achievement of several of the MDGs. For many people around the world the ability to earn a decent living is dependent on access to energy, and the connections between energy and economic activity are widely recognized. 2 The ongoing and intensifying debate around the post-2015 development framework addresses energy in a more comprehensive way than the MDG framework. In their report the UN Secre -tary-General™s High-Level Panel of Eminent Persons on the Post-2015 Development Agenda introduced a set of 12 illustrative goals to be included in the post-2015 framework; one of the proposed goals is to secure sustainable energy, to be achieved through increasing the share of renewable energy, ensuring universal access to modern energy services, improving the energy ef˜ciency in different sectors and phasing out inef˜cient fossil fuel subsidies. 3 The post-2015 discussions so far have not widely emphasized the cooperative model. The case studies included in this paper show that cooperatives have the capacity to contribute to achieving any goal related to clean energy production or energy access. Through a selection of case studies and examples from around the world this paper aims to raise awareness on how energy can be made accessible and affordable through the promo -tion and support of energy cooperatives, particularly in relation to renewable energy. The paper both contributes to raising awareness on the cooperative model enterprise and provides insights into how the cooperative model is contributing to bringing sustainable energy to dif -ferent areas of the world and its potential for further growth. The contribution of cooperatives to sustainable development Cooperatives are sustainable enterprises that work for the sustainable development of their local communities through policies approved by their members. 4 Cooperatives and the coop -erative movement have been addressing these issues for over 150 years Œ since the ˜rst formal cooperative was established. Similarly, but driven by a global concern of the environ -mental limits of the planet, the World Commission on Environment and Development (the 1 United Nations: UN General Assembly Resolution 66/288: The future we want (11 September, 2012). 2 Practical Action: Poor People™s Energy Outlook 2012: Energy for earning a living (Rugby, 2012), p. 7. 3 United Nations Secretary-General™s High-Level Panel of Eminent Persons on the Post-2015 Development Agenda: A new global partnership: Eradicate poverty and transform economies through sustainable development (New York, 2013). 4 ILO: Promotion of Cooperatives Recommendation, 2002. Available at: http://www.ilo.org.
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VIII Brundtland Commission) famously de˜ned the term sustainable development as fimeeting the needs of the present generation without compromising the ability of future generations to meet their own needsfl .5 Despite the fact that sustainable development and the cooperative movement were born out of different motivations, they address Œ although to different degrees and at different levels Œ a common ground: to reconcile economic, social and environmental needs, be it the needs of a local community or the needs of the whole world. Accordingly, cooperatives are ideally placed to promote sustainable development and foster a fiGreen Economyfl* Œ which was adopted by Rio+20 as a practical concept and vehicle for achieving sustainability. As member-based organizations, cooperatives are designed to help their members meet their economic and social needs and aspirations, which often depend on the availability of natural resources and a healthy natural environment. As democratic and participatory organizations, they encourage equity and equality. As economic entities, cooperatives provide their members with commercial services, which in the context of the Green Economy and renewable energy could derive from opportunities in emerging green sectors. As locally rooted institutions, they re˚ect their communities™ concerns about social justice and the environment. As enterprises operating under values and principles that include social responsibility and caring for their communities, they strive to serve members not solely in economic terms, but also in terms of the wider social, cultural and environmental bene˜ts. Cooperatives therefore encourage people to take a longer-term view by creating common expectations and a basis for coopera -tion that goes beyond individual interests. While short-term economic thinking is often seen as the main driver of environmental destruction, cooperatives strive for longer-term bene˜ts, making them best placed to harness the longer-term paybacks of a Green Economy. Cooperatives bring together an estimated one billion people worldwide. Ranging from micro- scale community organizations to multi-billion dollar global enterprises, cooperatives are estimated to employ more than 100 million people. They therefore have enormous potential to mobilize their members and the general public through advocacy, information sharing, and education and training. Cooperatives have also been found to be resilient to crisis, thus making them sustainable in terms of longevity. Many cooperatives have long histories, attesting to the fact that they are ˚exible and adapt to new realities in the marketplace and environment. Therefore, just as there is evidence that more people choose the cooperative form of enterprise as a way to respond to new economic realities, we also see that people are choosing cooperatives to respond to other exigent realities, such as climate change and environmental degradation. The value of the cooperative business model for providing clean energy and energy access A particular focus of the sustainable development debate has been energy. Energy is a main ingredient for meeting social needs and enabling economic growth. However, energy-related carbon dioxide emissions are at an historic high, causing the climate to change. The ever rising demand for energy and resultant concerns regarding national energy security cause market volatility, increasing energy prices and economic turmoil. Meanwhile, 1.3 billion people still nave no access to electricity and 2.7 billion are without modern cooking energy Œ a number 5 World Commission on Environment and Development: Our common future (1987) (Oxford, OUP). Available at: http://www.un-documents.net/ wced-ocf.htm * UNEP de˜nes a Green Economy as one that results in fiimproved human well-being and social equity, while signi˜cantly reducing environ -mental risks and ecological scarcitiesfl. In its simplest expression, a Green Economy is low carbon, resource ef˜cient and socially inclusive (UNEP, 2011, Green Economy Report).
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IXthat is projected to rise by 200 million by 2030, with increases in South Asia and Africa. 6 The situation is especially alarming in developing countries, where access to energy is much lower than in the developed countries and where over half of the population rely on solid fuels for cooking. As well as being a source of greenhouse gas emissions, these fuels create serious health problems Œ indoor pollution resulting from cooking with biomass fuels or coal is responsible for an estimated 2 million deaths every year. 7 These current environmental and economic trends emphasize the need to rethink our global energy systems. A new energy approach is needed if we are to achieve the objectives of pro -viding energy access to all and ensuring energy security and stable markets while addressing climate change and local pollution. While the accelerated transition towards renewable energy systems offers a technological solution to addressing these problems, a social and economic solution still need to be found. Technologically, there is a unique opportunity for the developing countries to leapfrog conven -tional energy systems and directly build up renewable technologies. In contrast, developed countries need to adapt their energy infrastructure to accommodate modern renewable ener -gies. While several developed and emerging economies are massively scaling up investments in renewable energy, providing this technology to economies and populations with no access to modern energy technology still remains a major social and economic challenge. Regarding the economic challenge, critics say that renewable energy is not affordable to developing countries and the poor. But with costs of renewable energy technology decreasing and the prices of fossil fuels projected to continue to rise, it is estimated that 70 per cent of the electricity access needs are most affordably met through renewable energy. For 65 per cent of the non-electri˜ed households the cheapest method of supplying power is though mini-grids, and in 45 per cent of households, by using off-grid technology. 8 Accordingly, providing the poor with access to energy requires rethinking energy investments, moving away from central grid infrastructure by large utilities and exploring locally available renewable energy opportunities. The International Energy Agency (IEA) estimates that the annual cost of reaching the goal of universal energy access will be around US$48 billion between 2012 and 2030. 9 In compari -son, the International Finance Corporation (IFC) indicates that those people without access to modern energy services spend US$37 billion per year globally on low-quality cooking and lighting energy. 10 The poor spend three to ten times more of their disposable income on energy than the rich. Indeed, the poor are already spending nearly as much on fuels as would be required in capital investment to provide accessible renewable energy (which has high upfront costs but very low operating costs). In addition, the energy services currently available to the poor are often unreliable and of poor quality. In light of the above, it seems that households™ access to modern energy is restricted not only because of its economic cost, but also due to lack of ˜nance and political institutions, governance and policy, the lack of corporate organizations and enterprises, and the shortage of skilled entrepreneurs and technicians, education and human capacity. Cooperatives offer an interesting socio-economic business model for helping to overcome the lack of institutions and policy, and the lack of enterprises, organization and human capacity. Cooperatives are enabling the poor to be able to afford modern renewable energy by actually organizing and paying for renewables themselves. 6 Practical Action: op. cit. 7 UNDP & WHO: The energy access situation in developing countries: A review focusing on the least developed countries and sub-Saharan Africa (New York, UNDP, 2009). 8 OECD/IEA: Energy poverty: How to make modern energy access universal? (Paris, IEA, 2011). 9 International Energy Agency (IEA). World Energy Outlook. (Paris. 2011). 10 International Finance Corporation (IFCI). Advisory Services in Sustainable Business: 2012 Annual Review (Washington, DC, 2012).
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XFor example, in the United States in the nineteenth century, when the electric grid only cov -ered major towns and rural households did not have access to the emerging central systems, it was energy cooperatives that made it possible for rural households to access electricity. Today in the United States, energy cooperatives serve 12 per cent of the population and own over 40 per cent of the energy distribution network. In addition, due to the decentralized nature of rural electri˜cation, 80 per cent of electricity generation comes from renewables. In most industrialized countries, accelerated industrialization in the early twentieth century and the development of large fossil fuel power plants led to expensive centralized grids. Recently, however, in response to increasingly volatile energy prices, the rising concern over climate change and the interest in energy security and energy access, the cooperative model of enterprise is experiencing a revival. Although there is no one trigger to the growth of energy cooperatives, studies point to a number of reasons for their development, including new energy regulations, public interest in community-owned energy solutions, raised awareness on green issues Œ including renewable energy Œ and a resurgence of interest in the cooperative model of ownership, where members own and control their enterprises. Energy cooperatives are increasingly being formed in countries as varied as Bangladesh, Bolivia, Cambodia and Germany, however the particular value of the cooperative business model for providing access to energy stands out. This paper demonstrates that the promotion of energy cooperatives is a powerful way to overcome key bottlenecks that are hindering poor people™s access to clean and modern energy. This paper is organized in four chapters. Chapter 1 introduces the model of sustainable energy cooperatives and shows the advantages that cooperatives can have over other forms of enterprise. To illustrate the diversity of size, scale and type of energy cooperatives, Chapter 2 provides a series of examples of energy cooperatives from different continents and devel -opmental contexts. These include a cooperatively owned micro hydropower plant, which not only provides a small village with electricity, but also generates a surplus that it sells to the national grid and to small and medium-sized enterprises (SME). Other examples take the form of energy safety hubs; organized as cooperatives, these provide poor rural populations with access to cooking and transportation fuels while functioning as training and informa -tion centres. On a larger scale, the examples include self-suf˜cient bioenergy villages and rural electri˜cation cooperatives, which aim to bring electricity into rural areas that for-pro˜t investor-owned utilities are unable or unwilling to serve, believing there would be insuf˜cient return on their investment. Chapter 3 introduces policy and legislative frameworks that have created enabling conditions for the establishment of energy cooperatives. The examples included describe the support -ive institutional framework conditions and measures, where such information was available. The ˜nal chapter provides some outlooks and recommendations for the promotion of energy cooperatives, so that their potential for production and distribution of cleaner energy around the world can be realised. The paper focuses on energy provision and energy access. It does not include a review of measures taken by the cooperative movement at the international, regional or national levels to promote sustainable development practices in other sectors.
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