Follow-up on the webinar series from the online course on energy democracy. Last week’s course was on the role of the State vis-a-vis the democratization of the energy system. This is one of my present topic of interest about which I feel that I have more to learn than to say! But after seeing the two very interesting presentations and looking at the material gathered for the course, I thought it would be a good idea to gather a few thoughts.

The Uruguyan Energy revolution: how a state-owned utility can be instrumental to a drastic change

This topic was introduced by an interview of Gonzalo Casaravilla, who is the director of the state-owned electricity utility in Urugay (called UTE). This was a very informative interview in many respects (and I thank Daniel Chavez for it!):

  • Mr. Casaravilla stated that one of the main advantages of a state-owned utility is that it manages and controls all sectors of the energy system (generation, transportation, distribution and commercialization). In his view, this allowed Uruguay to quickly implement their “energy revolution”, i.e., their very rapid energy transition towards renewables. He said that countries where all the sectors are in various hands (e.g., where it has been privatized) take a lot longer because the goals of these different sectors are not necessarily aligned (in their search for profit). This is defeating the belief that privatization is more efficient than the State.
  • In Uruguay, the fact that prices are the same all over the country is a tool of redistribution of wealth and equal access to opportunities to all citizens.
  • Another interesting point: As they did not have enough means of investment, they had to include private investors for building their wind farms. So they issued bonds and created some societies with shares on the stock market. They guarantee returns of 10%, so they had no problems issuing the bonds and selling the shares. However, as Mr. Casaravilla says, it is a benefit which is lost on the state to be reinvested in other sectors.

Re-municipalisation: a tool to fight energy poverty

In the introduction of the webinar, there were also presentations of movements of re-municipalisation of energy systems, like Switched-On London and the Berliner EnergieTisch. I got out two points that I found interesting:

  • In London, one million of people live in energy poverty and have generally higher tariffs because they are on pre-payment meters.
  • In Berlin, the demand for re-municipalisation failed the first time because the numbers of votes in favour was not reached during the referendum and because the ‘rot-schwarz’ coalition (social democrats & christian conservatives) did not support the project. With the new parliament being elected in October 2016 and leading to a ‘rot-rot-gruen’ coalition (social democrats, left and greens), the game has changed and the project is put again in the spotlights. This shows that if the political environment plays a decisive role (as a facilitator), it will mostly follow and rely on existing grassroots initiatives (the ignition).

During the webinar itself, we had presentations from Daniel Chavez (TNI) about Uruguay and from Shrihari Dukkipati (Prayas Energy Group) about their actions in India. Together with the webinar, there were a few questions to stir the discussion.

Topical questions: visit my brain

Q1: In your country or region, how does state involvement help or hinder advancing energy democracy?
For those who don’t know, I live in Germany but come from France. This is a pretty complicated topic and I am not sure that I get all the pieces of the puzzle right. Let’s give it a try.
In France, there is a tradition of centralised, state-controlled energy system (which probably stems from our Jacobin state of mind -see the definition for France). About 75% of electricity production in France relies on nuclear power, which originates from the 1960-70s, when our then president Charles de Gaulle aimed at making France independent for energy. This has led to a constant flow of scandals (until now –only in French) and is the basis of France’s neocolonialist relationships with former colonies in Africa. The investments in the nuclear sector have been massive, making it hard for renewables to take a share in the electricity sector. The nuclear technology has locked-in and although many generators now arrive at the end of their life-time, it seems that our politicians lack the will of switching them off.
The whole show is run by EDF (half privatised but still mainly in the State’s hands) and AREVA (state-owned, with a Kuwaity Investor), which operate like any other company. They control the whole chain, from mining uranium and enriching it to recycling and burying the waste, as well as the power plants, the grid and the distribution sector.
I let you guess: no chance in that scheme for public engagement and participative decision-making. The money is big, the technology (nuclear) is very hard to get rid of, France is politically very weak (I am afraid for the upcoming elections). It needs to come from under, but even then, it’s gonna be hard.

Q2: How does state/municipal energy compare to cooperatives?
So contrarily to a very centralised system like in France (although it can have some advantages like explained by Mr. Casaravilla), I tend to envision self-sustainable municipal/regional utilities. I have the feeling that a well-organised municipal utility might have advantages over an energy co-op:

  • First it solves the dilemma of the inclusiveness of co-ops (if shares are too expensive for poor people to get in) and the threat of accumulation of capital in the hands of those who already have it.
  • Second, it actually allows to treat energy as a public good, which guarantees the right to everyone to access to it and helps saving it.
  • Third, it allows to envisage the whole energy system of a community/municipality/region, i.e., not only electricity production, but also storage, grid, transport, heating, efficiency (refitting, isolation, etc…).

BUT, this is only true if (and only if):

  1. citizens are fully integrated in the decision mechanism and in the design. Individuals have to be considered as full stakeholders.
  2. the utility is set as a non-profit organisation, which ensures that prices are fair and potential benefits are reinvested in the community,
  3. it is not dependent on local politics but regulated by federal/national laws.

Q3. What does a democratic public energy utility look like?
I do think of a positive example where the state clearly facilitates energy democracy: Barcelona. The newly elected government is very keen on community initiatives and supports them. Concerning electricity if I understood it right, they plan to develop massively decentralized power generators and apply a progressive tariff (like on water) in order to fight energy poverty. I don’t have much proof of what I say, but I recently got a contact in Barcelona and I will investigate it further. More contacts or material welcome!
Another examples that comes to my mind is the Sustainable Energy Utility. The concept has been developed by John Byrne and his team at Uni. Delaware (US) and is been presently implemented in Delaware as well. I described the idea in a previous post, but it is also on my list of further investigations.