Originally published on energycommonsblog. 

Image: Advertisement for the municipal electricity utility in Hamburg (round 1900)

In Germany, there is a strong movement to claim the gas, electricity and heating networks back from private corporations. Initiated by civil organisations, they are pushing the political arena to take action towards a remunicipalisation of the energy system. This is a very interesting process, which allows to explore key concepts such as the right to energy and democratic governance as well as the interplay between politics and the civil society.

I presented this story during a conference about the potential remunicipalisation of the Groningen gas field at the beginning of January (see previous article). You will find here all the slides from the presentation, which you can download and reuse (but please, cite me!). All sources are indicated at the end of the post.

Energy is a commons

Firstly, I will quickly lay some theoretical foundations to the relationships between energy and the commons. The following slide is an illustration of the differences between energy used as a commodity or a common good.

  • Energy is a commodity: it is produced to make profit (even green): we are clients/consumers and our decision power is to chose between different companies. The incentive in this case is to produce as much energy as possible (or raise the prices) to increase the profits. The prices are set either by the producer (the owner of the power plant) or by the market.
  • Energy is a commons: it is produced to respond to a need and we are producers and consumers at the same time, this is called “prosumers”. We can decide together with our neighbours on the system we want to have. The incentive is to produce what is needed and save it. Being a commons does not mean that energy becomes free of charge but that the prices can be adapted to our needs (we control it and use it to foster social and climatic justice). Think of water, which is also a common good: it still has a cost for the consumer. But you don’t make profit out of it because it is considered as a human right. We should look at energy in that way.

Cooperatives and municipal utilities to foster energy democracy

When we think energy democracy, one thing that comes to mind are cooperatives. There are many throughout Europe, which can have very different financial structures and sizes. But they have one thing in common, which makes them very particular: their ownership and governance modes.

The infrastructure is owned by the members, who each have a vote. Decisions are taken on the model “one member, one vote”.

The other form of organisation that holds great potential for energy democracy are municipal utilities. They are known in Europe for the water utilities and used to play a large role for energy as well. But the wave of privatisations in the 1990s put them in the hands of private corporations. For the last few years, some cities are taking a reverse path and buy their networks and utilities back. This is very interesting because municipal utilities, which inherently belong to all, have potentially one crucial advantage over cooperatives: as all inhabitants/users can be considered as members, they might prove more inclusive structures. However, this is only true if the governance mode is copied on the coop one: “one member one vote”. We will see that it is not necessarily the case.

Hamburg in the driver seat

First, here are a few basics on the structure of the energy system in Germany:

  • On the one hand, there are the grid operators (TSO): they own and operate the local electricity, gas and heating networks. They get concessions of 20 years, given by the federal states: these are quasi-monopolies. They compete to get the concession but once the get it, they have no competitors.

  • On the other hand, there are the energy providers, who operate the power plants and commercialise energy (they are the users of the grid). Here it can be anyone producing energy, from the very big to the very small.

In Hamburg, the concession for the networks was hold by Vattenfall and ran out in 2013. People then decided to regain control on the grid. So the city of Hamburg grounded a municipal utility (called “Hamburg Energie”), as a daughter of the water utility. It is now an energy provider, which focuses on producing and selling local green energy (mostly electricity but also some gas).

Next to that, a collective of citizens founded the initiative “Unser Hamburg Unser Netz”. They ran a campaign and had a referendum, during which people voted in favour of a full remunicipalisation of the networks. Therefore, the electricity network was bought back in 2014 and the gas and heating networks should get back in the public hand by 2018/2019.

So things seem to be on a right track in Hamburg, and it was indeed experienced as a tremendous victory for the supporters of energy democracy. But… something is missing in the Hamburg model: the citizen participation, based on the cooperative model. Indeed, both the municipal energy utility and municipal TSO are run as companies and users are not taking an active part in decision-making (they are merely consulted).

A municipal utility in Hamburg: good try, no cigar

The referendum in Hamburg pushed the municipality to buy the electricity, gas and heating networks back from Vattenfall. Therefore, things seem to be on the right tracks there. However, a more careful observation shows that the model is missing a crucial part: the democratic governance.

In order to understand where the step was missed, we have to go back in time. During the phase preceding the referendum, several local actors created an energy cooperative, which aim was to apply to the concession for operating the electricity grid. It’s name is Energienetz Hamburg. They made a deal with a Dutch TSO, Alliander, which pulled out at the last moment.

Unfortunately, although Energienetz succeeded to attract a large number of members who commited to a common capital of 50 million euros, the municipality did not include them in the deal for the concession.

This is a missed opportunity, which could have seen a new type of civil-public partnership and the implementation in a state-run company of the cooperative decision-making model: one member (one user) = one vote.

On the brighter side, this energy coop. is now playing an important role in Hamburg, by organizing debates (called Wärmedialogue) to promote and push the municipality to investigate alternative sources of district heating. One solution for instance would be to recuperate the heat from a copper furnace on the South East side of the city instead of using fossil-fuel power plants. As mentioned in this video (to watch absolutely if you have 12 minutes to spare!), district heating is crucial because this represent a large number of homes (>450 000), which generally do not have other choices (e.g., renters who de facto have district heating). Therefore, prices and heating sources become central issues.

In Hamburg, an advisory board was created and adjunct to the Energy Agency of the city. As explained in this article: “Members of this new Board include a broad range of 20 representatives from society, science, business, industry and most importantly all local grid companies, also including Vattenfall and E.ON, which still remain main shareholders of the district heating and gas distribution grid until the purchase options has been exercised.” However, the board exert a mere advisory function and has limited decision-making power. As the article states, this is one of the main challenges that Hamburg faces: “avoid [that] the board becom[es] a toothless tiger”.

Twists and turns in Berlin

In Berlin, the story started in a similar fashion as in Hamburg but developed very differently. A dynamic campaign to remunicipalise the networks was launched in 2013, orchestrated by the civic initiative Berliner Energietisch. The referendum attracted more than 600 000 people but unfortunately, failed short of 20 000 “Ja” votes.

The actors are pretty much the same as in Hamburg:

  • private utilities (e.g., Stromnetz Berlin, belonging to Vattenfall) are running the show at the moment,
  • a municipal energy provider, Berliner Stadtwerke, daughter of the water utility and a minicipal grid operator Berlin Energie were created as a result of the campaign in order to apply for the concession to operate the grids. Berlin Energie is investigating interesting concepts, like the combined networks (link in German).
  • an energy cooperative, Bürgerenergie Berlin, alive and kicking, aims at buying back and operating the grids.

Interestingly, everyone though that the game was over after the failed referendum but this was forgetting the importance of the political game. Indeed, the municipal vote in 2016 saw the formation of a new “Red-Red-Green” (SPD-Die Linke-Die Grüne) coalition in Berlin, which put back the remunicipalisation process on the agenda.

And here are the different options that are being evaluated presently by the municipality. We find applicants like in Hamburg: In white, the fully municipal operators (Berlin Energie) and in grey, the fully privatised actors (NBB Netzgesellschaft and Stromnetz Berlin). But we also find more funky applications: in white-grey hashed, either classical public-private partnership for the gas networks or more a complex civil-public-private partnership for the electricity grid. A new field of possibilities has been opened. We are all very curious what will happen now!

This is interesting as it points out the joint role of the civil society and of the political arena in creating new spaces. It starts by a strong civic movement and is enabled by a favorable political landscape.

To finish, here a second little video that we did with TNI at the occasion of the conference “Against the NAM”. I had to answer the question “Why should we treat energy as a commons?”.

You can watch the whole presentation, that was recorded by TNI (whom I thank very much!).

Photo by Pacific Northwest National Laboratory – PNNL