From End-user to “Shareholder”: “A changing market model”?

Written by Sameen The transformation of the energy system: a lot of countries in Europe are currently “struggling” with this topic. A more efficient industry, better insulated buildings, all combined with huge investments in renewable energy! But what is the best, and especially, the cheapest option? In a time where...

Written by Sameen

The transformation of the energy system: a lot of countries in Europe are currently “struggling” with this topic. A more efficient industry, better insulated buildings, all combined with huge investments in renewable energy! But what is the best, and especially, the cheapest option? In a time where most countries are still recovering from the aftermath of the financial crisis, the climate goals from the European Union can feel like a heavy burden. Some countries are investigating the so-called “biobased economy”, while others are aiming for huge investments in offshore wind farms. All in all, there is not one perfect solution, so let’s not waste time discussing that in this article. Instead, we will focus on finding the right approach to reach the goals.

In general, we can distinguish between two different kinds of approaches. To start, there is the so-called “top-down” approach, which is popular with governments, and has a focus on mostly large-scale projects. This approach can be viewed as being more policy-driven. The government is responsible for developing a vision on the energy system, after which policies are implemented to realize them. An example of such a policy is a subsidy intended to stimulate a certain (renewable) energy technologies. In the Netherlands the government has recently stated that it will stimulate the development of offshore wind energy by an amount of 18 billion euros. The largest part of the investments made in the top-down approach, will eventually be paid by the taxpayer in the form of (energy) taxes.

The second approach is the “Bottom-up” approach, which is for a large extent focused on local ownership and participation. In this approach, there is no need for one “definite” energy vision stated by the central government. As a matter of fact, people, communities and regions are the driving force in the transformation of the energy system on a local scale. A good example can be found in Denmark, in which the vast majority of investments in renewable energy technologies are made by local communities and small-and medium sized companies. Citizens, who often unite themselves in the form of local energy-cooperatives, are co-owner of their own energy production. Therefore, they have the “power” to make their own decisions, for example about the prices of the energy and maintenance. Investments in this approach are mainly covered by the local participants, who are able to share both the profits and risks of the investment.

From a psychological point of view the contrast between the two approaches is very interesting. Most people tend to have a negative affinity with taxes. In the first approach, the investments in renewable energy are associated with increased taxes. This has the potential implication that the people will develop a negative feeling towards sustainability on a general level. In the second approach, on the other hand, the people make their own decision to invest in renewable energy. This active commitment can give the people the kind of information they can use to (unintentionally) shape their self-image. In this case, even if the original reason for the investment was completely economical, future behavior can be shaped by the new self-image of a person who cares about the environment. Positive affinity with sustainability may be developed, leading to future behavior that complies with this feeling.

The psychological effect described above can spread very fast through society, when local participants stimulate other people within their local area to participate. As both the financial and social benefits are clearly understood, people who did not invest before will possibly be very much willing to get engaged. The “local trust” is often much stronger than the trust in the central government, which therefore can lead to increased investments while at the same time changing the self-image of society.

So what about the right approach to reach the climate goals? I would argue for a bottom-up approach in which the “What’s in it for me” can serve as a mean to create a changed self-image of the citizens. The recent boom in the emergence of local energy cooperatives within Europe can be seen as a sign that the bottom-up feelings are no longer an ideal, but a reality! When society at a large changes their self-image towards sustainability, they will also be more likely to support the necessary policies made by the government to reach the European climate goals.

Therefore, my plead is for local commitment and participation. From end-users to shareholders. From NIMBY (Not in my backyard) to IMBY!

Author:
Toine Bartelet, Board Member SAMEEN Groningen


About Sameen

SAMEEN is a cooperative platform initiated and run by students with a passion for energy. We connect organisations with ambitious students from various disciplines, in the form of a part-time job or (graduation) internship. Through this approach we assist organisations in realizing their ambitions in a multidisciplinary, independent and accessible way. Not only do we focus on assisting organisations; the students of SAMEEN are continuously stimulated to explore their potential, entrepreneurial ambitions and innovative ideas through our interactive platform, supported by their co-SAMEEN students, professionals and potential investors.

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