100% Community-owned Wind Turbines
By ensuring broad local ownership to the benefit of all of the citizens, the necessary local acceptance of new, big wind turbines can be obtained. This has been the case in the Danish fishing town, Hvide Sande.
OBJECTIVES | The co-operative, local enterprise model for ownership of local wind turbines is highly successful, allowing the citizens, local communities and regions to be the driving force in the transformation towards the use of renewable energy in Europe. Denmark is on its way to achieving its 100% renewable energy target for electricity, heat and transport by 2050.
- COOPERATION: The Hvide Sande wind turbine project is a good example of local initiative and cooperation – how businesses and citizens join together to provide income for the area, while electricity from the wind is a cheap, clean and fossil-free energy source.
- LOCAL ACCEPTANCE: The Hvide Sande wind project and its ownership model was developed after the unsuccessful previous initiative of the private project developers who wanted to establish wind turbines in the same location. Their project failed due to protests, the Hvide Sande Trust Fund’s project succeeded having minimal objections. Hvide Sande shows a model that is accepted locally, especially in a country where wind power is such a present theme in the daily life of many citiens.
- ECONOMIC ADVANTAGES: The turbines are co-financing the new harbour facilities and other local infrastructure and provide green energy solutions. A well-functioning modern harbour and tourism are of great importance as levers for employment and income generation of the town. The Hvide Sande socio-economic model can be applied in many other locations.
- POSITIVE CHANGES: Turning a negative development with local degradation and exodus into new future-oriented initiatives has a significant positive psychological effect with increased self-esteem and belief in future. Transition to renewable energy re-activates the traditional local production economy which is fishery and the associated supply chain.
Hvide Sande has demonstrated that when properly organized and with respect to the attitudes and emotions of all of the local citizens, the supply with renewable energy can become a harmonious part of a contemporary society with its social, administrative, cultural and industrial structures and institutions. It is in itself a precondition for achieving 100% renewable energy supply for a local community.
Renewable energy is by nature decentralized. In Denmark, especially in the 1980s and 1990s, it was possible to make decentral, renewable energy technologies part of ordinary people’s everyday life, thus not only serving the local development and the environment, but also as a manifest instance of how individuals and households may play an active part in changing the social system and create a model reaching far beyond the borders of the local area and the country.
Wind power as a lever for regional development
The regions of Denmark with the best wind resources have in fact the lowest per capita income and the highest rural exodus. Degradation of local communities in villages and smaller townships leads to increased inequality and represents special development challenges at the national level for creating sustainable income in the country’s marginal areas.
Instead of protests that blocked previous investor project in Hvide Sande, a pro-active initiative from a group of local players has shown, that the Danish government’s goal of 1.800 MW new onshore wind energy can be realized when the necessary support and acceptance by the local population is obtained.
This, however, requires new types of ownership and organizational solutions where the income from the wind turbines does not land in the pockets of individuals that are able to invest. When the income is re-invested in improved community infrastructures that all citizens benefit from, with improved employment, income generation and quality of life, even big modern windmills with their strong visual impact meet broad local acceptance.
In national opinion polls 80% of the population supports more wind power, however, due to the NIMBY effect at the local level rather 80% of the residents are against the real wind energy projects. This dilemma has been overcome in Hvide Sande by applying a new ownership model that appeals to the local population and deserves attention and recognition.
When ensuring that income from renewable energy electricity generation is activated locally, the economical basis for improved development in marginal areas in Denmark is provided as well, in addition to an accelerated transition to renewable energy supply. In this respect, Hvide Sande shows the way as well.
National target of 50% wind power by 2020
With the Energy Agreement of March 2012, 50% of Danish electricity production must come from wind turbines in 2020. In 2012, 27% of the power production in Denmark came from wind energy. By 2020, 1.800 MW onshore, 500 MW near-shore and 1.000 MW offshore wind turbines shall increase the share of wind energy to 50%.
Due to substantial opposition and protests against onshore wind energy projects, offshore wind energy during the last decade has obtained broad political support even if offshore is a much more expensive option. Investments per kWh may be 2 to 3 times higher offshore than onshore.
With the expansion of the share of onshore wind turbines very big amounts can be saved compared to the same amount of electricity produced offshore. Therefore, the more turbines that can be established onshore the lower the electricity prices to the benefit of consumers and competitiveness of renewable energy.
The socio-economical dimension
With a total of 1.800 MW new onshore wind energy there is a very significant socio – economic potential. Each MW, as installed in Hvide Sande, produces 5.000.000 kWh/Y. The local spin-off is 2 to 3 EUR/cents per kWh. With the capacity factors achieved in Hvide Sande, the 1.800 MW new onshore windmills will produce 8 billion kWh per year. With 100% community ownership 200 to 300 million EUR will annually be available for investments in infrastructures as a lever to the common good in the regions with the lowest per capita income.
The marginal regions, often called the „rotten banana“, represent 15 to 20% of the national population of Denmark of 5,5 million inhabitants. In case if the 1.800 MW new onshore wind power was private investor-owned, the amount mentioned, 200 to 300 million EUR/year, would not be available for leverage of regional development but may even land in tax-shelters abroad. Thus it is clear that the Hvide Sande model has a wide societal perspective that can serve as an example for many countries and communities.
Overcoming the NIMBY effect
The political target of 50% wind energy in 2020 is ambitious. Considering that there are no essential technological or economic barriers, the biggest obstacle to overcome in Denmark are the protests from more than 200 local protest groups against new big wind turbines.
Many of the protesters organized windmill cooperatives in the 1980s. Therefore they are well familiar with wind energy and how to organize themselves at the community level. Now the same persons protest against financial investor projects that have no or little relationship to the communities where they plan to install their wind farms. Thus, the political target of 50% wind energy by 2020 cannot be fulfilled unless there are ownership solutions applied that allow the local residents to benefit from the wind energy projects. The alternative would be a much more costly offshore wind energy.
Trust Funds when applied to the common good
According to the Danish law, any group of persons or organisations can initiate a Trust Fund by raising a minimum founding capital of EUR 40.000. The founders themselves and specific individuals cannot benefit economically from the outcome of the fund. Thus, the statutes explicitly have to mention to which general purpose (allgemeingenützliche) the outcome of the fund can be donated.
As a lever for the transition to renewable energy, a Trust Fund’s beneficiaries shall be groups, associations and organizations that represent community interests with broad local purposes that can support local employment, income generation, culture and infrastructure. Examples of beneficiaries are commercial and industrial associations, agricultural associations, sports clubs, theatre groups, civic associations, trade unions, tourism associations etc. These could have an interest in creating a Trust Fund-owned wind power project when the purpose of the fund’s beneficiaries coincides with the associations’ interests.
Associations are the key part of the Danish culture, especially in the marginal low-income regions. Here local associations’ participation in wind energy projects could contribute to the development of cultural, sports and business while ensuring local acceptance of wind energy projects. Local utilities can also be included in the Trust Fund.
Overview of the Hvide Sande project
Hvide Sande is a small fishing town in Jutland, Denmark, directly at the North Sea. The town has a population of about 3.000 and is the fifth largest fishing port in Denmark. It is also a popular tourist location.
In 2010, the Holmsland Tourism Association initiated a Trust Fund “Hvide Sande Business Development” with the aim to install three wind turbines each of 3 MW on the site owned by the Hvide Sande harbour.
In December 2011, three 3 MW Vestas V-112 wind turbines were installed in the area near the port. The turbines went into operation in January 2012. They each produce 15 million kWh annually (with a capacity factor of 0.50, which is in line with offshore wind turbines where the investment per MW can be more than double).
Ownership structure – Hvide Sande Trust Fund
The Hvide Sande wind power trust fund was founded by four parties:
- The local Federation of labour unions
- The local Confederation of Danish Industry
- The local utilities
- The tourist association
The Hvide Sande Trust Fund owns 80% of the wind energy project. As per the guidelines set by the Danish Renewable Energy Act the remaining 20% of a wind project must be offered to local individual residents living within a 4.5 km radius from the wind turbines. The local individuals that own 20% are organized in the North Harbour Windmill Cooperative with approximately 400 shareholders from Hvide Sande and the nearest region.
Required acceptance
For several years, private project developers planned to erect wind turbines in the same location. Because of local protests their project was not realized. In this context, the Trust Fund’s objectives and positive impact on the community in Hvide Sande has been crucial for local acceptance. The plan for setting up the turbines met objections from 2 citizens only and the local branch of the Danish Society for Nature Conservation. None of the complaints were fully or partially upheld.
Economical details
The investment in the three Hvide Sande wind turbines was EUR 12.2 million, financed with a loan from two local banks with the three wind turbines as the only collateral for the loans. With the annual return of 9% to 11%, the Hvide Sande Trust Fund is expected to repay the loans in approximately 6 to 8 years.
The port owns the land where the turbines are installed. The annual rent for the three sites of DDK 4.8 million per year (approx. EUR 650.000), is paid to the local harbour, thus creating an annual operating grant to support the development of the port.
After the repay of the loans the income from the turbines will help to finance the necessary modernization and future development of the harbour. The Trust Fund is further used for energy renovation of local public buildings, local public e-mobility and other new business initiatives for the benefit of the harbour, tourism and the local municipality.
The project received the Wind Prize 2013 given by the Danish Wind Turbine Owners’ Association in April 2013, for being a good example of a local initiative and cooperation in establishing wind turbines with broad local support.
Folkecenter for Renewable Energy 