Across Europe and around the world, the energy community movement is increasingly committed to delivering social justice through access to clean, affordable energy. Often, a progressive vision and mission create financial challenges.
As confirmed by CEES Partners, an overarching challenge is that energy solidarity measures rarely represent a revenue stream. Rather, they are resource-intensive and likely to remain on the ‘cost’ side of EC balance sheets. In worst cases, they risk rendering standard EC business models unviable.
Because energy market structures do not yet reflect the ‘added value’ of social benefits that accrue, ECs keen to practise energy solidarity must seek other financing mechanisms. As explored in the Financing chapter of the Toolkit (and across several blogs), developing business models in which ‘doing good’ and ‘doing well financially’ are mutually reinforcing (rather than mutually exclusive) requires a blend of strategic thinking, creative community engagement and innovative financial solutions.
Doing good while doing well: can ECs pull it off?
ECs are, in many ways, unique actors in energy markets that are, for the most part, structured to ensure delivery of energy supply under conditions that attract the engagement of large players motivated by profits. A commitment to keeping energy prices low through local, community-owned generation, re-investing profits to support community needs, and increasingly practising energy solidarity to tackle energy poverty, means that ECs bring a fundamentally different business model into the mix.
The EU rightfully recognises that ECs are well placed to play a key role in delivering on the Clean Energy for All Europeans Package. To date, however, policy frameworks do not properly account for challenges that being socially engaged introduces to financial viability. Evidence is emerging that the long-term benefits of energy solidarity deliver substantial social and economic value that can significantly exceed short-term costs. Under present market structures, however, there is a very real risk that being socially engaged will make ECs fail. And the opportunity to have them deliver for EU citizens will be lost.
As CEES Partners found, being socially engaged often carries high costs, particularly in terms of human resources. While more ECs are showing interest in practising energy solidarity, making it integral to their value proposition often creates compromises on the side of financial health. The scope of this challenge is reflected in the fact that almost all CEES Partners included testing new financing models within their pilots.
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