Due to the extremely high energy prices since the beginning of the war in Ukraine, money is pouring in to the oil companies and energy companies. But energy cooperatives are also benefiting from the energy crisis. Betuwewind director Gerlach Velthoven expects an “extra profit” of 6 million euros this year.
Usually the profit is about 1.5 million euros. Velthoven initially felt ‘uncomfortable’ with the high income, because a cooperative is not intended to make as much profit as possible, but to serve the interests of its members and of the environment. At the same time, he is “overjoyed” that Betuwewind is a cooperative, so that he does not have to distribute the profit to shareholders. “The money stays on board,” he says.
The Netherlands has more than 600 energy cooperatives. Most are small. Betuwewind is one of the greats. The two Betuwewind wind farms in the Tiel and Geldermalsen regions annually supply more than 90 million kilowatt hours (kWh) of electricity, which is sufficient for a maximum of 30,000 households. All cooperatives in the Netherlands together have approximately 100,000 members and generate green electricity for approximately 300,000 households.
Betuwewind would like to use the extra profit to lower the energy rates for its members, but that is not possible. Because even though the energy cooperatives themselves generate electricity via their wind or solar parks, they do not supply it directly to their members. Members usually pay a one-off fee for their membership. They often provide a loan to the cooperative of several hundred to several thousand euros. They thus participate in the local generation of green electricity and receive interest on the loan.
Supplying energy is complicated
But they do not get the locally generated sustainable electricity. “It is complicated to be an energy supplier,” explains Velthoven. “You have to have just enough power to supply your customers at any time of the day.”
At times when there is no wind, Betuwewind cannot deliver, for example. Because the cooperative does not want to leave its customers in the dark, it sells its energy on the open market. There it is bought up by large energy companies such as Vattenfall and Eneco, which are able to constantly balance supply and demand. That is a matter of adjusting a gas-fired power station up or down.
Sometimes cooperatives also set up partnerships, so that members can indirectly purchase electricity from the cooperative via an energy company. That always went well, because the energy market has kept prices low since liberalization in 2004. With the supply of natural gas faltering, prices on the free market are skyrocketing, while costs for the cooperatives remain the same.
To help its members in times of energy poverty, Betuwewind promised in April of this year that they would not have to pay more than 15 euro cents per kWh. That is a very attractive offer in a market where electricity prices of 70 cents are not uncommon.
But the offer only applies to members who are customers via energy supplier Greenchoice, because Betuwewind has a contract with them. Does Greenchoice charge 70 cents? Then Betuwewind will add 55 cents. Betuwewind immediately ran into a problem after the announcement. Because Greenchoice is no longer accepting new customers due to the uncertain situation on the energy market. And so only 150 of the total of 900 members can benefit from the scheme. Director Velthoven: “We couldn’t find a solution with Greenchoice. Now we are looking at whether we can organize it ourselves.”
This ‘self-organization’ means that eight energy cooperatives are joining forces. In addition to Betuwewind, these include Zuidenwind, Windunie, West Betuwe and Energie van Ons. What they cannot achieve individually, they are now trying to do together: supply energy to members themselves, at cost price. You can recoup the investment in a wind turbine for 8 euro cents per kilowatt hour, Velthoven reckons. Add to that the costs for maintenance and administration, and you arrive at a cost price of 15 cents.
“We want to offer electricity at cost price when our wind turbines are running,” says the Betuwewind director. “But if you purchase electricity when we do not have our own supply, you simply pay the market price”. Velthoven hopes to come to the market with “an initial offer” at the beginning of 2023.
If the cooperatives succeed in matching the supply and demand of electricity at any time of the day, then the members will be lucky. Because then they always get electricity for a low price.
Sift through
“You then pay the cost price, but we expect that you will help to keep the demand in line with the supply,” says Velthoven. “We will work with digital tools. I can imagine that we, as a supplier, determine exactly when the heat pump or the washing machine switches on. Then we can better balance supply and demand.” Consumers who want to turn on the heating when the cooperative has no electricity will then have to buy electricity on the open market at the current price.
To find out exactly what is needed to turn energy cooperatives into energy suppliers, Energie Samen, an interest group for energy cooperatives, has applied for a subsidy of 4.6 million euros. “We are working towards a system where you can also use locally generated energy locally,” says chairman André Jurjus of Energie Samen. “We want to link supply and demand of green electricity locally as much as possible. But we do need a link with the national infrastructure, so that you can trade shortages and surpluses with each other.”
The energy crisis has brought the essence of the cooperative idea to the surface again: for and by members. In anticipation of a status as a supplier, many cooperatives have set up a sustainability fund to allocate the surplus profits to a destination that fits the social task.
This also applies to cooperative De Windvogel, which owns three wind turbines and invests in a number of wind farms of other cooperatives. Members of De Windvogel can apply for a maximum of 2,500 euros from the sustainability fund. People make small purchases with it, such as radiator foil and energy-efficient LED lighting, says chairman Laetitia Ouillet. But members can also have cavity wall insulation installed, for example. “In this way we help our members to become more sustainable and to reduce their energy bills,” says Ouillet.
Incidentally, not all members are satisfied with the sustainability funds. At the Windvogel and other cooperatives, directors were told by some members that they would rather receive a higher interest payment: ‘Give me the money and I will decide what to do with it myself’. In short, since the energy crisis, shareholder thinking has also affected people in the cooperative world. But this is a minority. The general meeting of members of De Windvogel gave the board the green light in October to continue with the sustainability fund.
“At Betuwewind we have had an extensive discussion about this,” says director Velthoven. “What are we on earth for? Not only to serve the financial interests of the members. We are also there to accelerate the energy transition.” Most cooperatives therefore opt for the golden mean. Now that income is increasing, there is room for higher interest rates in addition to sustainability initiatives. “We have agreed that members will receive a maximum of 10 percent interest,” says Velthoven. “That is already a lot. I say to sulking members: take a look around you at what’s going on in the world. We also need to pay attention to that. People are usually quick to agree with that.”
In this way, the cooperatives are increasingly developing into fully-fledged players in the energy market. At the end of November, Climate Minister Rob Jetten announced that he would release 150 million euros for the Cooperative Energy Generation Subsidy Scheme. “That means there will be more cooperative projects,” predicts Jurjus of Energie Samen. “So more and more sustainable energy comes from cooperatives.” Jurjus expects that energy cooperatives will be able to sell more and more electricity at cost as a result. Although Betuwewind hopes to make a start next year, the project to turn cooperatives into fully-fledged energy suppliers will take “several years”, Jurjus thinks.
Awareness of energy transition
By actively involving members, the cooperatives expect to gain more support for wind turbines and solar farms. You may not like the view of a windmill, but if it keeps the energy bill affordable, the resistance can disappear. This means extra competition on the energy market. Jurjus expects local energy communities to “cause the necessary ripples in the energy market”.
Former Eneco CEO Jeroen de Haas is regarded as an expert in the field of innovative business models in the energy sector. He thinks it is a “good idea” for the cooperatives to become suppliers themselves. “It certainly appeals to me, but it is not easy to realize. Because are they also going to set up a call center where customers can call if they have questions?” According to De Haas, the cooperatives will discover that the cost price of green electricity is higher than 15 cents: “Everyone thinks that energy companies are currently earning huge margins from the supply of energy, but that is only very limited.”
Velthoven van Betuwewind is optimistic. “The Netherlands will soon consist of energy communities that generate and consume electricity locally. Regions that are short and regions that have surplus exchange that with each other.” De Haas is enthusiastic about the social aspect of the initiative. “If they really succeed in building a community where production and consumption are shared by the same people, it will make a big difference in the energy transition. A mental transition is needed to stay below 1.5 degrees global warming.”
A version of this article also appeared in the December 12, 2022 newspaper