Last April, Grenoble Ecole de Management organized a gathering on the subject of energy with actors interested in new business models for the energy transition. One development in this evolution includes the rise of citizen initiatives and energy coops, which create producer/consumers of renewable energy. Today, we look at the current states of affairs in France and Holland.
Anne-Lorène Vernay is a professor of strategic management at Grenoble Ecole de Management. Her research focuses on new business models being developed by the energy sector in response to the energy transition. She also analyzes the impact of business models on sustainable transitions.
“Currently, growing numbers of companies are building on the idea of energy communities in order to stand out from traditional energy actors. These companies have one point in common: they’ve developed platform-based business models that rely on connecting with small renewable energy producers and consumers instead of valorizing costly energy infrastructures,” explains Anne-Lorène. This evolution has led to the emergence of prosumers, or producers/consumers that are both clients and competitors of traditional energy companies.
France and Holland: two markets, two models
“The French coop energy movement is emerging with 300 coops that unite 11,000 stakeholders who produce 0.2% of French renewable energy. In Holland, there are almost 500 energy coops (coops exist in two-thirds of Dutch cities) with 70,000 citizens (1% of Dutch households). They produce 2% of Dutch solar energy. Wind coops produce enough energy for 120,000 households. At such a scale, these citizen initiatives are starting to become significant actors on the alternative energy market,” says Anne-Lorène.
The Dutch energy market is completely liberalized. “In 2018, 18% of Dutch households changed suppliers. One fourth of households changed suppliers in France. Dutch energy suppliers must compete for access to renewable energy plants, whereas French suppliers are pretty much required to sell their energy to EDF.”
“There are also differences in positioning. In France, these emerging movements and coops are often presented as militant companies that enable participants to invest their savings in a project that has meaning and helps develop the local economy. In Holland, coops are also energy suppliers and enable consumers to buy energy from the coop. They create short circuit local markets much like local agricultural initiatives. These coops enable people to decide how they consume,” highlights Anne-Lorène
Cooperatives to help major players go “green”?
“Our study demonstrated that the French commission for energy regulation is not very keen on citizen energy initiatives. Many French coops make the practical choice of working with traditional energy suppliers (e.g., Eneco was just bought by Shell). These coops are not ‘anti-system’, but rather use the system to help them develop. It’s a question of whether or not they’re willing to work with traditional actors.
In Holland, many coops work with traditional energy players, but they also question the risks inherent in working with traditional players. On one hand, traditional players bring technical and sector specific knowledge to the table which is essential for major projects. On the other hand, they can act to control a coop’s actions thus risking a loss of meaning and autonomy (as explained by Eneco).
Energy suppliers have several options: change nothing and simply produce electrons (thus losing access to certain value creation), evolve and develop platforms like Powerpeers (owned by Vattenfall, EDF Sweden), or work hand-in-hand with coops. This can enable them to access renewable energy projects with the support of local communities. These initiatives can also be a source of innovation and progress if citizens and companies are given the freedom to act. This option might hold the most promise to help major actors go ‘green’,” concludes Anne-Lorène.