By Jan Ahlen, NFU government relations representative

Rural America is under increased economic stress. What once was a thriving sector of the economy and a boon for rural economic development, American agriculture employs fewer people every year. As a result, there are fewer jobs for young people. Today’s farm children would rather move to cities where there is more opportunity than take over the family farm. There is thus a distinct need for innovative and fresh ideas to revitalize rural communities and create job opportunities.

On the other hand, rural America is blessed with excellent natural resources that can be converted into energy. America boasts some of the best wind and solar conditions in the world. In fact, compared to Germany, every state besides Alaska has better solar resources than Germany. Despite this, German installed capacity of solar PV far outpaces installed capacity in the United States. Furthermore, in contrast to the United States, the German rural economy is booming. Since the introduction of a Feed-In-Tariff for solar, wind and biogas, the German rural economy has created thousands of jobs and led to a renaissance where people want to stay in their local communities. While American natural resources for renewable energy production are superior to Germany’s, the United States has failed to capitalize on this advantage because of an unfavorable policy environment.

The idea that renewable energy can revitalize rural communities is not a new one. The development of the ethanol industry in the 1970s, for example, created tremendous new opportunities. Then came the promise of massive wind farms, where rural landowners would receive lease payments for their permission to install wind turbines on their property. The problem was that a lot of the economic benefits and profits from the development of and production from renewable energy systems leave the community. Projects are often financed by investors located outside of the state and developed by multinational corporations. While much of this development is welcomed because of the environmental and energy security benefits it provides, it does little to revitalize rural economies.

Recently, however, the idea of local community ownership of renewable energy systems has begun to take shape. When members of the local community have an ownership stake in a project, those people receive additional income from their investment that will be reinvested locally. This increased economic activity leads to more jobs. In fact, a study by the National Renewable Energy Laboratory (NREL) found that local ownership of wind projects creates 2.6 times the amount of jobs that traditional wind projects with standard lease payments generate. In Germany, community ownership of renewable energy projects comprise roughly fifty percent of installed renewable energy capacity. In the United States, only about two percent of installed capacity is locally owned.

Renewable energy is still a minor player in the U.S. energy landscape. Within the renewable energy sector, community-owned projects play an even smaller role. However, a growing number of organizations and rural residents increasingly support community-owned projects. In order for this idea to take off, there needs to be favorable policy at the federal and state levels. The current framework is set up to encourage the construction of large projects producing hundreds of megawatts (MW) of electricity. So, it is difficult for smaller, community-owned projects to receive financing. Besides policies that encourage local ownership, in order for community-owned projects to be successful, they need proper financing. There is a lot of knowledge on this but there is a lack of information sharing. It is crucial that information on financing community-owned projects be made readily accessible to any community that wants to build a renewable energy project.

The idea of community-owned renewable energy systems is relatively new in the United States. However, in Europe, and Germany in particular, it is seen as logical and a main driver of rural economic development. In order for this idea to take root in the United States there needs to be increased awareness campaigns through strategic outreach. The ELEEP network can play a crucial role in this. Americans need to learn from the experience of Europe. Policy exchange and sharing of renewable energy project successes between Europe and the United States is crucial to furthering the idea of community ownership.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.