Historically, most energy used in the United States has been collected and delivered through centralized facilities, owned and operated by large companies and utilities. The primary energy source itself—be it coal, natural gas, oil, or uranium—typically originates far from where it is used. Energy efficiency and renewable energy, however, provide an opportunity for energy to be “produced” closer to end-users. Developing local energy resources may also involve large commercial enterprises (e.g. investor-owned wind farms) or actions by individual households and businesses (e.g. weatherizing one’s home, installing solar panels on an office building). There are, however, a wide variety of collective and community-scale approaches that allow local energy users to share the benefits of developing local energy resources. These collective efforts—to help local communities move from importing energy to producing their own energy—are what we call “community energy.”
Benefits of Community Energy
Community energy projects and programs can have multiple economic and environmental benefits. Given the uncertainties about future energy prices and vulnerabilities of centralized power generation, communities can strive to continue to build out a network of distributed energy generation. This helps communities become more energy self-sufficient and helps stabilize energy supplies and prices. Reducing energy use through efficiency improvements helps households and businesses keep more dollars in their pockets, just as developing local renewable energy sources also helps keep energy dollars in the local economy. Developing local markets for energy infrastructure, products, and services can be a major driver for economic development and job creation. Reducing fossil fuel use also improves public health by reducing pollution, including greenhouse gases which cause climate change.
Types of Community Energy
Community energy can take many forms, both in ownership/development structures and technologies. Small-scale wind, solar, and hydropower systems are perhaps the most familiar forms of community energy technologies, but geothermal, combined heat and power (CHP), district heating and cooling, efficiency improvements and other technologies are also effectively deployed at the community level.
Community energy typically requires some organizational entity that connects or serves multiple local users. Such connections can take many forms. Projects and programs may be implemented through an existing local institution, such as a municipal or cooperative utility, business and homeowner association, community and economic development corporation, civic organization, or a neighborhood group. Projects may involve the creation of a new entity, such as a special assessment district, energy improvement district, local cooperative, or non-profit association. Private companies serving local customers can be instrumental to developing local energy resources.
Community energy projects come in many different shapes and sizes, combining a variety of energy technologies with ownership and development structures. Examples of community energy projects include:
- Rural landowners in Michigan joined together to install wind turbines on their land and sell the power to local utilities and businesses.
- South Carolina rural electric cooperatives offer loans to co-op members to improve their home’s energy efficiency. The loans are then repaid through the member’s electric bill, in a process known as “on-bill financing.”
- The East Akron (OH) Neighborhood Development Corporation provides energy efficiency outreach and services to local residents and businesses.
- The City of Stamford, CT created local energy improvement districts to coordinate and finance the development of distributed and renewable energy systems.
- A private company leased a public utility right-of-way to install a district cooling system that serves numerous buildings in downtown Chicago.
Keys to Success
Local Capacity and Technical Assistance Opportunities to develop local energy resources—through energy efficiency or using renewable energy—abound in every community. Capturing those opportunities, however, generally requires knowledgeable businesses, organizations, government agencies, or individuals to lead, manage, and implement projects and programs. Many communities lack such local capacity, and building this capacity is critical to expanding and accelerating community energy efforts.
Financing Many worthy projects, including projects that can greatly reduce costs for local energy users, may not move forward due to lack of appropriate financing mechanisms. All energy projects face challenges in securing access to financial capital; however, community energy projects may face additional hurdles because existing financial instruments and institutions are not conducive to unconventional projects that involve multiple parties or atypical organizations.
Policies Local, state, and federal policies relevant to energy have mostly not been conceived with collective community-based strategies in mind. Projects may succeed in spite of the lack of supportive policies, but policy provisions to specifically accommodate community energy approaches can help spur projects and programs and ensure success. Moreover, existing policies, including policies intended to promote energy efficiency and renewable energy, may present unintended barriers to community energy solutions.
EESI Community Energy Initiative
EESI’s community energy initiative aims to help communities make greater use of local renewable energy and energy efficiency resources. The initiative is focused on strategies that allow multiple households and businesses to collectively develop, own, or otherwise share the costs and benefits of local energy. EESI is working to advance policies that promote community energy solutions and to disseminate the lessons learned from cities, towns, and regions that are pioneering community-oriented approaches to meeting local energy needs.
EESI’s goal is to help share information among communities who are pioneering or exploring community energy strategies. We are very interested to learn about the experiences of different communities with efforts to ramp up energy efficiency and renewable energy through collective or community-scale projects and programs. We are especially interested in key elements that contributed to a project’s success, as well as key challenges that hindered success and how those challenges were addressed. To submit local community energy examples, please contact John-Michael Cross at jmcross [at] eesi.org or (202) 662-1883.