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Most energy used in the United States is 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, bringing benefits to consumers. 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.”
Community energy projects and programs have multiple economic and environmental benefits. Given the uncertainties about future energy prices and the vulnerabilities of centralized power generation, community energy is an appealing alternative to depending on large utility companies. Community energy allows self-sufficiency, can reduce costs, helps stabilize energy supplies, and is also far more resilient to storms, flooding, and other natural disasters than regular grids (community energy can provide power even when the grid is down).
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 local economic development and job creation. Last but not least, community energy initiatives (whether in renewable energy or energy efficiency) reduce fossil fuel consumption, thereby improving public health by reducing pollution and greenhouse gas emissions.
Locals touring the Detroit Lakes Public Utilities’ Community Solar installation (Courtesy: Clean Energy Resource Teams)
Community energy can take many forms, both in terms of ownership/development structures and technologies used. Small-scale wind, solar, and hydropower systems are the most common forms of community energy technologies, but geothermal, combined heat and power (CHP), district heating and cooling, efficiency improvements and other technologies (such as micro-grids) are also effectively deployed at the community level. Paired with storage, small-scale energy generation hugely improves the resilience of communities and frees them from depending on utilities for electricity.
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:
Local Capacity and Technical Assistance Opportunities to develop local energy resources—through energy efficiency or using renewable energy—are present 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, but community energy projects can 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.
Community energy has become more practical as storage technology has improved, and the increasing frequency of dangerous storms makes the resilience offered by community solar more appealing.
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