Ownership Models for Renewable Smart Energy SystemsInsights from Denmark and Sweden regarding Onshore Wind Farms and District Heating Systems

Abstract

In the context of the climate crisis and the Paris Agreement, the EU has set the target of reducing its carbon emissions by 55% compared to 1990 levels by 2030 and reaching carbon neutrality by 2050. The transformation of the energy system through the substitution of fossil fuels with energy demand reductions, variable renewable energy and other low-carbon fuels and technologies will be crucial to meeting those goals. However, the positive and negative consequences of different socio-technical paths are still not fully understood, and in particular, more knowledge is needed regarding the potential socio-political, market and local acceptance of these paths, as this is essential for a timely energy transition. This study contributes to this understanding by studying which ownership characteristics and models could best promote (a) the implementation of onshore wind farms and district heating systems in renewable smart energy systems and (b) the reduction of the related energy costs and prices. The study builds on existing theoretical understandings (about citizen ownership, citizen energy project development and suitable approaches for the design of alternative energy plans) to develop a theoretical approach that − by particularly focusing on the distinct characteristics of different ownership models and the concrete contextual factors surrounding the energy project − reveals the benefits that different ownership models can or cannot deliver and why, thereby facilitating the design of suitable policies to promote the bestperforming ownership models. Three in-depth studies are conducted: 1. The ownership of wind turbines and district heating systems in Denmark in 1977-2016. 2. Consumer power in Denmark and Sweden (1903-2020): Conditions promoting district heating companies’ trustworthy behaviour. 3. The benefits of consumer co-ownership of wind turbines and powerto-heat in district heating systems in different locations of the power grid in Denmark. The studies utilise various data sources, including literature and documents, archival records, relevant actors’ websites, interviews and contact with experts. A quantitative analysis is conducted to estimate wind power capacity shares by type of owner in Denmark for the 1977-2016 period. Qualitative analysis is used for the rest of the study, applying a codebook-based thematic analysis. A different codebook is used for each of the three in-depth studies, in line with the specific theoretical approach. The results of the study indicate that local and inclusive citizen ownership models (such as utilities owned by local municipal companies or local consumer cooperatives) could be particularly advantageous to promote the implementation of onshore wind farms and district heating systems in renewable smart energy systems – even under current market conditions and project sizes. The local and inclusive utility model could enhance local acceptance of wind turbines, lower district heating prices, increase consumers’ willingness to choose district heating, improve project economics and facilitate the necessary coordination to reduce electricity grid costs. When local and inclusive citizen ownership models cannot raise the necessary capital for onshore wind farms, joint ownership models (where local and inclusive citizen ownership models are combined with exclusive models) could be an effective solution to facilitate access to capital while enhancing local acceptance. Further research is necessary to fully comprehend the appropriate design, implications, drivers and barriers of the abovementioned citizen ownership models in Denmark, Sweden, the EU and beyond. The study has also identified other important research outlooks for citizen ownership. Amongst others, the benefits and drawbacks of different governance (and ownership) models to facilitate the necessary coordination in renewable smart energy systems constitute an important and understudied area of research. All in all, it can be concluded that the Danish move from broad support for local and inclusive citizen ownership models towards increasingly supporting large commercial ownership models could be counterproductive to the achievement of the country’s ambitious climate and energy targets. In fact, the results suggest that Denmark would benefit from the design and implementation of energy policies that promote the redevelopment of local and inclusive citizen ownership of onshore wind farms and the modernisation of local and inclusive citizen-owned utility companies so that their full potential benefits to the energy transition can be realised. Regarding the EU and its Member States, the study suggests several points that could be considered for the improvement of policies and regulatory frameworks. These include focusing increasingly on the differences between local and inclusive citizen ownership models and other citizen ownership models, improving district heating regulation to ensure consumers’ rights and interests are safeguarded, registering the ownership model of energy assets and monitoring ownership developments quantitatively, reviewing the auction scheme for renewable electricity generation technologies and removing obstacles for sector integration (such as high grid tariffs or taxes).