Co-operative Community Schemes Alex Bird Chair Co-operatives

Co-operative Community Schemes Alex Bird Chair, Co-operatives & Mutuals Wales

Co-operative Community Schemes • In the past developers have seen community organisations as useful partners • They can fulfil Corporate Social Responsibility commitments • They can bring community buy-in • Community organisations can also be developers in their own right 2

Co-operative Community Schemes • Co-operatives are community based • Generally much more commercially focussed than other community organisations • Can be: – – Worker Co-operatives Consumer Co-operatives Community (Hybrid) Co-operatives Secondary Co-operatives 3

Co-operatives defined • Defined originally by the International Co-operative Alliance in 1937 • Latest revision 1995 • 800 million members worldwide • 100 million jobs worldwide • 4, 820 co-ops in UK • 205, 800 jobs in UK • £ 28. 9 bn turnover in UK 4

Co-operative Community Schemes The Three Economic Sectors First Sector The Public Sector Central Government Nationalised Industries Government Agencies Quangos (ASBs) Armed Forces Health Service Fire Service Regulators Regional Development Agencies Devolved Regions/Nations Local Government Parish/Community Councils Third Sector Hard to Define Voluntary Sector Social Economy Voluntary Organisations Charities that Trade Social Enterprises Community Businesses Building Societies - Voluntary Groups Tenants Groups - Campaigns - Self Help Groups Credit Unions Worker Co-ops Consumer Co-ops Arts Centres Enterprise Agencies ILMs Second Sector The Private Sector Multi-Nationals PLCs Conglomerates Offshore Companies Private Companies Partnerships Ltd Partnerships Sole Traders Franchises 5

Co-operative Community Schemes Co-ops governed by ICA principles 1. 2. 3. 4. 5. 6. 7. Voluntary and Open Membership Democratic Member Control Member Economic Participation Autonomy and Independence Education, Training and Information Co-operation among Co-operatives Concern for Community 6

Co-operative Community Schemes • Co-operatives are accountable to their membership • Co-operatives have long term investment – not traded shares • Co-operatives share risk amongst stakeholders • Co-operatives can overcome NIMBYism • Co-operative model brings a whole mutual support mechanism into play 7

Denmark • In 2002, the installed capacity of wind energy in Denmark was 3, 000 MW, generated from 5, 600 turbines and providing 14% of the nation’s electricity consumption. • Wind farms ~ 23% (600 MW) of Denmark’s wind capacity is owned by co-operatives, with 100, 000 members owning over 3, 200 turbines. • In Denmark, 150, 000 families are members of windenergy co-operatives. • Due to an average growth of 71% per year, Danish offshore wind capacity remains the highest per capita in Europe. 8

Denmark • By contrast, in 2004 the UK’s installed capacity, for a population ten times that of Denmark, was 777 MW. • This comprised 90 projects, only one of which was owned by a co-operative, providing 0. 5% of the UK’s electricity. 9

Denmark • CHP/district heating – 300 of the 400 district heating networks are owned by consumer co -operatives, ensuring accountability for a monopoly supply. • Biomass fuel – farmer co-operatives manage the fuel supply chain and own the majority of the 120 straw and wood-fuel district-heating plants. • Anaerobic digesters – farmer co-operatives own over 20 large-scale digester plants providing farmers with a sustainable wastemanagement solution. 10

Middelgrunden Co-operative, Denmark 11

Middelgrunden Co-operative, Denmark • The project has two owners – Copenhagen Energy (the local utility owned by the Municipality of Copenhagen) and the Co-operative – each taking possession of ten turbines. • The Co-operative, assisted by government grant and through the Copenhagen Environment and Energy Office, contacted between 50, 000 and 100, 000 people in the early stages. 10, 000 local people committed cash, buying 30, 000 pre-subscriptions at € 7 each. • Ultimately, 8, 552 electricity consumers became shareholders, half of them subscribing for five shares (the maximum number to be given tax-free status). • The cost of the Co-operative’s share of the project was estimated at € 23 million, giving a price per share of € 570. 12

Baywind Co-operative • Baywind Energy Co-operative Ltd is an Industrial & Provident Society and was formed in 1996 on the lines of co-operative models successfully pioneered in Scandinavia. • The first two Baywind projects enabled a community in Cumbria to invest in local wind turbines. 13

Baywind Co-operative • The original board of directors included 7 members of the community from Ulverston and Barrow. To date, members have received a competitive return on their investment from the sale of electricity. • The first share offer in 1996/97 raised 1. 2 million to buy two turbines at the Harlock Hill wind farm. In 1998/99 the second share offer raised a further £ 670, 000 to buy one turbine at the Haverigg II wind farm site. • Preference is shown for local investors, so that the community can share some of the economic benefits from their local wind farm. 14

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Co-operative Community Schemes 16

Co-operative Community Schemes • Specialist Loan Funds – www. co-operativeloanfund. co. uk – www. icof. co. uk • Specialist Investment Funds – www. energy 4 all. co. uk • £ 8 million grant pot from WAG for community owned green energy gives £ 100 k to £ 300 k per project • Industrial and Provident Societies – easier share issue than Companies – www. communityshares. org. uk • IPS Shares are withdrawable, not tradeable 17

Energy 4 All • Energy prospects - latest share issue from Energy 4 All • Will provide funds for work up to planning permission • Investment £ 500 to £ 20, 000 • Qualifies for Enterprise Investment Scheme tax relief 18

Energy 4 All • 7 wind co-ops – stake in each • Raised over £ 13 m equity, from over 7, 000 members • Local energy conservation funds • Pay attractive annual return • Two Energy 4 All models: – 100% owned – Stake (leased land) www. energy 4 all. co. uk 19

Alex Bird Chair, Co-operatives & Mutuals Wales www. cooperatives-wales. coop alex@cooperatives-wales. coop 20