The shift to a decentralised energy system means everyone can now participate in the electricity sector – including low-income communities.
Most households in the developing world can’t afford to go solar of their own accord. But under a power cooperative, households combine their resources to collectively own, run and benefit from renewable energy projects. By doing so, they can cut their energy bills and generate a stable income stream from sales of surplus electricity.
Brazilian non-profit Revolusolar, which kickstarted a number of community-owned and -managed solar projects in the favelas of Rio de Janeiro, shows how the energy transition can be used as a tool to uplift poorer neighbourhoods.
The organisation has focused on communities that were underserved by local power utilities, says Eduardo Avila, executive director at Revolusolar. Those neighbourhoods either weren’t yet connected to the grid, or were grid-tied but had to pay high tariffs, despite contending with ongoing blackouts.
As is the case with most successful upliftment projects, Revolusolar doesn’t impose its ideas on the communities it operates in. Rather, it partners with existing residents associations to jointly devise plans.
“We rely on strong institutions already in the community,” Avila said on a webinar hosted by the International Energy Agency. “We don’t want to create new structures.”
It then assists with technical, regulatory and administrative support, and by training up installers and project managers from within the communities.
With solar panels on their rooftops, and on central community spaces such as schools, households now have more affordable and reliable electricity, and some of the savings go towards covering operational and maintenance costs.
This is all good for the micro-economy – instead of leaking a large share of household income to power utilities, that money now stays within the community. And new skills are learnt.
Revolusolar is replicating this model in far-flung areas of the Amazon where the grid doesn’t reach, and plans to integrate it into Brazil’s low-income housing development programme.
The community energy cooperative is by no means unique to Brazil.
Even South Africa, which relies almost entirely on failing state-owned utility Eskom for power, has a few pilot projects on the go. One of those is the Lynedoch eco-village near Stellenbosh, which is home to some 38 houses, both rich and poor.
Interestingly, Eskom itself launched this pilot project in 2016. It chose Lynedoch because its mixed-income profile meant it could test the possibility of energy trading platforms, whereby, say, homes that don’t use much electricity sell power to richer ones.
To increase the rollout of energy cooperatives, communities need stable and clear regulations, including a clear sight of the feed-in tariffs on offer.
Generous feed-in tariffs can go a long way. At one point, the feed-in tariffs in the UK were so attractive that power groups could install solar panels on low-income households and provide them with free electricity, because they were earning enough from sales into the grid to cover their costs.
Upfront funding mechanisms are also critical.
Policymakers can come to the party by offering grants and subsidies for these projects in low-income areas, and by making it simpler for them to enter into power-purchase agreements with utilities and other offtakers. Power-purchase agreements make it far easier to attract financing. Crowdfunding platforms can also play a role.
India, meanwhile, recently published guidelines for peer-to-peer energy trading, using blockchain to record transactions.
Reena Suri, executive director at the India Smart Grid Forum, says power trading amongst community members helps to reduce transmission losses – or electricity lost while being transported across the national grid.
Europe is already miles ahead: The EU already has about 10,000 energy communities, according to Adela Tesarova, director-general for energy at the European Commission. And by 2050, nearly 50% of European consumers will also be prosumers – or producers and sellers – of renewable electricity, according to the commission’s modelling.
Aside from reducing energy bills, the cooperative model can “create more inclusive societies, with better social cohesion”, Tesarova says.