A Community Energy Incubator for Slovenia

An important investment towards a thriving future

credit: KLIK energy co-operative

Introduction

The idea of ‘community energy’ describes groups of citizens getting together and taking collective action to improve their local energy systems and generate wider community benefits.

Thriving Communities sees community energy action as a vital part of creating radical community change. Firstly, because addressing current system failures and improving local energy systems offers communities many direct benefits. And also, because it is an important way to develop new collaboration, investment and business models that start to challenge the shortcomings of our wider systems.

Overall, we think that more community energy initiatives are essential on the pathway to a radically better (including zero carbon) future. So, we think that more community energy actions need to be happening everywhere.

Unfortunately, community energy action remains underdeveloped in Slovenia. Therefore, we see a need for an integrated support model to help community energy action to scale across the country.

Therefore, in this article we outline:

1. What community energy is and why it is important.
2. Good examples of community energy action in Slovenia.
3. An outline for a proposed incubator programme to help accelerate community energy initiatives across Slovenia, with an indication of investment need and value case.

We aim to work with people and partners who are keen to build on this proposition and to scale community energy action in Slovenia. So please do get in touch if you are interested to align efforts, and to take this proposition into design and delivery.

We are certainly keen to connect with partners who would consider making some of the much-needed investment into this work.

Note: While this proposition is focussed on Slovenia, we also see a similar picture in countries across SE Europe — where Thriving Communities is focussed. We are also working on transnational approaches to advance this work in a similar way across multiple countries, so do also get in touch if this is of more relevance to you.

Community Energy

Community energy means having strong community-benefit objectives behind a business model for energy action. The core of community energy initiatives is that they are initiated and developed by networks of citizens who get together and take collective action to improve their local energy systems.

Community energy initiatives can generate a wide range of social benefits such as cost-savings, employment opportunities, shared financial returns, improved social connections, and people being warmer and healthier in their homes.

Community energy initiatives can take many different forms. They usually prioritise new business models, community financing and/or shared ownership and local training and employment programmes. At the moment the prevailing technical entry opportunity is collectively-owned solar photovoltaic power generation projects — as these are now an easy place for communities to start.

Community renewable energy generation projects can be turned into revenue-positive business models. Rather than these revenues disappearing out of the community, community energy models can help to ensure that revenues are leveraged into other more complex community energy action — such as retrofitting of buildings and shared mobility.

A common starting point for many community energy initiatives around the world has been frustration with an incumbent energy supply system that extracts wealth from a community with little concern for local health and wellbeing. Other common drivers include creating local employment, improving air quality and escaping dependence on high-carbon and nuclear fuels. As a result, community energy initiatives are helping to show what is possible in the energy sector. In many cases community-led energy initiatives have been earlier adopters of renewable energy technologies and decentralised grid models than incumbent energy companies are managing.

Indeed, community ownership models can prove critical for some sustainable energy actions to happen at all. For example: development of wind turbines has proven to be much more readily accepted when they will be community-owned; and residents are more open to retrofitting their homes if they work with trusted local advisors and contractors. Significant decarbonisation and creating a more equitable energy system will therefore probably not be possible without much wider development of community energy models and actions.

Community energy initiatives are a great place for communities to start building new collaboration and investment models. Working on collective community energy action helps communities to build capacity to work together and take greater ownership over common community assets. This means that citizens to develop their ‘collaborative communities’ skills of communication, co-creation and collective management, and also experience in improving local business and collective investment models. These are all essential enablers of change that then provide a platform for launching even more radical community changes in other areas.

We note that the term ‘energy communities’ is increasingly used in Europe, linked to new EU policy that encourages collective citizen and renewable energy action. But community energy action might include citizen-lead action in the energy sector that doesn’t smoothly fit these new definitions of energy communities, especially as the EU requirements are being translated into national rules in different ways. Connecting a community energy approach with the new opportunities of ‘energy communities’ is part of the process that communities need support with.

credit: KLIK energy co-operative

Progress with Community Energy in Slovenia

In Slovenia, community energy is generally still in its infancy.

Examples of active community energy cooperatives and initiatives under development include:

• Zadruga Sončnih Elektrarn Slovenije (ZSES / Cooperative of Solar Power Plants of Slovenia) - was established in Ptuj in 2014. Today ZSES supplies and installs turnkey solar power plants for customers throughout Slovenia and ZSES members together have a total installed solar power capacity of 6.3+MW. ZSES has run two successful citizen-investment capital raising processes for solar energy projects.
• Lesna Zadruga Loški Potok (Loški Potok Wood Cooperative) - founded in 2016, the co-operative operates a local district heating system, running on wood biomass, with 13 connected customers in Loški Potok. In 2020 the co-operative also completed a 33 kW solar PV installation and integrated charging of an electric vehicle used as part of the Prostofer scheme (through which volunteers transport older citizens where they need to go). Development of a community wind turbine project is now in progress.
• Zeleni Hrastnik — the largest cooperative solar power plant in Slovenia is the 300 KW array now being developed on the roof of a local primary school in Hrastnik.
• Ajdovščina municipality realised a pilot community solar PV pilot project where the roof of a public facility is used to supply electricity to seven households.
• Sočna Zadruga — has implemented five local biomass-based micro heat network projects on co-operative principles.
• A solar energy cooperative has been established in Sv. Anton, near Koper, through the ENES-CE Interreg Central Europe project.
• A small co-operative hydro power plant Krajcarca was established in 1992.

Experience from these initiatives shows that there is willingness of Slovenian citizens to work together on innovative community energy actions — but also that encouragement, activation, facilitation, capacity building, and technical support is essential to help ignite and accelerate the progress of such initiatives.

Experience also shows that in many Slovenian institutions there is still a relatively low level of knowledge and capacity when it comes to supporting community energy. For example, recent analysis by RESCoop shows that Slovenia is doing a poor job of using EU Funds (Recovery and Resilience Fund, Cohesion & Regional Development Funds, Modernisation Fund) to support community energy. This is changing, and in places where municipalities are seeing the opportunity and actively helping community energy actions they are helping to accelerate progress.More in-depth support and capacity building for public institutions and municipalities can therefore certainly help. Especially as many Slovenian communities do have incumbent municipally-owned energy and network utilities, which could perhaps be playing a more proactive role in accelerating local energy transitions.

While the above examples prove that community energy action is possible, and beneficial, in Slovenia. They are still supported in relatively disconnected ways. Different organisations are doing what they can with various streams of private investment, and projects through national and EU funds. This is admirable, but not yet adding up to systemic change. So, we see an important role for a more integrated, and better resourced, incubator model to help scale community energy in Slovenia.

Loški Potok. Credit Notranjska.com

A Proposal for Incubating Community Energy in Slovenia

To advance more joined-up support for community energy initiatives in Slovenia, we propose the establishment of a national Community Energy Incubator support service.

This Community Energy Incubator model would be designed around these key streams of support:

1. Activation — to help community-leaders, municipalities and citizens to better recognise and understand the opportunities and value-case of community energy
2. Capacity Development — to equip community-leaders and citizens with the skills and knowledge needed to create impactful community energy projects and social enterprise models.
3. Coaching — for start-up community energy initiatives, especially in critical areas such as governance, organising models, co-creation, technical standards, investment and business models.
4. Investment support — to help the design and development of suitable blended community, public and private financing solutions. This would include a strong focus on developing collective crowd-investment by citizens and local community actors.
5. Learning — capturing and sharing lessons learned between different local actions and initiatives.
6. Policy and Procurement Innovation — helping new initiatives to navigate existing regulations, while generating suggestions for policy improvement and encouraging local public procurement innovation to support community energy.

Ideally, the programme should also have the capacity to provide small activation grants to accelerate the start-up phase of new community energy actions.

Rather than any new organisation, we suggest to establish a networked partnership model to hold and manage such an overall support programme, and deliver the community energy incubation services across Slovenia. We envisage that this should be designed around:

• A core team of experts working under a partnership-based governance model. This team would deliver national-scale capacity building, trainings, communication and advocacy, and programme co-ordination work.
• A network of community advisors and coaches working with citizens and local community leaders across Slovenia. They would be embedded within a network of aligned organisations such as NGOs, companies, municipalities and local energy agencies.

Programme Investment Need

Towards the overall goal of getting community energy action happening right across Slovenia, we think a reasonable initial goal for the programme would be to support the start-up of 150+ local community energy projects in the first 3 years of the incubator’s operations.

Experience shows that unlocking a good community energy project might require on average: 6 person weeks of tailored capacity-building, coaching, learning and design support; and a €10.000 activation grant.

For 150 new initiatives this would come to €1.5 million of activation grants, and 900 person-weeks of support (about 22 FTE).

In addition, we think that core programme work of capacity building, training of local advisors and coaches, advocacy, drawing in international expertise, communications and programme co-ordination would require about 5FTE / annum, = 15 FTE over 3 years.

Therefore, an indicative 3-year programme budget would be:

• 15 FTE for core programme work = €750k
• 22 FTE advisors and coaches = €1,1 million
• €1,5 million of project activation grants

So, the initial 3 year incubator programme would require a total investment of approximately €3,35 million. This is of course an approximate figure that can be refined with more detailed programme design, but we believe it is a reasonable indication of what is needed.

The Value Case for this Programme Investment

Community energy actions focussed on renewable power generation across Europe are consistently managing to offer financial returns to community investors of 3–5%. This is in addition to the social returns that they prioritise and financial returns that are reinvested into other community benefit initiatives.

Let’s assume that an average community energy project requires an investment of €50k. For the 150 new projects that the programme targets this will require investment of €7.5 million. 4% returns on this investment would be about €300k per annum flowing back to Slovenian investors in these community energy projects. So, if Slovenia invests €3,35 million in the programme, this investment will directly return to Slovenian citizens within about 11 years.

Then, the wider economic case analysis that we have done for Slovenia, shows a significant economic return from decarbonising Slovenia (about 3:1 on an overall €10 billion investment). At the core of this case:

• Transitioning to renewable power generation offers massive greenhouse gas abatement potential, but with smaller returns on investment. The need to balance centralised and decentralised generation was also identified as a key issue.
• Massive health benefits and job creation are projected from rapid improvements in building performance and shifting to clean forms of heating, which means that this area has the greatest economic value. Of course, it is also the hardest to make happen.

The economic case analysis highlighted how a business-as-usual approach is unlikely to deliver these changes, even though they hold great potential social value (while helping to address climate change).

This is where the value case for community energy really lies — helping to realign interests, investments and collaboration around the overall social value that could be realised by rapidly transitioning Slovenia’s energy systems.

In this content, an investment of €3,35 million in a community energy support programme looks very small, given that this is such an important step towards unlocking the €billions of potential social value to Slovenia from a faster and more systemic energy transition.

Conclusions

More community energy initiatives are essential on the pathway to a radically better (including zero carbon) future in Slovenia.

There are some great examples of community action in Slovenia already, but overall community energy action remains far below the potential and real need.

Therefore, we see a need for a national Community Energy Incubator support service, to help community energy action to scale across the country. This incubator service would be designed around:

1. Activation
2. Capacity development
3. Coaching
4. Investment support
5. Learning
6. Policy and procurement innovation

We think that a reasonable initial goal for the Community Energy Incubator programme would be to support the start-up of 150+ local community energy projects in the first 3 years. Indicatively, such a programme would require an initial investment of approximately €3,35 million.

There is a very large potential economic and social upside to making such an investment. Both in terms of direct financial returns to citizens, while helping to unlock the social and economic value of a faster and more systemic energy transition in Slovenia.

We hope to work with more people and partners who are keen to help advance this proposition and together to scale community energy in Slovenia.

So please do get in touch if you are interested in taking this proposition into design and delivery. We are certainly keen to connect with partners who would consider making some of the much-needed investment into this work.

With thanks to all of the community energy practitioners in Slovenia who are leading the movement and have shared their enthusiasm, ideas and experiences with Korimako so far, enabling us to prepare this proposition within the frame of the Thriving Communities initiative.

Note: While this proposition is focussed on Slovenia, we see a similar picture in countries across SE Europe — where Thriving Communities is working. We are also working on transnational approaches to advance this work in a similar way across multiple countries, so do also get in touch if this is of more relevance to you.

Grunneger Power cooperative. credit The Guardian