Smart Choice Properties

Energy cooperatives - what is it and is there any ground for it in Bulgaria?

There are over 3,500 energy communities in Europe. In Bulgaria, unlike a number of Western countries such as Denmark, the Netherlands, Germany, Spain, and Italy, their existence is not regulated by law and currently, this type of venture is considered exotic. The opportunities for achieving higher energy efficiency, lower costs, and optimal price security through the establishment of local RES cooperatives are very real. Given this, it isworth our country to actively consider regulations affecting such projects for the generation and sale of energy from renewable sources.

What are energy communities (cooperatives)?

Energy cooperatives for the production of electricity from solar and wind energy, geothermal energy and biomass have the so-called Business model of cooperative. It is characterized by the fact that the participants (citizens) make decisions affecting the community but also have an active financial and economicparticipation. All within the cooperative to be able to share with each other the electricity, generated by their community-owned facilities. However, they are not exempt from taxes, fees, charges, and levies borne by end-users who are not members of the community or other producers in a similar situation.

Main characteristics of energy cooperatives

Energy citizens, members of cooperatives can be: individuals, small businesses, public or non-profit organizations that collectively produce, sell and use energy from renewable sources. There are three main characteristics of this type of energy communities:

  • Generation and supply of energy independently of the electricity distribution companies;
  • Joint investments and open communication, creating opportunities for social cohesion and protection of common resources; 
  • Democratic conduct of all procedures.

Good examples internationally

Particularly impressive is the way in which a number of Western countries are implementing successful projects and practices based on the opportunities provided by this type of organization. A brilliant example is Germany where energy cooperatives not only participate in stock trading but invest a significant percentage of profits in concert halls, kindergartens and more. And in a small town in Croatia in 2018 the first project for fully renewable energy was launched. Not only in Europe but all over the world energy communities would give a strong impetus to the energy transition with many additional benefits for the society.

The administrative obstacles in front of our country 

Unfortunately, Bulgaria is far from achieving a collective idea at the heart of which is the term "cooperative". Perhaps this is a direct consequence of the communist model of the cooperatives and associations it awakens. The fact is that we lack not only regulations. In order to introduce such an example in the practice of our country it is necessary to eliminate the lobbies of the major energy players that produce and trade in electricity. And not only that - the benefits of the existence of such communities in Bulgaria need to be reconsidered, namely - their use as a key to overcoming the crisis and combating monopoly in our country. 

Possible solutions for achieving maximum energy efficiency

Potentially, the solution is to create a regulatory environment that will enable citizens and municipalities to take an active part in the transition to clean energy. To this end administrative barriers must be removed. One of the possible models is the establishment of an intermediate company in which people have a stake through investment in new or existing RES projects. Another interesting possibility is the so-called "Solar garden model" which allows citizens to purchase or subscribe to a certain number of solar panels from this "garden". Subsequently they receive a monthly or annual income for the value of electricity, depending on the share they hold in this “garden”. This model is gaining huge popularity in the United States and Australia but in our country it would also have a chance for successful implementation, if the relevant reforms and legal changes occur.