How Electricity Cooperatives in the U.S. Are Paving the Way for a Renewable Future

Curtis Wynn had a problem. Since 1997, Wynn has led the Roanoke Electric Cooperative in North Carolina. For a good chunk of that time, he'd been pushing for the cooperative's members to adopt clean technology. The problem? His members thought their bills were too high—some were paying more than $200 a month. A third of the co-op's members live in mobile homes and about a half live in single-family homes—almost none live in apartments. Many of these buildings were badly in need of efficiency upgrades.

Wynn's team tried educating members (didn't solve it) and weatherizing grants and rebates for water heaters (not enough). They offered loans, but people didn't want them. So in 2015 the co-op tried a new idea. Roanoke began paying its members to make efficiency upgrade to their homes through a tariff on-bill financing program. It's a model that electricity cooperatives are using to modernize the oldest infrastructure in the most rural places in the country—often in places where access to the clean energy economy is restricted by persistent poverty.

How does the initiative work? It's pretty simple. The cooperative hires local contractors to make the efficiency upgrades—caulking windows, installing insulation, and replacing heat pumps or other appliances. After the work is completed, members pay the co-op back by way of a fee on their electric bill, usually over a 10-year period.

It's different from the typical on-bill financing model provided by many investor-owned utilities. With the tariff initiative, customers don't have to take out a line of credit or take any new debt. Typically, the co-op will do an energy audit of the home to ensure that monthly savings are enough to reduce the bill while still covering the monthly tariff fee. Energy bills are less expensive even as people are paying for the upgrades and living more comfortably.

Today's plummeting costs of wind and solar infrastructure are changing global energy markets, even as the grid is badly in need of modernization. Researchers are proposing that regulators open up the market to distributed energy resources and renewable technology, and the solar industry now employs twice as many people as coal. Still, renewables can be a tough sell in conservative states, especially among rural communities that have long been powered by fossil fuel industries.

But Wynn says the Roanoke initiative, which the cooperative dubbed the "Upgrade to $ave" program, satisfies members, keeps costs down, stimulates the economy, all the while reducing energy use and benefiting the environment. Already, the co-op has invested an average of $6,400 into about 200 homes, and it's on target to invest in another 1,000 residences in just a few years.

"It's an investment," Wynn said. "It's giving us a return. We are getting better buildings in our region. We are creating a workforce. We are creating jobs. Local contractors are doing this work and we are feeding them with a steady flow of jobs."

Decentralizing the Grid

Cooperative leaders like Wynn believe that energy efficiency can be a stepping stone to renewable technology like wind and solar generated power. Could the momentum be aggregated to decentralize an outdated energy grid? Keith Taylor, Assistant Community Economic Development Specialist at the University of California, Davis, thinks they can. He believes that if electricity cooperatives share resources and influence, they can re-shape federal energy policy to focus on renewables.

"The electric co-op needs to be front and center on this," Taylor says, adding that even if you put environmental arguments aside, it makes sense financially. "The ownership. The costs. The stars are aligning for electric co-ops. We don’t need the subsidies anymore."

Across the U.S., there are more than 900 consumer-owned electric cooperatives. These co-ops are in more than 47 states and provide power to 42 million people in much of the rural U.S., according to the National Rural Electric Cooperative Association. That's about 75 percent of the country's entire landmass. With assets worth $175 billion, co-ops serve more than 19 million institutions, from businesses to churches to farms.

At Roanoke Electric, the investments are funded by a $6 million rural development grant from the U.S. Department of Agriculture's energy savings program. In June of 2016, as part of former President Barack Obama era Climate Action Plan, the Feds announced the availability of $52 million in loans to energy providers like co-ops to spur efficiency programs.

If Wynn's idea of using federal development grants to fund community energy projects in the rural South sounds familiar, that's because something similar has happened before. Today, most farms are connected to the grid, but in the 1930s only 10 percent of the nation’s farms had power. As part of the New Deal, electricity cooperatives were established to power rural America. By the 1950s, roughly 90 percent of farms had juice, and that same grid exists today, but it’s badly in need of an upgrade.

But will that happen in an era of "America First" energy policy? President Donald Trump has promised to reinvigorate coal and signed an executive order that shredded Obama's plans for slowing the pace of climate change by reversing rules restricting emissions. Trump has asked Congress for a $4.7 billion cut from the U.S. Department of Agriculture. While the budget doesn't mention the rural development grants specifically, the deep cuts amount to a 21 percent reduction in the agency and would surely scale the initiative back, if not eliminating it entirely.

The goal of the grants is to lower energy bills for rural families and provide a pathway to renewable energy. Roanoke was the first cooperative to apply, but another financing program was developed in Kentucky by the Mountain Association for Community Economic Development and Kentuckians for the Commonwealth, and other community groups. Chris Woolery helped establish the program, called How$martKY. He says that Wynn has "learned from us and then he raised the bar."

That's exactly how the cooperative system is supposed to work, he added. It's an example of a core tenant of electricity cooperatives: sharing ideas. "It's a mission. It's time for us to learn from them and do what they are doing." Woolery said. Wynn signs on to this philosophy too. In 2017, he wrote an open invitation for any other co-op to copy the program.

"It is really hard to argue against energy efficiency," Woolery says, adding that it's all about economic development. "We want to create jobs and opportunity and wealth that stays in Appalachia, because so much has been extracted from it."

So far, How$martKY has funneled $2.5 million to local contractors for performing efficiency upgrades on homes, but the program hasn't reached the same scale as in Roanoke. Still, he's worked with organizations from California to Arkansas to develop similar programs. He testified on behalf of the program at the Kentucky state legislature in the city of Frankfort.

Most recently, Woolery went to the Lausitz region of Eastern Germany for a summit on how coal communities can transition to renewable energy. He says he toured defunct coal mines that were turned into historical sites and monuments. "I expected a two-way exchange, but we were really there to see and hear," he says. "We saw strip mines turned into lakefront properties, century old plants turned into cultural centers and hubs for the community." He says it was inspiring.

The German Energiewende, or energy transition, is a case study in how local communities can drive renewable development. In 2013, the citizens of Hamburg voted to return private control of utilities to the local government. The citizen group "Our Hamburg – Our Grid" organized the referendum. A year later in 2014, Germany passed the Renewable Energy Sources Act, which subsidized the production of wind and solar energy through a feed-in tariff system. The initiative spurred rooftop solar installation and allowed environmentally conscious co-ops to bankroll wind and solar projects while creating jobs. Woolery sees energy efficiency projects in Kentucky as the beginning of a regional transition to renewable energy system like Germany's. He said that the on-bill financing program is a "foot in the door," to renewable energy and points to places like the city of Benham as examples of how it can work.

Communities Take Power Back

Benham, a small town of 500 or so people in eastern Kentucky, has been in the news recently because its coal museum just installed solar panels. But its energy transition programs are much broader than headlines suggest. Established by International Harvester, a mining company, as a Cadillac coal camp in 1909, Benham was built to house company employees. Carl Shoupe, a local resident, says it was one of the premiere coal camps in mid-20th-century Kentucky. Shoupe is a veteran and moved to Benham to work in the mines after the Vietnam War. Today, Shoupe serves on the Benham Power Board, a very different sort of utility from the traditional large investor-owned companies.

Benham became a city in the 1960s, when the coal companies closed up shop. A few of the residents formed a small government and decided to establish their own community-run power board. Today, there are 300 customers in the town, many living in mainly single family homes built when coal power was abundant and homes didn't need to be as efficient. Over the years, as the rural economy declined, and homeowners couldn't pay for needed upgrades on their homes. "The homes aren't well insulated," Shoupe says. "I mean, you could throw a cat through some of the walls."

As with Roanoke Electric's members, Benham's homeowners pay high rates for power—some spend more on electricity than they do on their mortgage. Woolery says he saw one homeowner's electric bill which was $1,400. "You can imagine how difficult it is to come up with that," he says. 

With help from Kentuckians for the Commonwealth and other community groups, the Benham Power Board launched its own energy efficiency program called Benham$aves. It's a fledgling program. The model is similar to the on-bill financing program: local contractors are hired to check for efficiency upgrades. Shoupe says it's saving customers hundreds of dollars. The board has found roughly two dozen eligible homes, but the community is raising money to pay for even more. "We are here to serve our community and help them as best we can. We saw so many people struggling, good people," he says.

Similar programs have launched around the U.S. In February of 2016, Arkansas utility regulators approved a tariff on-bill financing plan developed by the Ouachita Electric Cooperative in a unanimous decision. Norma O'Neal works with the members of Ouachtia Electric, and she says that many members are cutting their energy usage in half.

"We are in a very depressed part of the country," O'Neal says. "It is a very tight market around here. Saying that, most of the people that we deal with can barely pay the bill much less cough up $8,000 or $10,000 to make their home efficient." She says that the tariff program has been a huge help in reaching these members.

Ouachtia's plan opens the door for adoption of similar programs across the state. Tammy Agard, the president of EEtility, an energy efficiency organization, said other co-ops are following. "The hardest part of this program is overcoming the skeptic that says it is too good to be true so therefore it must be a lie," Agard says. "Nevertheless, because so many are participating and the savings are there, the skepticism will happen less and less. It happened in Ouachtia."

Agard says that energy efficiency is needed much more on older homes, and the tariff model is the fastest way to convince homeowners that renewable energy will save them money. "When you are talking about ways to engage that consumer to get involved with solar or renewables, the only way to engage them is to show them how it is cost-effective to do it," she says. "There is not any model that exists that is capable to do that kind of convincing that would outpace the tariff model."

Community Energy Production

While electricity co-ops are pushing efficiency programs, others like the Community Power Network, based in Washington D.C., are advancing renewable energy production. Partnering with local organizations and governments, the co-op is organizing neighbors to facilitate the bulk installation of residential solar projects. They are working in Maryland, Virginia, West Virginia, Ohio, and Florida and plan to expand to more states. The organization is an offshoot of Community Power, a buying co-op developed in 2007, the brainchild of a few dozen people in the Mt. Pleasant neighborhood of Washington D.C. Ben Delman, who manages communications for the group, says that now many communities are reaching out for help. "The goal is to develop cooperatives across the states," he says.  

What is holding electricity co-ops back? Delman says that different states have established very different markets, and they can be tricky to navigate. Building strong solar co-ops depends on rules and regulations. "State policy heavily impacts the growth of these groups," he says. "The benefit of our model is as we are working together with co-ops, we are creating a community around solar and they can fight for better policy," Delman says. "That's what we have seen here in D.C. with the first group. Before they went solar, they had to push for policy changes in D.C. We've worked in other states to push policy."

One big obstacle is that the energy grid is controlled by large utilities and energy corporations that have a vast centralized power. Al Weinrub, the coordinator of the Local Clean Energy Alliance in California, says that a decentralized energy system could stimulate local economic development and create clean-energy jobs. Weinrub sees vast potential in urban areas with high unemployment and depressed, formerly industrial communities.

In 2010, he wrote an influential policy paper titled "Community Power: Decentralized Renewable Energy in California," in which he argued that to meet the challenges of renewable energy, local economies and communities need to change. He says everything is on the table: "How we utilize resources, and how our local, state, and federal governments address energy issues." The cooperative structure can still be polarizing, according to Taylor. Co-ops need to be more vocal about issues beyond clean power, like the benefits of membership and governance. Taylor doesn't see a national strategy for electricity cooperatives developing yet.

It's true that co-ops can contribute to community development, but governance could use some rejiggering. He says that co-ops need to make sure that their members are not only being engaged to enhance the organization, but also inspiring people to get involved in government and other institutions by developing good civic habits. "We can lead a renaissance in community economic development," Taylor says. "The new business opportunities are not just new jobs. It is power. Real legitimate power. Grab onto the renewables. Run with it. Invest the profit back into the community. Electric cooperatives can be a real solution, and they have the capacity."