24.06.2013
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Community ownership

More buybacks in Germany

This month, the sale of shares in new grid lines to normal citizens was launched, but the rules handed down by the grid operator are not in the spirit of community ownership. Elsewhere, more German citizens are working to take energy supply into their own hands.

As announced a few months ago, new grid lines to connect offshore wind farms are to be built partly with community funding because Dutch-owned grid operator Tennet lacks the capital to make such investments on its own. Citizens who live along the lines are now able to purchase shares at 1,000 euros apiece.

The terms are fairly onerous, however. Although the grid fee is guaranteed to provide a return of more than nine percent, citizen investors will receive only three percent during the planning phase and only five percent starting with construction. Furthermore, the bonds are called "hybrids," which means the returns are not guaranteed; if the firm goes bankrupt, all other investors will be served first. In addition, the firm reserves the right to buy back all of the hybrid bonds. Citizen investments are also limited to 15 percent of the total investment.

 - Tennet, a 100 percent subsidiary of the Dutch government, lacks the capital to make grid upgrades in Germany.
Tennet, a 100 percent subsidiary of the Dutch government, lacks the capital to make grid upgrades in Germany.
TenneT TSO GmbH

In contrast, true community projects in Germany generally have a far more democratic structure. For instance, there is the principle of one investor, one vote – meaning that those who invest more do not have a vote commensurate with their investment. Investors in Tennet's grid upgrades are, in contrast, practically powerless.

Meanwhile, the wave of "recommunalization" – the buyback of municipal utilities sold off to private firms in the 1990s – continues. From 2007 to 2012, more than 230 German municipalities either founded their own utility or took over the infrastructure from the private firm when the supply contract expired. At present, an additional 24 campaigns are also underway, not only in the country's largest city (Berlin), but also in its second-largest, Hamburg. A few weeks ago, the city council in the small town of Göppingen (population: 56,000) brought together 27.6 million euros (as chance would have it, just under 500 euros per person) and voted unanimously to buy back its local grid.

But as this report (in German) explains, citizens can no longer take over their own municipal utilities without an EU-wide call for tenders. Municipalities can, of course, argue that their own citizens wanted a municipal utility, but local politicians would be well advised to argue in business terms – EU firms could theoretically challenge the outcome, and the firms currently being ousted often take part in the new round of bidding. For instance, Vattenfall is fighting to keep control of the grid in Berlin. (Craig Morris)

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