Energy cooperatives in Denmark, Germany and Sweden : A transaction cost approach

By 2020, at least 20 percent of the gross final consumption of energy in the European Unionshould be produced from renewable energy sources. The cooperative movement as such is not new, buthas a long history in the agricultural and credit sector. Over the last years, energy cooperatives havebecome an important option for decentralized electricity production. The transaction cost theory has beenapplied numerous times to agricultural cooperatives, but not to energy cooperatives. A number of casestudies and a subsequent survey analyzed the main benefits and challenges associated with energycooperatives as well as their relation to each other.The study revealed that while Denmark and Sweden focus mostly on wind power as a source for theirelectricity generation, German cooperatives use a more diversified portfolio. The differences are due tonational legislation and affect the total installed capacity as well as membership numbers. Although theindividual motives to join a cooperative vary, the reasons to establish a cooperative clearly show adedication to support renewable energies. The most important benefits associated with this organizationalform are the positive environmental impact as well as local value creation, ownership aspects and thelimitation of the individual liability. Contrarily, most of the disadvantages discussed concern factors outsideof the cooperatives such as the change of regulatory frame conditions and the insecurity towards thedevelopment of the electricity price. Transaction costs play a minor role since professional governancestructures are in place and the trust among members prevents opportunistic behavior