REVIEW #7: Municipal Energy Concepts: A Sustainable Model for Energy Transition or an Inefficient Distraction?

Energy transformation, Germany’s plan to transform the energy industry into a greenhouse gas-neutral energy supply, is no longer solely a federal government project. Local authorities are beginning to push ahead with energy transition focused on decentralized municipal energy concepts.


As many citizens have borne the cost of energy transformation so far, they would also like to profit from it economically. Terms such as “energy communities”, “power self-sufficient municipalities”, or “municipal energy transformation” are becoming popular. Many German municipalities wish to utilize the expiration of concession contracts for electricity and gas supplies in order to re-communalize the energy supply. Public utilities run by private operators are again coming under municipal ownership. In many places, energy cooperatives or citizens’ wind parks are being established. So-called “tenant electricity models”, in which the residents of a tenement house consume the electricity from a solar roof system themselves and are remunerated for surpluses fed into the electricity network are high on the agenda.

Rationale Behind Energy Transformations

Motives for re-communalizing the energy industry are numerous. For many municipal politicians and citizens, the prospect of energy self-sufficiency, and more political and economic power, is attractive. Many municipalities intend to revitalize the economy and local labor markets with the regionalization and communalization of supply chains. With the takeover of the energy supply, municipalities hope to create a profitable business which will facilitate re-capitalization and cross-subsidization for municipal budgets.

In addition to the commercial aspects, the implementation of individual climate protection plans also plays a role. Every German federal state now has a climate protection plan. Many municipalities are also setting specific targets for decreasing greenhouse gas emissions, intensifying the expansion of renewable energy sources, and increasing energy efficiency for heating supply as well as among local companies.

But how useful are those undertakings from the perspective of citizens? Are the municipalities actually gaining political power, or is there a risk that they might over-extend themselves? Could the resurgence of municipal involvement in the energy industry intensify competition? Finally, there is the question of the consequences of ecologically oriented re-communalization for the costs of energy transformation.

Pros and Cons of a Communal Energy Supply

In the ideologically charged debate on energy supply as a basic public service, the answers to important questions come up short: Are municipal energy-economic activities suitable in realizing increased energy-political or financial room for maneuvering? Can they actually have an influence on sources of energy? Can municipalities generate sustainable profits? Do citizens really benefit from lower prices?

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Steffen Hentrich