The Re-Municipalization of the Hamburg Grid
In a successful referendum, Hamburg’s voters forced the city to buy back the grid last year. Charleen Fei and Ian Rinehart summarize how a broad and inclusive campaign driven by the civil society made this historic event possible.
While Boulder’s energy-aware and politically liberal citizens make it an outlier in Colorado, these attributes describe a large percentage of German citizens.
Germany is in the midst of an ambitious energy transition movement, known as the Energiewende, which seeks to eliminate fossil fuels as energy sources, phase out nuclear energy, and increase the use of renewable energy sources. According to a 2013 survey by the German Consumer Advice Center, 93% of citizens are aware of the Energiewende and more than 80% support its goals.
In this environment, one would expect utilities to move aggressively to decarbonize and invest in renewables. However, almost the opposite has occurred. As of 2013, renewable energy was responsible for 23.4% of electricity generation. German utilities only owned 11.9% of this capacity, meaning they have lost 88.1% of the renewable market, and roughly 20% of the total electricity generation market.
Clearly, German utilities have failed to find value in these new sources of energy production. As the CEO of the German utility RWE recently admitted at a press conference, “We were late entering into the renewables market—possibly too late”.
The consequence of this inaction has been an erosion of trust from the German public and the increasing viewpoint from citizens that large utilities, in particular, are not seriously concerned with the environmental goals of the Energiewende. According to a 2009 survey, 81% of citizens trusted local municipal utilities while only 26% of citizens trusted large corporations.
This has given credence to municipalization proponents and forced utilities to fight on the defensive. Since 2007, over 60 municipal utilities have been formed in Germany and over 170 communities have attempted to purchase pieces of the energy grid back from private providers.
It is against this backdrop that an initiative known as ‘Our Hamburg, Our Grid’ formed in 2010 to purchase Hamburg’s energy, gas, and district heating supply back from Vattenfall and E.On, two large, privately owned utilities.
Three years later, in September 2013, 50.9% of voters in Hamburg, Germany, voted in favor of a re-municipalization referendum. In January of 2014, the city of Hamburg agreed to purchase the energy grid from Vattenfall for between 495 and 550 million Euros (690 – 765 million USD). Talks to purchase the gas and district-heating infrastructure are still underway, with a preliminary purchase price of between 1.25-1.45 billion Euros (1.75-2 billion USD) being discussed when contracts expire in 2018 and 2019 respectively.
What sets the Hamburg initiative apart from other re-municipalization efforts in Germany?
Hamburg, with more than 1.8 million residents, is Germany’s second most populous city. The sheer size of this movement was unprecedented and demonstrated the ability of campaigners to mobilize average citizens around the idea of local grid control. On top of this, Hamburg’s governing party, the Social Democrats (SPD), actively campaigned against the movement with strong support from business associations, Vattenfall, and other political parties such as the conservative CDU and the libertarian FDP.
The successful referendum in spite of heavy political and industry resistance can be attributed to a number of factors. ‘Our Hamburg, Our Grid’, effectively spread its vision of “a socially equitable, climate-friendly and democratically controlled energy supply from renewable energy”. They argued that such a vision could only be achieved through placing the energy infrastructure in public hands. Vattenfall, as the logic went, was a self-interested, multinational company—how could it possibly be working in the best interest of citizens when it also had to watch its bottom line?
With this message as their rallying call, the initiative attracted over 50 groups throughout Germany to join their alliance. The breadth of these groups—from anti-nuclear groups and pro-environmental groups opposing Vattenfall’s ownership of nuclear and coal plants, to anti-corporate groups wary of Vattenfall’s profit incentives, to a parish of the Lutheran church supporting democratic environmental stewardship—contributed heavily to the success of the movement. These groups added legitimacy, promoted the initiative’s message, and provided experienced volunteers to engage in grassroots campaigning.
While the initiative worked hard to spread its message of energy democracy and municipal control, Vattenfall did little to shed its negative portrayal as a monolithic, profit-driven utility. During the campaign, chief representative Pieter Wasmuth stressed Vattenfall’s role as a “reliable partner”, while anti-buyback commentators frequently cited the high cost, some 2 billion Euros, of purchasing the electricity, gas, and district-heating infrastructure.
Both of these are valid points, and Vattenfall has done a particularly good job of providing reliable power as citizens in Hamburg experience only 15 minutes of power loss on average per year. But these messages did little to address the core grievances of the initiative. ‘Our Hamburg, Our Grid’ was quick to remind people: Vattenfall still owns two nuclear reactors in the vicinity of Hamburg, Vattenfall still owns two of the dirtiest brown-coal plants in Europe, and Vattenfall has done little to invest in renewable energy outside of offshore wind.
In this ideological battle, ‘Our Hamburg, Our Grid’ brought the heavier weaponry.
‘Our Hamburg, Our Grid’ stressed the importance of citizen participation in bringing the Energiewende to fruition. They then devised a low-cost and clear means for citizens to assert their voice and accelerate the goals of the Energiewende, namely by voting YES for the grid buyback.
“Taking Back the Grid: Municipalization Efforts in Hamburg, Germany and Boulder, Colorado” was written by Charleen Fei, graduate of Northwestern University currently living in Germany, and Ian Rinehart, Fulbright Research Scholar at the University of Hamburg. The full report is available as download at us.boell.org.