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NW Cooperative Development Center
Essentials of Energy
May 29th, 2008
Eric Bowman; Cooperative Development Specialisteric@nwcdc.coop
1063 S Capitol Way # 211Olympia, WA 98501
360.943.4241
Presentation Overview
1. Introduction; the Center
2. Co-ops 101 & Benefits of Cooperation
3. Why Ownership Matters
4. Brief Case Studies
5. Co-ops in renewables
6. Policy
7. Q&A
The role of co-ops in local renewable energy development
NW Co-op Development Center
The Centera 501(c)3 nonprofit which provides development services for new and existing co-ops
Our mission to foster community economic development through the cooperative business model
We’rea team of co-op developers with skills specific to start-up and organizational business development
Co-op 101A co-op is any corporation, that’s member:
Owned Benefited Controlled
Top 100 co-ops’ 2007 revenues = $150 Billion! Ag & Grocery Energy/Communications Finance Hardware/Lumber
Why Cooperate?
Co-ops are a proven strategy to access economic resources which may not be individually achievable
Marketable Co-op Benefits; “Goodwill” Local = accountable Trusted Social and economic bottom lines
Unique Characteristics of Co-ops
Owned/controlled by members, not outside investors
Exist solely to serve members Motivated by service, not profit Return surplus based on use, not investment No pass-through taxation
Co-op v. Investor (50MMgpy EtOH)
56% greater impact on local economy Why? = Local sourcing
General services & accounting = $1.5MM more Debt interest = $2.4MM more Supply inputs
Farmer dividends = profit distribution spent locally
…we’ve been waiting all our lives for a way to increase the value of our ag commodities. I’d hate to turn loose this opportunity to leave something for the kids…
- Marvin Oerke, 66, MME Board
They are out of their minds…
- Peter C. Fusaro, Energy Hedge Fund Center
“As Investors Covet Ethanol Plant, Farmers Resist.” NY Times. Nov. 2 2006
Project Lifecycle
Co-op Development Stages
Identify a need a co-op could meet
Form Steering Committee Research Feasibility Review Findings (Go/No Go) Membership Drive Planning and Financing Begin Operations (Go/No Go)
How We Can Help
Facilitate identifying mission and goals
Train founding Board members Market and feasibility research Assist with organizing Professional, 3rd party perspective General business consulting
Our Economy
Post-industrial Service-based "High value-added” Complex Globalized Privatized Liberalized Diffused capital
Uncharted territory Time for a new vision
To This:
From This:
Distributed Energy Production
Distributed Resources = Distributed Opportunity Many small sources Diseconomy of scale Rethinking
infrastructure
Consumer-owned Co-ops:Rural Electrics and Public PowerRECs
900 co-ops in US 40MM people Serve ~75% of US land mass Maintains local control
What next? Chambers and Assns’ energy buying pools Nat. Renewables Co-op Organization Start up RE co-op within incumbent IOU territory?
Co-ops in Biofuels
Biodiesel Production/marketing
Pendleton Grain Growers Joint-ventures
Inland Empire Oilseeds, LLC (Odessa Union Warehouse Co-op, Reardon Grain Growers, Reardon Seed Company)
Consumer-owned Bend Biofuels Co-op
On-farm consumption/co-op production
Co-ops in Anaerobic Digestion
AD = Harnessing decomposition Ownership
Co-op ownership dominates E.U. Small-scale in the developing world Investors or municipalities
Benefits diverse stakeholders Farm – manure & nutrient Environmental – GHG & odor Energy
Increasing power costs = feasible
Co-ops in Renewables; the HorizonWoody Biomass and/or cellulosic EtOH
Aggregate producers for biorefinery Grass or wheat straw, etc. Non-industrial private forests
Aggregate Attributes Green tags
Our Wind Co-op Carbon credits
Direct Seed Assn
Industry Ownership at a Crossroads
Until recently, ag/biofuels = value in local communities With VC and equity/hedge funds, now decupled Absentee-owned, investor projects
Pros = fast, efficient, legitimized, well-capitalized, connected Cons = more of same for rural economy; farmers as passive input
providers; profitably crises, over-production, out migration
Co-op, farmer-owned projects Pros = deeper rural development, consider multiple factors,
accountability, more permanent, won’t “cut and run” Cons = more risk-exposed, group dynamics, less flexible
Strategies to Develop a Co-operative Bioenergy Industry
Ownership-based incentives; federal & state Capitalization; accessible and sizable:
Investment equity Grants Debt availability & loan guarantees
Education and advocacy about the benefits of local ownership
We need a Project-Apollo-scaled program
In Conclusion
Co-ops Economically cluster owners Empower communities Create assets and jobs Re-invigorate local economies Keep control local Inherent advantages
We must define our vision for our future energy production, and then build it
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