The air around the island of Samsø is calming, but never still. Nestled between the Jutland peninsula and the Danish archipelago, it is something of a condensed vision of Denmark itself, with vast stretches of greenery, forests, marshes and wind turbines, whirring both offshore and onshore.

Home to 3700, the island became 100% sustainable in 2007, 10 years after winning a government competition to become a model renewable energy community. 

At the UN COP26 conference, hosted in Glasgow this November, the island is due to win a UN Global Climate Action award in the ‘climate leaders’ category for becoming “the world’s first renewable energy island”. It continues to provide inspiration to policy-makers and communities around the world for forging a sustainable community.     

Søren Hermansen, director of the Energy Academy on Samsø, a non-government organisation set up to support the island in its energy ambitions, says that the island’s community-based approach has been vital to the island’s success.

Local engagement

“We have learned that it is very profitable to be friends with your neighbours — to have this involvement upfront in this process where you actually engage people in part of the [energy] transition,” he says.

A former Viking meeting point, and famous in Denmark for its potatoes, Samsø has provided a template for other countries and communities, having worked with the EU, US states and an island in Indonesia among others. 

It has moved from initial feelings of scepticism to understanding the value of clean energy. Through workshops and community meetings, Samsingers became more aware of the role they could play as consumers, investors and practitioners. From farmers and local co-operatives investing in wind turbines to plumbers swapping oil boilers for heat pumps, the community moved in step with the transition that changed Samsø’s energy mix.

“It doesn’t have to be everything, and it’s not just the physical or financial ownership, but also a mental ownership that serves other purposes, like job creation, better local innovation and infrastructure,” Mr Hermansen adds.

Samsø’s case illustrates how a small community has been able to make a full-scale shift to renewables — now boasting a carbon negative footprint — by inviting local islanders to co-own part of its clean energy infrastructure and by keeping supply chains local.

Over the past decade, foreign investors have been instrumental in the scale-up of renewable energy, with big energy companies investing billions of dollars into solar and wind projects. But now, policy-makers and investors are becoming increasingly aware of the necessity to ensure that local jobs are secure, and that value chains are built up domestically. As energy prices rise and the demand for electricity surges, the need for community engagement has never looked more urgent.

Island spirit

For Marcel Meijer, the mayor of Samsø since 2014, the success of its energy projects was the result of an “island spirit”.

“Because we’re an island and the borders are so clear, we depend on each other,  which gives us confidence in each other [and] makes it possible for people to join in common projects,” he says.

In the late 1990s, Samsø was reliant on oil imports, suffered a high unemployment rate of up to 15%, and saw many of its young people leaving for the mainland. When it won the competition to become Denmark’s renewable island in 1997, the Energy Academy and municipality moved to galvanise the local community, helped by Danish and EU funding.  

In 2000, 11 land-based one-megawatt (MW) wind turbines started whirring — nine of which were owned by individual farmers, with the remaining two owned by local co-operatives. By 2003, two co-operatives and three groups of farmers had chipped in to buy an additional five 2.5MW offshore wind turbines, while the local municipality footed the bill for another five.

Hans Jørgen Buur Sørensen, a local investor in wind turbines, recalls that there was a “leap of calculated madness”, as farmers and local councillors lurched into uncharted territory.

Local farmer Jørgen Tranberg, who has given numerous interviews to the likes of CNN, was one of the farmers who bought their own onshore turbine. 

Mr Tranberg took out a loan to buy it and benefitted from the government’s feed-in-tariff at the time, selling the electricity generated to the national energy grid. The island then buys the energy back, which, through guarantees of origin, is verified as green. Within six years, he says, Mr Tranberg had made good on his investment. 

With loan guarantees from the local municipality, the Energy Academy also helped build a biomass-fired district heating system, which is standard technology in Denmark. Roughly 70% of the houses on Samsø are heated in this way, using locally-sourced straw and wood chippings at four district heating plants, which are owned by co-operatives of households that they serve. Local farmers work on five-year contracts supplying straw to the local heating system. The remaining 30% of households are supplied by heat pumps. 

The establishment of the district heating system and involvement of local farmers selling the straw to be burned for electricity has also created a localised supply chain.

Instead of importing oil, farmers could sell a primary product to heat the houses of the local community and then reinvest their profits into a new barn, for example, which could be built by a local builder or carpenter, Mr Hermansen says.

Perfect test environment

Now, the island is looking to remove fossil fuels completely from the island by 2030. Currently, it is diesel cars, ferries and other transportation that contribute to the overhang of fossil fuels.

The German car giant Daimler is looking at electric vehicles (EV) opportunities on the island, which has more EVs per capita than any other municipality in Denmark. The company signed an agreement with the Energy Academy earlier this year. 

Signe Christiani, marketing manager at Mercedes-Benz Denmark, tells fDi that Samsø provides a “perfect test environment” to trial mobility solutions, including shared mobility.

Foreign investors can see that Samsø has a narrative that they can use as a template to engage with the local community and to avoid the so-called ‘Nimby’ (not in my back yard) effect, Mr Hermansen adds. 

Not in my back vineyard

One notable example of the reality of this Nimby effect over the past 20 years is the failed Cape Wind project in the US, projected to be built in Nantucket Sound — an area of sea that sits between Cape Cod, Massachusetts, and the nearby island Martha’s Vineyard. Opposition to the multi-billion dollar project ranged from rich property owners to local officials, fishermen and environmental activists.

Now, a similar project, the Vineyard Wind project, has been developed as a joint venture by Spanish and Danish energy giants Iberdrola and Copenhagen Infrastructure Partners (CIP), to be developed further out than the proposed Cape Wind project, 15 miles off the southern coast of Martha’s Vineyard. As the country’s first commercial-scale offshore wind project, it is set to be the frontispiece of Joe Biden’s green America.

Perhaps more interestingly, the $2bn project was the first large-scale offshore wind project to sign a Project Labour Agreement (PLA) with local union Massachusetts Building Trades Council in July, signalling a general shift away from the Nimby effect and towards the post-pandemic job recovery. The agreement will see some 500 union jobs created and $500,000 allocated to boost pre-apprenticeship and recruitment programmes.

Dennis Arriola, CEO of Iberdrola’s US subsidiary Avangrid, said in a statement that the PLA “sets a strong precedent as we build offshore wind energy infrastructure in the US” and that investing in the workforce will build “strong, sustainable communities [that] will enable the long-term growth and success of the offshore wind industry” in the US.

Adie Tomer, senior fellow at Brookings Institution Metropolitan Policy Program, is confident that foreign direct investment of this kind will go hand-in-hand with the Democrats’ interests in tradable skills and employment. However, Mr Tomer expects the build-out of new technologies and the need to withstand the effects of climate change to be “a much bigger source of renewable energy jobs than just what happens at the proverbial power plant”, with new additional capabilities and roles needed for jobs such as roofers, electricians and plumbers.

Nevertheless, with government plans for 30 gigwatts (GW) of offshore wind generation by 2030, there are also growing calls for the US to ramp up its domestic supply chain. 

In October, the Washington DC-based policy institute, the Center for American Progress, released an analysis stating that the push for clean energy in the US should focus on US suppliers of solar panels, wind turbines and batteries. 

Renewables arms race

This rings true across the world, both for job creation and security of supply. Energy research consultancy Rystad estimates global investment into utility-scale wind and solar is worth $250bn in 2021, but without building up domestic value chains, countries may be left behind in the renewables arms race.

“Almost all of that [$250bn] investment is in the supply of equipment, and relatively little is in the local job market,” Gero Farruggio, head of renewables at Rystad, warns. “If countries do not get involved in the supply side, they’ll certainly miss the real benefit of the renewable energy boom.”

In the wind sector alone, there has been a market consolidation of turbine suppliers, as the number declined from 63 original equipment manufacturers (OEMs) in 2013 to 33 OEMs in 2019, according to the Global Wind Energy Council.

Outside of China, Denmark-based Vestas, US-based General Electric (GE), Spain-based Siemens Gamesa, Germany-based Nordex and Germany-based Enercon account for 92% of the wind turbine OEM market as of 2020, according to consultancy Wood Mackenzie.

With the entire equipment market concentrated in just a few hands, and given the capital-intensive, labour-light nature of green power projects, the development dividend from investment into the renewables sector risks being well below the benefits on the environmental footprint of the energy matrix. Major destinations of renewable energy investment are waking up to this reality, and acting accordingly. The UK is a case in point. 

The country has more installed wind capacity than any other country at 10.4GW, according to trade body RenewableUK. With plans to quadruple offshore wind capacity by 2030, the UK government has also pledged that 60% of offshore wind “content”, meaning in both component manufacturing and value-added products, will be in UK projects.

Shashi Barla, principal analyst at Wood Mackenzie, says that while UK policy-makers did not devise the rules to encourage “local content” in the early stages, it has not completely missed the opportunity to develop domestic supply chains because of “the sheer volume of the market”. 

“It is certainly not a market you can ignore,” he asserts, especially with the arrival of GE to make wind turbine blades for Dogger Bank A and B off the north coast of England.

Whether the UK can succeed in becoming a global competitive manufacturer of wind turbines will depend on post-Brexit and bilateral trade agreements, Mr Barla says. “If they want to export components, they need to be competitive. If there is no incentive in Europe, [developers] would rather depend on facilities in Germany, France or Denmark to address European demand,” he adds.

An Aberdeen of renewables

Along the east coast of Scotland — a former fossil fuel community stronghold — big energy companies have poured billions of pounds worth of investment into renewables while doubts remain over whether enough has been done to deliver jobs to local communities, even if domestic infrastructure is strengthening.

France-based energy company Total teamed up with UK-based SSE Renewables in June in a joint venture worth £3bn to develop Seagreen 1 offshore wind farm project, slated to be Scotland’s biggest wind farm. 

Discussing the history of value chains in the UK, a spokesperson for Total said that “early projects in UK waters have created the world’s best market for offshore wind, but by going first, it is true that the supply chain was initially more global than local”.

The spokesperson added: “We have an excellent relationship with the energy supply chain. We very much hope that [the community] will join us and that we move through the energy transition together.” 

In June, Seagreen announced that 87% of the turbines’ blades will be produced in the UK. Of the 114 V164 blade sets to be installed at the project, 99 blade sets — or 297 blades in total — will be produced by Danish manufacturer Vestas on the Isle of Wight. 

Meanwhile, the neighbouring Burntisland Fabrications yard, which lost out to manufacturers in China and the UAE to make the majority of the turbine jackets, went into administration last year.

Gary Smith, general secretary of the GMB Union, maintains that “Scotland is a model of how not to do renewables”, as few benefits of the multi-billion dollar industry have been shared with local communities. “The green transition has largely bypassed communities in Scotland. This is the great renewables rip off,” he tells fDi. “People are paying more for their energy bills and they’re not getting the jobs [they] were promised.”

Mr Smith adds that “[while] we’re starting to see the crumbs of an industry with some jobs created in some parts of the country, it’s really at the margins”, and that “we’re behind the game to create an Aberdeen of renewables” .

The business of energy communities

Esther van der Waal, a postdoctoral researcher at the University of Groningen in the Netherlands, says that the energy communities that emerged over the past decade were made possible by government subsidies, such as feed-in-tariffs.

Now, she says, with the unwinding of the feed-in-tariff in the UK and the need to update technology, there will be fewer energy communities, adding that the “romantic reality” of energy communities like Samsø are few and far between. 

But elsewhere in Europe, potential energy communities might form under new digital guises. The EU’s new Renewable Energy Directive II, revised this year by the European Commission, has targeted 40% renewable energy of the overall energy mix by 2030, and has looked to renewable energy communities to help drive this target.

Launched in 2020, Portugal-based Cleanwatts makes a newfound business case for energy communities. As a cloud-based operating system, it has positioned itself as a provider to enable companies, households and local institutions to monitor and share energy, charging either an annual fee or a proportion of the energy consumed. In September, it launched Portugal’s first energy community under the country’s new legal framework recently transposed from the EU’s directive.

Michael Pinto, CEO of Cleanwatts, says that it is not that these energy communities will replace large-scale projects, but rather that both are needed as the world’s electricity consumption increases. 

“We need all those 150MW, 200MW and 500MW installations, but the reality is energy consumption and electrification are going to increase by 60% in the next 15 years,” he says. “There’s no way in hell that’s going to be enough. We are fighting the clock right here as a planet to get to where we need to go. The next logical argument is to complement all of that with local engagement at a local level.”

Renewed urgency

Ahead of COP26 and Samsø’s 'climate leader' prize, Mr Hermansen remains frustrated at how short-termist politics have brought about little change over the past 20 years, but is confident that urgency will create change.

“My experience is that in the lead up to top global, political meetings, journalists and organisations are looking around for successful projects to excuse the fact that not much has happened between meetings,” he remarks.

“Now the coal and oil are running out, we need to push industrial change through green sustainable production. This is where I have my thread of optimism — I think we will see much more action out of necessity than out of political will,” he muses.

This article first appeared in the October/November print edition of fDi Intelligence.