Financing the civic energy sector: How financial institutions affect ownership models in Germany and the United Kingdom. (February 2016)

• Record Type: Journal Article
• Authors: Hall, Stephen; Foxon, Timothy J.; Bolton, Ronan
• Is Part Of: Energy research & social science. Volume 12(2016:Mar.)
• Page Start: 5
• Page End: 15
• Publication Date: 2016-02
• Subjects: Civic energy sector -- Institutional economics -- Energy transitions -- Energy ownership; Power resources -- Social aspects -- Periodicals; Energy consumption -- Social aspects -- Periodicals; 333.7905
• DOI: 10.1016/j.erss.2015.11.004
• Languages: English
• ISSNs: 2214-6296

Abstract

Highlights: Institutions of energy finance affect system ownership. Bank led finance systems are more compatible with decentralised energy investment. Market led energy finance can lead to a finance gap for smaller schemes. Understanding financial institutions is important for energy transitions. Abstract: This paper examines the relations between financing institutions and more local ownership structures for energy provision. This research defines municipal and civil society structures involved in energy provision as the 'Civic Energy Sector'. It argues that the financial institutions of nations are key enabling institutions for this sector to contribute to a low carbon energy transition. The path of development of these financial institutions helps to shape the ownership structures and technology choices of energy systems and futures in different nations. This paper presents findings from case analysis comparing the United Kingdom's latent civic energy sector, with the expansion of this sector in Germany. Using an institutional economics framing, the paper demonstrates the importance of the German local banking sector in facilitating civic ownership structures in that country. In contrast, the neo-liberal, market-led financial institutions in the UK, reinforce energy pathways less reliant on civic ownership models. Hence, the forms of low carbon energy transition being pursued in these countries are constrained by path dependence of institutions both within and beyond the energy sector.