VAL-ÉO COOPÉRATIVE FINDS A NEW WAY
A rural wind-energy co-operative in Quebec brings together farmers and local residents to jointly manage and develop wind resources.
By Steven Biggs
November 2009
IT
WAS SOLICITATIONS FROM PRIVATE WIND-ENERGY COMPANIES that caused area
farmers to band together in 2005. Patrick Côté, general manager of Val-Éo
Coopérative de Solidarité, explains that the farms are located on southeast
side of lac St-Jean in
The co-operative has grown to include 60 farms. But while farmers have the land base, they have sought to include a wide range of local individuals and organizations spanning the community. “When we know that we’ll live with benefits and inconveniences, we balance the two,” says Côté, as he talks about how an inclusive process helps other stakeholders weigh the pros and cons of wind energy.
Co-operative
model
The vehicle used to build a broad base of support is the “co-operative de solidarité,” which, under provincial legislation, requires at least three different member categories. The one-member-one-vote nature of a co-operative appeals to democratic sensibilities. Val-Éo member categories include user members (landowners with wind resources,) auxiliary members (neighbours to wind resources,) working members (employees,) and supporting members (other interested parties.) Aside from farmers, the co-operative currently has two municipalities, and approximately 100 local investors as members.
Alongside wind resources, the community has something else in its favour: familiarity with the co-operative model. Côté says that when the concept of a wind-energy co-operative was initially proposed, there was a positive reaction because the model has a good reputation in the community, where there have been other successful co-operative ventures.
With a momentum to work together, the next step was better understanding wind resources. In the spring of 2006, the co-operative started by erecting three measurement masts. Côté explains that it’s a bit tougher to get to this stage because asking people to invest a few thousand dollars per farm to pay for measurements is a harder sell than the idea alone. “As long as people didn’t have to invest any money, it was easy,” he says. That’s why it requires a persuasive argument. “It’s important to have a good business case,” says Côté.
Beyond
a co-operative
With measurements underway, the next task was developing a business model that offered shared revenue and decision-making, while at the same time giving a fair reward to farmers who sign leases—a tough goal in a broad-based co-operative. And with the co-operative funding wind studies for members, it was also necessary to find a mechanism to ensure land lease option contracts would be honoured. There was concern that with wind data in hand, people might opt out and develop wind resources on their own.
The solution was grafting a limited partnership onto the co-operative. In 2007, Val-Éo created a limited partnership and became the general partner. A limited partnership is directed by its general partner, so the elected board of directors from the co-operative directs the limited partnership.
The other partners, limited partners, can be landowners, neighbours, and investors including co-operative members, citizens, municipalities, and local businesses. This structure, says Côté, allows a fair and equitable redistribution of earnings in the form of shares. Share class varies to recognize contribution of financial capital, land leases, and the actual presence of a turbine on the land.
Practically speaking, to be approved, a wind-energy project must first be approved by the co-operative board of directors (elected by the co-operative membership); then be voted upon by a general assembly of co-operative members; and lastly, be approved by limited partners who have contributed land and financial capital (through proportional voting, based on voting shares held.)
The partnership structure also means that shares can be given in return for land leases, meaning less funds required during project development. It also allows the disassociation of financial contributions from land contributions, meaning a small landowner could contribute money to a project, while large landowner might choose not to.
In 2007, the Val-Éo limited partnership collaborated with a private company, Algonquin power, to submit a bid for a 50 MW power project in response to a Hydro-Québec request for tender. The arrangement gave Val-Éo co-operative a minimum of 50 per cent voting power in the arrangement, and a say in decisions such as project size. While the bid was ultimately unsuccessful, it scored 16 out of 400 in the sustainable-development ranking—better than all winning bids.
Insights
Côté has found that past experience plays a big role in how people react to community-based initiatives. Once, while participating in a community wind-resource meeting in another province, he noticed that attendees were very reluctant to consider a co-operative model, and he overheard people lamenting money lost on other co-operative ventures.
Bringing aboard the right players is also essential. Reputation matters. Côté says that the people involved in founding Val-Éo were well known in the community. Just having these people behind the project, he says, garnered the support of many other community members. But sometimes, he adds, it takes time for a community to duly recognize achievements and accord credibility. And even small communities, he says, are not above neighbourly jealousy of good ideas.
The Val-Éo model incorporates a couple key concepts. One of these is the concept of exploitable area. This was key to rallying landowners who were worried about the dilution of their earnings and influence in a traditional co-operative model. With the exploitable-area concept, recognition (in the form of shares in the limited partnership) is given to landowners based on the land area suitable for turbines. Another key concept is subsidiarity, where central authority is second to local authority: only those tasks that cannot be effectively completed at the local level are done centrally, in line with the mission of serving the local community.
Generating
control
To date Val-Éo hasn’t generated any electricity—but it has generated community involvement and widespread interest in its model. Bringing together such a large group of stakeholders is in itself quite an accomplishment. And alongside it’s members, the co-operative has the backing of a local law firm, credit union, and farm co-operative. Val-Éo is gearing up to bid again following a May 2009 call for tender by Hydro Quebec.
What do members like best about the model? Côté says people say they like the control that they have over decisions compared to other projects. They also like that there is less confrontation with neighbours, something he attributes to engagement with the community as a whole. He believes a limited partnership and co-operative combined make a good combination for the development of community wind power on widely held private land.
The name Val-Éo represents the mission of the co-operative, developing wind energy in service of the local community (from French, valoriser les ressources éoliens.)
The tagline that accompanies the Val-Éo logo, Un vent de prospérité! means a gust of prosperity. It fits.
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