The Rise and Fall of Electricity Distribution Cooperatives in Germany
22 Pages Posted: 5 Feb 2016
Date Written: September 1, 2015
Rural electrification in Germany as in some other countries all over the world has been achieved to a large extent through and by electricity distribution cooperatives (e.g. contributions in Barnes, 2007). There are two main contexts where references are made to these electricity distribution cooperatives: first, as a pre-decessor of current energy cooperatives; second, in discussions about rural electrification in poor countries. In both cases the overall aim is some kind of “learning from history”.
In Germany, there are 44 “old” electricity cooperatives which remained from a total of more than 6,000 in mid-1930s. Since 2006, there has been a steady growth in numbers of cooperatives in the energy sector (“new energy cooperatives”). While this recent phenomenon has gained some interest in the scientific community and in the political arena, work on old electricity cooperatives is scarce. Therefore, the paper aims at giving an overview of the development of the cooperative electricity sector in Germany, to explore the founding context and the role cooperatives played during early stages of development, and to discuss reasons for the dissolution or survival of the firms. The overall goal is to generate some general lessons for the role and limits or challenges of energy cooperatives. General statistics illustrating the development of the sector (1), an analysis of the founding contexts of electricity cooperatives in selected regions (2) as well as the reasons for the dissolution of these cooperatives (3), and a description of survival strategies of remaining electricity cooperatives (4) build the four parts of the empirical investigation, followed by a brief discussion of theoretical implications.
There seems to be no comprehensive description of German electricity cooperatives in the literature, but rather a focus on specific firms (e.g. Leiner, 1982), certain regions (e.g. Konrad, 1936), or a mentioning of cooperatives in works with focus on the general development and political economy of the electricity sector in Germany (e.g. Zängl, 1989). Therefore, information is collected from various sources publicly available through libraries or on the internet. Data are interpreted against the background of theories on the formation of cooperatives, especially in the energy sector (Hansmann, 1988; 1996), and the cooperative evolution (Hanisch, 2006).
Business histories of German electricity cooperatives show the high public influence exercised in the energy sector. The description of the function in the founding process fits quite well to Hanisch’s (2006) explanation of price detection and public budget restraints. Political influence and market power exercised by local power generation monopolists can be seen as main reasons for the dissolution of many electricity cooperatives in the 1930s and after the Second World War. Small sizes and therefore a lack of economies of scale can be used as an explanation for the last wave of dissolutions since the liberalization of energy markets starting in 1998. At the same time, studying strategies of remaining old electricity cooperatives, especially cooperation strategies, might give some useful insights for the further development of cooperative theory.
Keywords: Cooperative History, Electricity Distribution Cooperatives, Founding Context, Political Uncertainties, Rural Electrification
JEL Classification: L31, O35, Q42, Q49
Suggested Citation: Suggested Citation