Why some energy cooperatives diversify and others do not: A comparative case study in Bavaria

Abstract: Energy cooperatives have become an important player in the German energy transition. After two legal amendments in the Renewable Energy Act in 2012 and 2014 the number of new foundations dropped sig-nificantly. Several studies have investigated potential barriers and opportunities for energy cooperatives to expand their business model beyond energy production and adapt to the legal changes. This study aims to identify relevant factors that lead energy cooperatives to have a high or a low level of diversification. To this end, I interviewed board members of eight energy cooperatives and complemented the findings by the assessment of firm documents and newspaper articles. While no single factor seems to be decisive, the founding initiative, in particular a clear vision and concrete business goals correlate with the level of di-versification. Important is, that a high level of internal resources or strong support from the local govern-ment alone cannot explain a high level of diversification. Instead, I identified two important aspects, in-teractive effects and threshold effects, that help to understand why energy cooperatives have a high or low level of diversification. Interactive effects mean, that a negative performance in one factor, such as a low level of internal resources, can be outbalanced by a very positive performance in another factor, such as external resources or local political environment. Threshold effects mean, that apparently a certain perfor-mance of a factor might be sufficient to achieve a high level of diversification, whereas a high performance of all factors, also leads to a very high level of diversification, as was shown with one cooperative, that serves as best practice example and corresponds to the theoretical model as forecasted. That means future research should deal with the complex nature of energy cooperatives, as diversification and probably de-velopment in general cannot be explained by looking at single factors, such as the level of internal re-sources. The findings also suggest, that for some energy cooperatives the plan to adopt new business mod-els was already laid at the foundation and did not spontaneously emerge as response to the legal changes. A future study should investigate, whether that applies to energy cooperatives more generally, or was just found  to be  true  for the eight cases  studied  here. The role of external resources  to adopt  new  business models has to be emphasized and calls for more cooperation among energy cooperatives and with external partners, to continuously be important players for the energy transition.