Energy sector’s ‘Wind Rush’ risks replicating existing patterns of financialized extraction
February 19, 2025
Courtesy of John Coutts
The Democracy Collaborative’s Neil McInroy has recently chaired a taskforce on incorporating Community Wealth Building approaches into the development of the renewable energy economy in Shetland, an archipelago of islands off the coast of Scotland. Joana Ramiro interviewed Neil on the opportunities and risks in the sector, and the danger that the benefits of the ultimate decentralized common asset – the wind literally blowing for free across the North Sea – will overly serve global financial interests rather than be realized for broad community benefit in the public interest.
The renewable energy industry is growing at a remarkable pace. According to the International Energy Agency’s latest forecast, global renewable electricity generation is set to increase by nearly 90 percent between now and 2030. By then, utility-scale wind and solar power should account for nearly a third of all electricity generation worldwide. The expansion of the sector is vital to a successful green transition. But with the scale and speed of this growth in renewables, questions arise over who owns these resources, and who truly benefits from them.
The energy sector is central to the development of our economic system. Historically, without fossil fuels and hydropower there would be no second industrial revolution, which pushed forth mass industrialization and birthed global corporate powers like Rio Tinto and General Electric. The cycles of carbon through our economies have formed the basic cadence of capitalist production. The resulting struggles for ownership of and control over oil fields, mining territories, and all types of power plants have won wars, spurned revolutions, and birthed nations.
The shift from industrial to financial capitalism in the last forty years has had the same effect on the energy sector as on the economy as a whole. We’ve seen the growing financialization of the industry, following the privatization of gas and electricity. The commodification of energy assets, coupled with the advent of what should be understood as a “capital gains economy,” has meant a growing transfer of financial flows from the production and consumption of energy to giant energy companies and their owners and backers in global financial markets.
The rise of the renewable energy sector has seen increased attention from investors to this new field of opportunity. The popularity of “ESG” (Environmental, Social and Governance) policies within the corporate world has also contributed to burgeoning investment in energy transition projects. Sustainability-linked green and blue loans and bonds are among the new products populating the financial world. Last year, Bloomberg forecast that global ESG assets would reach the $40 trillion mark by 2030. According to an ESSU research report, of the 626 global transactions in the secondary market of renewable energy only 4.4 percent were made by the public sector in the years 2019-2020. By contrast, a staggering 34 percent involved private equity funds.
As new forms of energy grow in importance and replace fossil capital, it is vital that we develop a deeper understanding of financialization in the renewable energy sector and how it impacts communities hoisting and hosting the building blocks of the green transition.
If Community Wealth Building approaches are to continue to grow and become the foundations of a more sustainable and democratic economy, they will inevitably come into conflict with continuing models of financialization and extraction. This is already evident in the fledgling powerhouse that is the renewable energy sector. Huge private investment in the industry has given conventional financialized models a commanding head start, but space still remains in which to democratically and socially reconfigure the ownership of this bedrock sector of our economic system.
At the end of the day, a truly transformative decarbonization will not happen without definancialization. We cannot afford to allow the emerging renewable energy economy to replicate the patterns of financialized extraction of our old carbon-based model, delivering the benefits of the green transition to the same wealth extraction by financial elites who have benefitted from forty years of privatization and upwards redistribution.
International Models
Locally owned renewable energy investments are not without precedent. Since 2019, the European Union has enclosed within its legislation the rights of “energy communities” – citizen-driven organizations investing in renewables, accessing energy markets alongside private enterprises. The EU is also operating its fourth funding programme, the European Energy Communities Facility, which will run until February 2028. Calls are open to energy communities in EU countries, Iceland, and Ukraine.
Perhaps the best-known example of this is the Danish island of Samsø. The island, which is now run on 100% renewable energy, hosts eleven onshore and ten offshore wind turbines. They have been operating since 2000 and 2002, respectively. The onshore turbines are owned by local farmers or local cooperatives; the offshore ones are owned by the municipality, cooperatives made of various small shareholders, and three private investors.
The project took advantage of a 1997 Danish state initiative to lead a renewable energy community experiment, which offered some seed capital to the winning proposal. But according to the UN Climate Change secretariat (UNFCCC), Samsø’s success stems greatly from a financing model that had the “participation of citizens and stakeholders and local ownership of the renewable energy investments at its core.” The community ownership strategy is touted as the secret behind the wide-ranging benefits of the island’s energy transition.
Samsø has not only become carbon negative but has also seen its employment rates boosted, injected the municipality with much needed cash for other local projects, and made the average citizens of the island better off. There have also been beneficial population effects, reversing a challenge facing many island communities: according to the UNFCCC, “families have also moved to Samsø from the mainland, inspired by its success and green brand.”
The social ambition shown by the Danish state at the turn of the century to share the benefits of the green transition is in keeping with the actions of other Nordic governments. Europe’s largest generator of renewable energy, Statkraft, is fully owned by the Norwegian state. Vattenfall, which runs various on-and offshore wind farms in Scotland, England and Wales, is entirely owned by the Swedish state. The ideological predisposition for private over public ownership in Britain has in fact opened the door wide to state ownership of renewable energy resources – just by other states!
Community owned renewable energy enterprises, on the other hand, are common in Germany, where there are over 900 “civic energy communities” as part of the Energiewende. They cannot, however, access and have their electricity distributed by the public grid, facing major obstacles when it comes to growth and further financing.
GB or not GB – who will own Britain’s renewables?
Creating a publicly owned renewable energy provider was one of the concrete policy pledges made by Labour in their general election campaign in 2024. Named Great British Energy, or GB Energy for short, the policy has widespread popular support (with up to 75% of the public in favor, according to pre-election polling) and one of the government’s signature actions in its first six months..
While the final Great British Energy Bill is yet to receive royal assent (that is, to become law), the company has had its headquarters, chair, and non-executive directors publicly announced. Scotland will be the home of all its main sites, with GB Energy headquartered in Aberdeen and housing offices in Edinburgh and Glasgow, too. The board will be chaired by Juergen Maier, the former chief executive of German multinational conglomerate Siemens, and counts Frances O’Grady, a former Trades Union Congress general secretary, as one of its members. Maier will apparently not be relocating to Scotland but will continue working from Manchester instead.
The company’s mission statement proposes to “create jobs, boost energy independence, and ensure UK taxpayers, billpayers, and communities reap the benefits of clean, secure, homegrown energy.” To accomplish this, Labour has created five areas of work for GB Energy, including the £3.3 billion Local Power Plan – a programme set to award low-interest loans to communities and make funds available to local authorities so they can develop 20,000 small and medium-scale renewable energy projects.
Unfortunately, the institutional model for GB Energy remains vague, and the pathway to genuine impact is unclear. The original electoral presentation – Make Britain a Clean Energy Superpower – cites cases of community and municipally owned enterprises, but the language leans heavily towards enticing and derisking private investment. As a comprehensive examination of the policy by Common Wealth points out, “absent genuine public ownership and investment coordination, GB Energy’s functions would resolve to some mix of debt financing and minority equity stakes of private sector led investments.” In other words, there is a distinct possibility that GB Energy will not become a leading player in the strategic public development of Britain’s renewable energy sector, with far too little support for community and municipal ownership, with the UK state’s stewardship, control over and benefit from the green transition severely diminished. What is more, public money would be used to co-finance and derisk renewable energy ventures without a guarantee of significant and equitable distribution of profits or the securing of public benefits such as lower retail prices for consumers. Furthermore, recent research from the Scottish Trade Union Congress (STUC) indicates that offshore wind companies are resisting Fair Work principles including Trade Union recognition
There are question marks over the main thrust of Labour’s flagship energy policy, particularly when the government’s wider approach to the green transition is taken into account – one that lacks ambition and falls short of any real aim or commitment to restructure a system in which the production, transmission, distribution, and individual supply of energy is fragmented by many different entities and interests.
For all the good intentions that have been articulated for it, GB Energy lacks the historic purpose, political provenance, and strategic ambition of state-backed energy vehicles like Statkraft (the Norwegian owned energy company), while still being given the charge to accelerate the green transition towards a zero-carbon electricity system by 2030. How exactly GB Energy will be able to deliver at such speed, let alone how it will also obtain community consent for a just transition or incorporate elements of economic democracy or community wealth into its operations, remains unclear.
“Coos and Turbine” by Scottish Rural Network, 2000, is licensed under CC BY 2.0
Renewable energy has to be at the forefront of driving a just transition away from fossil capital. This includes ensuring a reduction in wealth extraction and growing attention to social and economic justice in the green transition through advancing inclusive and democratic ownership of energy generation, transmission, and distribution – not simply a shift in supply towards renewables. What is needed is public power in every sense of the words – proper public and local community benefit from distributed natural resource endowments that essentially come free in the form of solar energy harnessed from the sun’s rays and converted into heat or electricity, or the wind that blows freely across the seas. GB Energy and its Local Power Plan are off the pace in the race to a new energy model, in large part because their tone and messaging seem predominantly industry-led, with a weakened voice of consumers, citizens, workers and communities.
GB Energy may be shaping up to be not merely a missed opportunity but potentially something worse. There are already political grumblings about the impact of net zero on energy prices against a backdrop of chaos and uncertainty around the new Trump Administration in Washington. Policymakers looking to eke small wins risk missing the bigger picture, in which small and even large wins can all too easily be lost or reversed if political support for the green transition is not actively and consciously sought and constructed along the way. The immediate dismantling of the Bidenomics climate programs and agenda ought to provide a cautionary tale of what can happen if technocrats ignore democratic popular consent and the need to provide tangible material benefits to people and communities as part and parcel of government climate action – especially when it comes to those expected to directly and actively undertake the transition from the carbon economy.
There are readily available models for how to build justice and equity and local democratic control into the energy transition. Samsø’s fruitful experiment took a decade to accomplish and offered generous timeframes for consultation and implementation, allowing for vital public confidence-building and a sense of collective ownership that went beyond shareholding or financing.
For GB Energy to succeed in half the time, it must at the very least commit to ownership and institutional models that offer frontline energy communities and the wider public a means to share in the benefits of the renewables transition. Ideally, the green transition ought to provide a huge opportunity to build community wealth and repair the tattered social fabric of Britain’s communities after decades of neoliberal disinvestment and decay and fiscal austerity. Unless the centrality of ownership, control and the need to institutionalize community and public benefit is at the heart of the renewable energy transition, there is risk of political backlash and perhaps even reversal, and even if it succeeds it will only have replicated the unsustainable patterns of extraction and financialization that have long plagued the wider economy.
Shetland’s Wind Rush
It was with some of this context in mind that The Democracy Collaborative was able to engage with the challenges of the expanding renewables industry in the Shetland islands, an archipelago off the coast of Scotland in the North Sea. In recent years, Shetland has been home to a veritable “wind rush” of foreign private and public investment into the enormous potential afforded by offshore wind. Our Global Lead for Community Wealth Building, Neil McInroy, chaired Shetland’s first Energy Transition Task Force, which in turn was responsible for a report setting out steps to ensure ‘A Fair Share for Shetland’ in the development of the sector.
It is a fitting irony that so much of the UK’s offshore wind potential should be located cheek-by-jowl with the carbon industries of the North Sea. The oil and gas industries have been important to the Shetland economy for the last fifty years, and the presence of an immediate alternative right to hand makes the case for a truly just transition unanswerable. The transition to renewable energy presents an epochal opportunity for Shetland, and could provide a model for the energy sector as a whole to shift the pattern of resource and wealth extraction into one of recirculation and shared benefit in frontline energy communities around the world. As the Independent Panel report outlines, the task force suggested a pathway by which to attempt just that, exploring how the isles “could maximize value and community wealth from the renewable energy activity in Shetland”.
“There is a massive concentration of new developments in Shetland and the seas around Shetland. Traditionally you’ve had the oil and gas industry – which are still there – but now you’re also seeing a new spaceport and plans for hydrogen plants, , plus the energy renewable sector and associated activity. There is a lot going on, for a group of islands with a mere 23,000 people. One could see these developments in wind energy as akin to the gold rush in California or Alaska in past centuries.”
Importantly, Neil highlighted that while there are some existing community ownership developments, these are “dwarfed by private investment and financialization”. The Shetland Islands Council is, already playing a key role in tackling this imbalance by its ownership of some of the sites, including the oil and gas site at Sullom Voe.
Looking ahead Shetland is ideally placed to spearhead a green transition that would be commensurate with the UK government’s net zero aspirations, drawing upon some of the strongest winds on the planet, sheltered deep water harbors, prime sites for developing hydrogen production, and an existing workforce in the energy sector that could be reskilled and repurposed. The islands are a particularly good place to invest in community wealth building, too, given the council’s prospective influence in shaping renewable energy developments. As well as owning land and assets, the council holds planning control functions and could act as steward over the framework for development, representing not just the immediate interests of Shetlanders in securing a fair share of the returns from the region’s growing renewables industry but also acting as custodian of the broader public interest in ensuring that the benefits of abundant, cheap, clean, green energy are spread far and wind – including to the consumer, in the form of lower prices..
The Energy Transition Task Force – instituted by the Shetland Islands Council – was born out of the sense that there was a need for clarity within a fast moving, ever changing, dynamic investment situation and the need for a mechanism to explore how Community Wealth Building could be incorporated. “The task force was a moment, a space, to discuss how to achieve a fair share. A space to breathe, to take stock, to move from the maelstrom of the everyday, and have a Shetland-owned conversation, to think about the issues and what is and could potentially be done,” Neil explained.
While the abundance of offshore wind energy represents a windfall for the Islands and community if managed appropriately, the Task Force found that the wind rush towards renewables also poses considerable risks to the environment and natural habitats, and could jeopardize Shetland’s ancestral culture, and industries – including the area’s sustainable fishing industry. The final report argues that a move away from fossil fuels is absolutely necessary, but that must not come at the cost of – and, indeed, must be of benefit to – the local community, their homes, their businesses, and their livelihoods. “What we can’t do is allow the direction of travel, this juggernaut, to be steered by the investment interests and priorities of financiers or the developers,” Neil added.
Before the further development of Shetland’s renewables is fixed and determined through developers and overly-financialized investment models there is a pressing need for open and transparent analysis as to how this promising new sector will be effectively managed, how Shetland’s interests will be safeguarded, and how the public interest in abundant cheap green energy will be kept at the center of decision-making. A balance must be struck between the environmental impact and potential benefits of renewable energy development for the local community – and the wider public.
The Energy Transition Task Force identified five modes through which a democratization of the renewable energy industry in Shetland could be achieved. Those included: the establishment of community benefits packages; indirect benefits and market gains, through the trickling down of industry opportunities and wealth; compensation payments for those disrupted or “dis-benefited” by the development of renewable enterprises; regulatory measures such as special local tariffs; and the adoption of one or various public or community full or shared ownership models. All these have their clear advantages and disadvantages, differing legislative weight, and assorted regulatory frames and processes. They are best perceived as a toolbox from which the leaders of the green transition in Shetland, in Scotland, and in Britain, can and should draw in a combined fashion specific to the development in question.
Conclusion: Community Wealth Beyond the Wind Rush
As the late, great poet and civil rights activist Audre Lorde wrote: “The master’s tool will never dismantle the master’s house. They may allow us temporarily to beat him at his own game, but they will never enable us to bring about genuine change.” Relying on the financial interests and systems of the selfsame energy sector that has brought us to the brink of climate calamity to come to the rescue of our ailing planet – that is, to lead the green transition – is a grave error.
The transition is happening in Shetland and in many places across the world, but the manner in which it is occurring, risks simply replicating the patterns of financialization and extraction that have brought about the climate and economic crises we now face in the first place.
The British government’s environmental ambitions do encompass a series of programs and plans to promote the green transition. But in strategic and in tactical terms ask far too few questions about the environmental impact, alongside the challenges and interests of local communities on the front lines of this energy transition, including their means of economic subsistence, their identity, and future in the face of the impending juggernaut.
Yes, net zero and a transition away from fossil fuels is urgently required. We must find the right balance between the legacy of the past and the demands of future. The manner in which we are collectively planning and bringing to life these new developments needs to be different, and be pursued with the object of building a more democratic, locally rooted economy on the basis of the community and the public owning the means of producing and sustaining and powering and retaining its own wealth.
Without this, the means by which we produce our energy may become greener, but the extraction and distribution of this new wealth, and the social conditions and relations it produces and reproduces, will remain as dirty as ever.