The Place of the Next Generation Energy Cooperative

This is the third and final part of a three-part blog designed to explore opportunities for cooperatives to thrive in the newly emerging sustainable energy sector. In Part 1, I discussed the basic principles of cooperative formation and outlined an initial niche-based value-opportunity for cooperative activities as equity-ready organizations. In Part 2, I discussed cooperatives as local manufacturers and distributors of biodiesel solutions services. In Part 3, I will discuss what I believe are the largest opportunity areas for the next generation cooperatives in the biofuels arena.

As with any newly emerging industry, there are  participants that recognize areas of trememendous opportunity early on. Some form enterprises that are capable of adeptly capitalizing on these opportunities, and while many thrive and survive when new entrants enter the competitive fray, many do not and succumb to the economic pressures that assail most during the climactic times that accompany world changing opportunities.

The bioenergy arena is such a world changing opportunity. In my earlier posts on this topic I have discussed the cooperative position as a catalyst and agent of change. Unbound by the traditional corporate agenda of maximizing share value, and by extension, shareholder value, the cooperatives core value proposition can be defined by its mission and the core values of its membership.

Cooperatives are driven by their members. The members have the power to decide the organizational priorities. The membership can define profitability as a core value, but in general will often prefer an approach which maximizes the “collective good”.

Intelligent corporations are best served by defining missions that maximize corporate profitability, even when the corporations desire is to serve niche markets with limited market capacity.

A cooperative can serve to enhance the functions and capabilities of its members, which may consist of individuals, corporations, and non-profits. It can serve as an outsource opportunity or subcontractor, handling activities that would be considered low margin or beyond the general scope of operations to its corporate or small business membership. It can also serve as a market focal point, assisting its membership in maximizing the profitability of good sold, or controlling the costs related to goods purchased.

In the bioenergy arena the capabilities and potenial of the cooperative are amplified.  The nature of the products (renewable consumables) and a new, time-sensitive, environmental credits market create a new opportunity. It is an opportunity of tremendous scale, with a variety of niche applications, products, and services required to adequately support industry growth and transition to maturity.

Some of the niche postion opportunities are clear. Some are relatively obscure, and are the stuff of future legendary organizations.

In the first posting on this topic, I spoke about the cooperative as a bioenergy distributor. This role is distinct from the role of manufacturer, but in the current state of the industry most organizations by necessity are both manufacturer and distributor.

Some additional cooperative roles I discuss briefely below:

Research innovator – A cooperative can serve as a point of joint venture research and innovation projects, utilizing both the resources of its core membership as well as government agenicies and grant organizations.

Renewable credits consolidator – Although this area is more traditionally viewed as the domain of for-profit corporations, a cooperative eco-credit pooling and trading model seems viable under current law.

Renewable credits trade organization – Distinct from a consolidation entity a trade organization may simply supply trading infrastructure with or without credit consolidation function.

Promethean was started to derive purpose and strategic advantage from a cooperative ideal. Many models can and will be used to help the world change its relationship to sustainable energy. I hope this brief commentary on the potential roles of the cooperative has been of interest.

Make it a better place….

Todd