In the midst of a seemingly rich Germany, numerous towns, villages and rural districts are broke. The pathway to insolvency typically includes the following steps. Over the course of ten to twenty years, a community heaps up debt because revenue is permanently too low. To raise funds, towns then sell assets and establish public-private partnerships or so-called cross-border leasings. Usually things like the tramway, the water and sewage works and/or social housing is wrested from democratic control. After only a few years, this extra cash has melted like snow in the sun, but the running costs for the now-rented infrastructure are far higher than before. Finally the local audit court imposes a spending freeze: the town or community council can now only spend what is absolutely necessary and not a cent more. Within this intensified neoliberal logic, libraries, swimming pools and kindergartens often become a superfluous luxury. Particularly annoying is that this is a catch-22 situation: communities lose any opportunity to open up new sources of income such as, managing wind or solar farms for themselves. One such financially tied town is Colditz in Saxony.
For the incorporated village of Zschadraß this is doubly detrimental, because it is not allowed to finance the village kindergarten itself, and any new income sources are automatically used to repay the regional debt.
In 2014, local village politicians founded an ecological and social foundation to provide financial support for public institutions in jeopardy. The foundation in turn founded a municipal company (Kommunale Wind GmbH & Co. KG), of which it holds 50%. This company operates several solar parks and a wood-fired heating system, and, in 2009, built a large 2.3 MW wind turbine in Zschadraß. This wind turbine is operated by the small association Ländliches Leben e.V., which finances new solar parks from the profits and also uses some of the money directly to fund social projects in the village The village’s politically active people are all members of either the foundation’s advisory board or its steering committee. The communal authorities, for example, helped the foundation find areas and rooftops that could be used for energy systems, and the foundation donates money directly to the local sports associations, the school and the kindergarten. School meals for the children of poor families as well as the yearly school holiday camp are also paid for by the foundation, and the kindergarten receives additional funding of 70 EUR per month per child. Once the wind turbine has been paid for, the entire profits are to go to the kindergarten, which will then be free of charge.
Towards a functioning business model
The relatively large sum of 3.5 million EUR that the wind turbine cost was actually not a problem, says Mayor Matthias Schmiedel, because a large share can easily be financed through a loan, especially considering that banks offer good credit terms for renewable energy projects. The foundation only needed to provide 650,000 EUR in capital.  But where was a basically broke village – a village not allowed to have money – to get that kind of sum from? The details have not been revealed, but suffice to say a rich benefactor from Frankfurt am Main donated the necessary funds to the foundation.
Now that the foundation has established a functioning business model and is credit worthy, Matthias Schmiedel plans to use the foundation’s capital to support similar projects in other municipalities. The foundation could donate to other municipalities the necessary capital base for a wind turbine or a PV installation to enable them to get a bank loan to fund the rest. These installations would then also be managed by an association or foundation and a part of the profits could be used to directly fund social institutions without first having to pass through the over-indebted municipal household.
This might sound a bit complicated and highly unconventional. But faced with an ever-longer list of over-indebted municipalities, such a model offers a backdoor to which there is currently no alternative. A parallel budget based, for example, on the profits from a wind turbine provides financial support for public services and helps circumvent the restrictions resulting from a budget freeze. It remains to be seen whether this can become a model beyond Zschadraß.
 Interview with Matthias Schmiedel, spokesperson for Zschadraß, 30.4.2013.
This article is presented in the Energy democracy in Europe, A survey and outlook by Rosa Luxemburg Stiftung in 2014.