Study on financial tools for producing energy on buildings ENERBUILD

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Within the ENERBUILD project, different financing methods for realizing photovoltaic plants were studied. Some project partners made an investigation in their own region or country on existing systems to finance photovoltaic plants, with a special attention on collective actions.

The expert groups involved in this WP were VLBG - Regionalentwicklung Vorarlberg, TIS - Techno Innovation South Tyrol, RAEE - Rhônalpénergie-Environnement and EAO-Styria - Energieagentur Obersteiermark.

Different methods or approaches to finance photovoltaic plants with public participation were found in the four Alpine regions.

Northern Italy - Financial tools for realizing PV plants

In Northern Italy, financial methods for realizing photovoltaic plants were studied. In order to achieve this topic, the WP partners made an investigation in their own region or country on existing systems to finance photovoltaic plants, with a special attention on collective actions. The expert groups involved in this WP were VLBG - Regionalentwicklung Vorarlberg, TIS - Techno Innovation South Tyrol, RAEE - Rhônalpénergie-Environnement and EAO-Styria - Energieagentur Obersteiermark

Description

The TIS innovation park of Bolzano, a center for innovation, cooperation and technology transfer for companies in the region, investigated about legitimate financing methods of photovoltaic plants in Italy and in the region of South Tirol. The most interesting approaches were selected and are going to be presented in the results.

Illustration with results

An affiliate from the bank Raiffeisen called Ethical Banking is investing, according to customer’s mandate in economic activities related to sustainability, biologic and fare trade markets. Among these branches, Ethical Banking is investing also in photovoltaic plants, especially to realize small photovoltaic plants for domestic use. The rate of interest of this bank loan is very low, it is usually 2 – 3% lower than the rate of interest of a conventional bank loan. In the End of February 2011 the rate of interest was at 2,079%. This rate is being actualized every 6 months and is calculated as the average rate of interest of all ethical banking saving deposits and increased of 1%.

Everyone who wants to realize a small pv-plant for home consumption can ask for this loan, logical until the saving deposits are exhausted. The upper investment limits are following:

  • One family (detached) house up to 15.000 Euro;
  • Two family (semidetached) house up to 30.000 Euro;
  • Companies up to 35.000 Euro.

Photovoltaic roofs for free

A municipality in the region of South Tirol started the project called „20 photovoltaic roofs”, which gives municipality citizens the opportunity to install a photovoltaic plant on the roof of their own houses without investing any own money. The goal was to realize at least 20 PV plants on family houses.

The project is managed and realized by a local photovoltaic company, which means that it plans, installs and finances the plant and therefore it is also the owner of the plant. For this reason, the local photovoltaic company is going to receive the national incentives for producing electricity (from GSE) for all the incentive period of 20 years.

On the other side, the participants to this project, or the person whose roof is going welcome a small photovoltaic plant, can use the produced energy for internal consumption.


The figure shows the functional principle of the project "20 photovoltaic roofs"


The participant in the project has the big advantage that he doesn’t have to invest private capital, because all the costs for realizing the pv-plant are paid by the local photovoltaic company. Furthermore, the participant in the project can use the produced energy for internal consumptions and therefore he saves energy costs. The legal relations between the local photovoltaic company and the participant of the project are regulated in a roof rental contract, in a pvplant rental contract and in a compulsory maintenance contract over a period of twenty years.


The only costs the participant has to support are:

  • 1.000 Euro for notary and taxes
  • 200 Euro/year for maintenance with the photovoltaic company.

At the end of the twenty years the pv-plant goes directly without paying any amount of money from the company to the project participant. The project participant can also buy the pv-plant after a period of ten years.


Public participation to finance PV plants

Suitable corporate structures for public participation in photovoltaic plants are stock corporations or limited companies. The advantages of stock corporations are that they can collect financial resources from a wide public in shares and/or bonds. Both can be easily transferred.

The stock corporation called „Belvedere” is a company, whose core business is the waste management in the municipality of Peccioli (PI). In 2008 the company realized a 1.000 kWp pv-plant and gave citizens the possibility to participate by buying corporate bonds.

The project is called „one hectare of sky” („un ettaro di cielo”). The produced energy from the pv-plant is going to be injected into the electrical grid and sold to the GSE. The plant produces 1.300.000 kWh per year, which corresponds to the consumption of about 450 families.

The project "one hectare of sky"

The corporate bonds have a nominal value of 50 Euro and can be acquired in batch of 60 for a total value of 3.000 Euro. The bond loan is issued in two tranches with different loan period and different rate of interest:

a) The first tranche is for a period of 7 years (from 2008 – 2015) with a rate of interest about 5,5% per year;

b) The second tranche is for a period of 12 years (2008 – 2020) with a rate of interest about 6,5 % per year.


Both the first and the second tranches are going to be reimbursed in the end of the loan period. The interests are going to be disbursed in the end of every business year. In order to present the project to the citizens and to find possible investors for promoting a campaign for the project was done. This campaign consisted in:

  • two public meetings to present the project;
  • sending of promoting flyers to citizens of the region with detailed information about the characteristics of the bond loan;
  • publishing posters over all the territory;
  • press release;
  • advertising spots on the local TV;
  • participation on different conferences and meetings to export the project.


During this campaign more than 300 people have invested in bond loans for this project.

The campaigns methods to search for investors among citizens are regulated by the public authority responsible for regulating the Italian securities market Consob (Commissione Nazion-ale per le Società e la Borsa). Therefore before starting a campaign, an authorization from Con-sob is needed.

Electricity cooperatives

To share the advantage of producing renewable electric power with a large group of citizens, it is possible to use another company model: the electricity-cooperative company. Electricity-cooperatives can supply their members with the so called system „auto-production and auto-consumption”, which means that all the members can be supplied with the energy produced from cooperative plants. Cooperatives don’t need to adhere the normal market structure (un-bundling), but can operate within all the sectors, that means that the cooperative can be producer, distributor and seller at the same time.

One big advantage is that the cooperatives can determine the electricity price on their own. In particular and in contrast to the normal rules of the electricity market, cooperatives can define for their members the energy producing and the energy transmission price.

Another advantage is that members of the cooperative have to pay less tax for the consumed energy.

In the province of Bolzano, there are a lot of small electric cooperatives who supply their members with electricity and in some cases also with thermal energy trough a district heating grid, produced locally from renewable energy sources. A best practice example in the province of Bolzano is the electric cooperative E-Werk-Prad that won the „champions league of renewable energy” in 2010.

This cooperative produces electricity using diffeThe rent local renewable energy sources. The electric energy producing plants are the following:

  • four small and medium hydroelectric plants (from 250 till 2.600 kVA);
  • four cogeneration plants (2 are supplied with biogas and two with a mix of heating oil and vegetable oil);
  • two wind turbines (1,2 and 1,5 MW);
  • several photovoltaic plants.

Contemporary to the electric energy production the, cooperative is also operator of a district heating grid which 85% of the citizens actually are connected with. The thermal energy is produced in two power plants, half is produced with two heat pumps. The recovered thermal energy forms the four cogeneration modules. The rest is produced with a boiler supplied with wood chips.

The figure shows the working principle of the electric cooperative E-Werk-Prad

Application to other regions, Capitalization solutions

Many solutions to finance photovoltaic plants that have been found and investigated in this WP can be applied to other regions in Europe. A solution that cannot be easily applied in other nations is the creation of electric cooperatives, since it is too strictly connected to Italian legal framework of cooperative companies (the European cooperative law isn’t a strong framework because it does not cover fiscal aspects) and in particular to the regulation made by the Italian authority for electric energy and gas.The detailed report about possible financing instruments for photovoltaic plants in Italy can be downloaded from the homepage of the TIS innovation park (www.tis.bz.it). For further information, please contact:

Rhône-Alps - Financial tools for realizing PV plants

In the Rhône-Alps, financial methods for realizing photovoltaic plants were studied. In order to achieve this topic, the WP partners made an investigation in their own region or country on existing systems to finance photovoltaic plants, with a special attention on collective actions. The expert groups involved in this WP were VLBG - Regionalentwicklung Vorarlberg, TIS - Techno Innovation South Tyrol, RAEE - Rhônalpénergie-Environnement and EAO-Styria - Energieagentur Obersteiermark

Description

In France, PV projects suffered from numerous changes in the regulatory framework during the last few years. New feed-in tariffs were finally settled in March 2011, but since that time, due to a national limitation of the annual PV capacity installed, fewer companies are trying to develop projects. Moreover, banks have increased their requirements to finance the projects and loan rates became higher.

Consequently, there is an increasing interest in projects which are based on citizens’ funding, since they may gather more own funding, require lower remuneration rates and lower loan amounts.

Aim of the task was then to work out a financial tool for collective investments in PV plants, considering two different types of society that are adapted to welcome citizens’ funds. The most relevant are „cooperative companies of collective interest”.

This kind of society is generally chosen when people want to share funds for collective actions, but without researching an important profitability. It is quite adapted for renewable energy projects when they are proposed by people that are willing to develop innovative RES projects. Several experiences already exist in France, using this model. The other kind of society that is also adapted is a „Society with Simplified Shares” which is the most flexible structure that exists: nearly all the functioning can be described in the status. In contrast to the cooperative, no public funds can be integrated in the capital and the objective is more lucrative.

The scheme explains the model that is used when realizing a PV project with citizen collective investment.

Illustration with results

In the ENERBUILD project, the work consisted in building a business plan model for PV projects supported by this type of society. Starting from a usual business plan, several specificities had to be integrated:

  • The fact that citizens can buy and sell shares at any time
  • The fact that municipalities can take shares up to 20% of the capital in a cooperative society
  • The fact that more than 57,5% of the benefits have to be kept into indivisible reserves and must be reused for other collective activities
  • The fact that this type of society has to have an employee

Two tools were developed: an exhaustive one and a simplified model which is shown below.

Rhonealplsfinancial.bmp

Results show that cooperative societies can provide a profitability rate of about 3%, whereas commercial societies provide rates that are 3 times higher. Anyway, many parameters can modify these results, and it is necessary to be very cautious about the interpretation.

Looking at the detailed financial balance, we can assess the results on a period lasting 20 years. We find out that if several PV projects are planned, the approach is different and on an economical point of view, cooperative societies are also interesting (reserves are reused for new projects and contribute to decrease the debt).

Application to other regions, Capitalization

The financial tool can be spread in other French countries but it can hardly be used by other EU countries since it is built for specific French societies, whose running is different from foreign ones.

Financial simplified balence

Styria - Financial tools for realizing PV plants

In Styria ("Obersteiermark"), financial methods for realizing photovoltaic plants were studied. In order to achieve this topic, the WP partners made an investigation in their own region or country on existing systems to finance photovoltaic plants, with a special attention on collective actions. The expert groups involved in this WP were VLBG - Regionalentwicklung Vorarlberg, TIS - Techno Innovation South Tyrol, RAEE - Rhônalpénergie-Environnement and EAO-Styria - Energieagentur Obersteiermark.

Description

In the course of the ENERBUILD-Project, the EAO was searching for a financing tool to pro-mote the implementation of photovoltaic plants in the target region, Upper Styria West. The customer participation model was identified as the most suitable for the needs, as it supports the involvement of committed private enterprises and interested citizens by providing the appropriate financial means.

The model is based on the cooperation with a regional private company that plans to invest in a photovoltaic plant within its facility. The company sells for the financing of said plant participation certificates. The offer has existing and potential costumers of the company as target group. In the repayment method, the participants receive for each certificate annual product vouchers in the value of their original investment plus a convenient interest. This benefits the customers for the favorable return of their investment and also promotes the goods of the company, as the distribution of profits increases the loyalty of the customers.

Eao-sheme.jpg

Illustration with results

The regional shoe company „Waldviertler” in the neighboring province Lower Austria has successfully financed its photovoltaic plant with this tool. It sold participation certificates with a value of Euro 200 each and offered 11 coupons over ten years with a total value of Euro 330 as pay-back. This accounts for an interest rate of 6,5%. As an incentive, participants also state their preference for green electricity and the contribution to regional development, since the shoe company is dedicated to the preservation of local SMEs.

The concept has already been duplicated within the region, as the local beer brewery „Schrems” offers participation certificates of Euro 200 value each for the installation of a photovoltaic plant on their roof. The repayment takes the form of annual product vouchers for Euro 60 over 5 years. The project has been planned and implemented by a new founded association of regional companies, the „Waldviertler Energiestammtisch”, the regular’s table of energy of the Waldviertel.

The EAO plans to implement a similar participation model on its home site, the Holzinnovationszentrum, HIZ (wood innovation center), together with an adjacent company, a local wood pel-lets producer. At the HIZ, we have several thousand square meters of available rooftop surface which are perfectly suited for a photovoltaic plant. The concept behind the participation offer includes the support of regional development and the contribution to environmental protection. In particular, the participation certificate will be an offer for increasing energy self-sufficiency as the money is invested in green electricity generation and will be paid back in wood pellets from regional forestry.

Application to other regions, Capitalization

With the described pilot financing model, we will be able not only to realize a PV plant but also to involve local companies and interested citizens in the process. The project increases energy awareness in the region through its implementation process and as a plainly visible landmark of the region. The participation model enables people to actively contribute to the regional energy balance and to experience the interactions of energy consumption and energy demand on a personal basis. For its synergetic effects, the model has great economic feasibility. The company realizes a photovoltaic plant on its premise that improves the energy balance of the enterprise sustainably. Ultimately, the installation contributes to the creation of a decentralized energy generation and distribution network. The pilot financing model can be duplicated several times in and outside of the region.

Vorarlberg - Financial tools for realizing PV plants

Ökostrom-ja-bitte

Vorarlberger Ökostrom PLUS provides green electricity consumers with 100% green electricity from the Vorarlberg. In addition, consumers also pay one additional cent per kWh of consumed electricity to the association „Ökostrombörse Vorarlberg”.

The association invests the funds in construction and maintenance of operation of small municipal water- power plants and for green electricity green plants in Vorarlberg. Consumers have control over the use their „PLUS“ in a stock-exchange-like system. Via internet, customers can choose on their own, which project they wish to fund. In the „stock-exchange” the power-plants and projects are listed for choice. The better those plants are described, the higher the chances are of funding by the private sponsors.

This concept is also supposed to emphasize and basically initiate the economic marketing of renewable energy.From a local politics-perspective, this tool makes an important contribution to a deeper understanding in dealing with the free market and the liberalization of the electricity market in favor of local products.The project ENERBUILD enabled the funding of the elaboration, adaptation and communication of the results to the public. Moreover, the concept was worked up, the funding guidelines, the drafting of contracts and also public relations could be made.

The Vorarlberger Ökostrom PLUS is offered by cooperation partners VKW Ökostrom GmbH and the Ökostrombörse.

Further information: Publication on Vorarlberger Ökostrom PLUS

References

Synthesis on producing energy on buildings in the Alpine Space (2012)