Financing wind farms in the context of the new...Breakthrough in the French law regulating the financing of renewable energy project financing Article L. 314-27 in the Energy Law clearly

Financing wind farms in the context of the new subsidy schemes

Templates of wind farm crowdfunding following the implementation of the TECV law and the ordinance on crowdfunding.

Presentation of VALOREM’s wind farm development processaccording to two types of crowdfunding offers:

To the regional authorities,

To the local inhabitants.

Claudio RUMOLINO – Crowdfunding and TEPOS technical adviser

OFATE. Berlin, septembre 2016

Legal and financial engineering

VALOREM is a member of CLER, an

organisation dedicated to the energy

transition

The regional authorities offer

• Signature of a unilateral share divestment agreement

– Via a mixed-economy company (MEC)

– Or according to the new regulations set by the TECV law (art. 109 et 111)

VALOREM can open up to 10 % of the capital of its project companies.

Beyond 5 % contribution to the capital of its subsidiaries, the tax

integration system cannot apply.

Renewable energy

limited liability company

Sharing the financial profitsFinancial contribution by allocating self-generatedrevenues.

3

VALOREM

Regional authorities

5 to 10 %VALOREM

90 to 95 %

X % Y %

The mother company must own at least 95% of the capital of

the project company in order to be eligible to the tax integration

system

VALOREM opens up to 5 (or 10) %

of the capital of the project company

Local partnership governance

proposal

VALOREMSelects the projects,

Triggers and identifiesLocal partnership with :

N+2

4

N-1

Possibility to sign unilateral

sharedivestmentagreementsN+2 ou +3

51 % minimum or sharesin a MEC

N-2 maxiN - … x years

• the regional authorities,• cooperatives,• land owners,• investors,• companies,• farmers,• associations

Sharing wind profits with the regional

authorities

VALOREM owns 100 % of the SPV

N+2 N+13 à 16

Shar

eh

old

ing

Be

nef

its

for

the

RA

Taxes and leases

Taxes, leases+

Return on equity(shareholders loan, dividends)

Taxes, leases+

Return on equity(dividends)

5

N+20à

25

N

NB : capital investment through shareholders loan contribution is limited to 2 year benefits : fiscal, land taxes…

Signature of a unilateral share

divestmentagreement N+2

or +3

Example SPV :

VALOREM :90 to 95 %

RA : 5 to 10 %

N-1

Cumulative benefits (k€) for the commune following its investment in 85 % shares of

a renewable energy mixed-economy company* which owns 10 % of a SPV in year 2.

Example of Valorem’s project in Loire Atlantique (6 x 2 MW)

Without the commune’sinvestment

With the commune’sinvestment

Claudio RUMOLINO

0

500

1000

1500

2000

2500

3000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

Rec

ette

s cu

mu

lées

(k€

)

années

comparative scenarii of wind prospect benefits

Série1 Série2 Série3

Overview of the cash flows for the commune over 23 yearsof activity

Investment in the MEC 183 k€

Leases and road access compensation 424

Tax related to the turbines 840

Dividends related to the MEC 1 773

NET TOTAL 2 854 k€September 2016

* By way of derogation from CGCT, TECV law now allows

the regional authorities to invest directly into a

renewwable energy ltd liability company.

Breakthrough in the French law regulating the financing of renewable

energy

project financing

Article L. 314-27 in the Energy Law clearly states that share purchasing isnot the exclusive way to finance a project.

Derogating from the monopoly of credit organisations and investmentcompanies to provide credits.

capital share

Mainly for the local residents

Derogating from the prohibition on LLCs to make public bids

For renewable energy projects, the companies can offer :

• Credit monopoly• Linked to the ordinance of 30th May 2014 related to crowdfunding

• The issue of shares and bonds by limited liability companies• In an exempted AMF visa regime (threshhold still under discussion)

• Direct investment in LLC’s shares by the regional authorities (equity & bonds). But loan issue stillambiguous.

The law n° 2015-992 of 17th August 2015 related to the energy

transition allows for the derogation from the following restrictions:

capital share

For the regional authorities and their consortium.

Derogating from the obligation to be part of a MEC

to private persons to the regional authorities

project financing

Direct (?) bond issuing or via credit platforms.

Derogating from the obligation to be part of a MEC

The local residents offer

• Co investment during the development of the project (risk-sharing)

• Sale of shares before construction

• Recovery of the shareholders loan

• Shareholders agreement

Term deposit account-current account

SENIOR BANK LOAN

EQUITIES

20 %

9

Local crowdfunding in Arfons (Tarn)

ADDITIONAL LOAN

Post-commissionning

operation

Claudio RUMOLINO

Banking partnership for thecreation of a term depositaccount dedicated to windprojects (part replacement ofequities)

80 % LOANS

June 2016

Exclusivity to the

people living nearby

the farm

Term

deposit

account

Arfons wind farm in

operation (Tarn)

Refinancing of the farm in

operationJune 2016

Offer dedicated to a local and partnership-based governance of the projects

VALOREMSelects the projects,

Triggers and identifiesLocal partnership with :

N+2

11

N-1

Possibility to sign unilateral

sharedivestmentagreements

with the local residents N+2

ou +3

1st crowdfunding possible, VALOREM bears all the risks

100 %

N-2 maxiN - … x years

• land owners,• investors,• companies,• farmers,• cooperatives• associations

Sharing the financial benefits with

the local residents

N+2 N+13 à 16

Shar

eh

old

ers

12

N+20à

25

N

Signature of a unilateral share

divestmentagreement with

the local residents - N+2

ou +3

Example SPV :

SASVALOREM :51 to 95 %

+

N-1

Crowdfunding5 to 49 %

Possible types of crowdfunding :

• Crowdlending

• Crowdfunding with bonds

Possible types of crowdfunding :

• Term deposit account

• Crowdlending

Our crowdlending campaigns

• Financing the development

• Financing pre-construction

• Replacing equities

200 local

residents (12 %)

5 - 6 or 7 %

Results of 6 crowdlending

campaigns to date

Santerre – Albine –

St-Michel CC –

Alzonne – Lesparre

700 other investors

(France or abroad)

5 % gross : 1 150 k€

June 2016

Where do the investors live ?The local residents are the most active

Outside fundraising campaignareas : Alzonne et Lesparreprojects

Claudio RUMOLINO

VALOREM involves the local actors in the financing of renewable energy production in their region

2016

VALOREM est membre du CLER,

réseau pour la transition

énergétique

VALOREM est signataire de la

charte AMORCE