The Role Of Community Energy - How can communities work with wind

The Role Of Community Energy

Paul Kenny, B.E. C. Eng.Chief ExecutiveTipperary Energy Agency

How can communities work with wind.

• Clear we need to Transition to Sustainable Energy.

• The “Distributional Impact” of policy needs to be carefully considered.

• Current “policy” leading to destabilising wealth transfer.

• Citizen owned Vs multinational profit. • Citizens have little trust in the “system”

Context/ Drivers

• Citizens use energy wisely• Energy use contributes to the local and

national economy (not harms it)• Citizens and businesses supply energy on a

competitive basis.• The rewards of which are in turn invested

(mainly) in our economy.• Policies support a secure, stable and clean

industry.

Ideal Energy Senario (Citizen)

Ownership

• Tipperary Energy Communities retrofit ~ 70% homes signed up.

• Aran Islands similar at 60+%• Research has & will continue to show community

energy engages.• Requires a bottom up approach at a community

level.• Needs to unleash

• Volunteer effort (competitive)• Citizens savings• Economic development

Communities Own Transition

Community Energy Delivers Value

85,702

90,036

148,559

Value to Local Economy / MW / Annum

Non Local SpendLocal SpendOwnership Revenue

Ownership Bene-fit Accruing to Local Economy

* Based on real figures for one project. NPV assuming 20 year life time

Danish vision of community energy- Engages people and their savings- Empowers decisions- Owns infrastructure – DH, Wind, Solar

District Heating must be consumer owned – i.e. community

Planned Tralee District Heating- 100M revenue over 20 years- All locally sourced energy.- Equivalent of 135 sustainable jobs.- 13,000 T CO2 (per annum)

Community Energy Delivers Scale

• Developers are forced to have 20% community owned equity

• Third party (state) completes due diligence and approves the investment offering (a regulated financial product)

• Open within a close geographic limit first• Open to a wider geographic limit if insufficient investors.• Community Investor returns ~ 7-11% (depends on project)• Community investor can sell shares at anytime.

Lessons From Denmark

• Developers assemble a project (€€€€)• Planning permission• Grid• Lease• Other consents

• Banks recognise this project value as “equity”• Additional “equity” provided by developer

• This may be a loan, a share offering, cash investment, Tax scheme (BES/ EII)

• This “equity” has less rights than bank (B-shares)• 60% - 85% Bank Senior Debt/ Project finance/ Non

recourse loan (Mortgage!) over 10-15 years.

Windfarm funding 101

What value is in the wind?

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

-2,000,000

-1,500,000

-1,000,000

-500,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000Simplified Windfarm Development Finance (per MW)

Bank finance

Developer borrowed equity

Developer equity

Years

Eu

ro

What value is in the wind?

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

-2000000

-1500000

-1000000

-500000

0

500000

1000000

1500000

2000000

2500000

3000000Simplified Windfarm Community / Developer Model

Bank finance

Community Share (1/3)

Developer Equity (2/3)

Years

Eu

ro

What’s in it for me?

Developer:- Lower development cost

risk.- Lower development costs

(planning/ court!)- Lower objections - Quicker project- Potentially larger windfarm- Feel good.

Community:

- Significant local income (100k/turbine/annum)

- Some ownership of decisions (Turbine siting)

- Ownership of project- Community development

funding- Less divisions, animosity- Landowner can get same

or more money!!- A future for children.€

- Community needs to organise and unite.- Educate all stakeholders about benefits and impacts. - Gain windfarm development knowledge.- Really need to get vast majority of locals on board.- Form a committee that the developer can work with.- Legal/ Finance- Form a co-op

or Ltd company.

Next Steps

• Non profit, public good social enterprise

• Partnership approach• Energy management• Renewable energy and energy

efficiency• Procurement, project mgmt.• Cost effective, value driven

• Paul Kenny• Chief Executive• T: 052 7443090• F: 052 7443012• E: [email protected] • W: www.tea.ie

Tipperary Energy Agency