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