the role of community energy - how can communities work with wind
TRANSCRIPT
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)
• 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