FINANCING AND BUSINESS MODELS OF ENERGY COOPERATIVES AND OTHER COMMUNITY ENERGY COMPANIES
BMWi, Exportinitiative Energie, Informationsreise Polen – Energieautarke Gebiete & Energiegenossenschaften Berlin, 09 April 2018
Lars Holstenkamp » www.leuphana.de Agenda
—Intro: Current State & Discussions —Community Energy in Germany —Financing Community Energy Projects —Business Models of Energy Coops
BMWi - GERMAN ENERGY SOLUTIONS INITIATIVE | POLAND - Financing & Business Models 09 April 2018 2 Agenda
—Current State & Discussions —Community Energy in Germany —Financing Community Energy Projects —Business Models of Energy Coops
BMWi - GERMAN ENERGY SOLUTIONS INITIATIVE | POLAND - Financing & Business Models 09 April 2018 3 Why Community Energy?
ENERGY UNION: PIONEERS: Enable Citizens participation participate
Art. 22 RED (draft) STAGNATION/LOSS OF StromEG 1991 ACCEPTANCE: Enforce participation ENERGIEWENDE 2.0: Preserve community energy (or diversity of Lov om fremme af vedvarende energi actors) BüGembeteilG M-V
EEG 2014, 2017
BMWi - GERMAN ENERGY SOLUTIONS INITIATIVE | POLAND - Financing & Business Models 09 April 2018 4 Agenda
—Current State & Discussions —Community Energy in Germany —Financing Community Energy Projects —Business Models of Energy Coops
BMWi - GERMAN ENERGY SOLUTIONS INITIATIVE | POLAND - Financing & Business Models 09 April 2018 5 Development of Community Energy in Germany - Types 1880 1900 1920 1940 1960 1980 2000 2018
Electricity Cooperatives Energy Supply Community Rural electrification in the 1st half of the 20th Cooperatives Energy century Oil price shocks “Boom” Installation and operation of local distribution => self-suply Community grids by citizens (and municipalities) wind (KG), community solar (GbR), PV coops (eG) Few “old electricity cooperatives” left (end-1920s: >6,000) Renewable “Boom” since mid-2000s, cooperatives since 2008/9 Energy Highly diversified community energy sector since mid-2000s Various mixed types / co-investments Pioneers From socio-technical niche (“pioneers”) to securing acceptance? Pilot projects “trial and error”
Source: based on Holstenkamp (2012)
BMWi - GERMAN ENERGY SOLUTIONS INITIATIVE | POLAND - Financing & Business Models 09 April 2018 6 Development of Community Energy in Germany - Numbers
No. of newly funded CE companies
Source: Kahla et al. (2017)
BMWi - GERMAN ENERGY SOLUTIONS INITIATIVE | POLAND - Financing & Business Models 09 April 2018 7 Community Energy in Germany - Legal Structures
Limited Liability Partnership (GmbH & Co. KG: Limited Partnership = Kommanditgesellschaft with LLC = Gesellschaft mit beschränkter Haftung (GmbH) as general partner) • Wind & solar parks • Large investments + co-ownership Registered Cooperative (eingetragene Genossenschaft, eG) • Medium-to-large investments 3 common forms • Often PV, also district heating • Several projects, “develops over time”
Civil Law Association (Gesellschaft bürgerlichen Rechts, GbR) • Common for small or medium solar PV (rooftop) and pre-development • Partly combined with solar club (e.V.)
BMWi - GERMAN ENERGY SOLUTIONS INITIATIVE | POLAND - Financing & Business Models 09 April 2018 8 Community Energy in the Auction System
—Create/use support structures? • Through this: become competitive/able to participate? • Most probably only few community energy companies —Change of rules? • Problem: heterogeneity of sector • What is the core problem? How can this be targeted? —Sidesteps: develop new business models in other segments • PV business models, storage, … • Heating sector • E-mobility • Integrator/facilitator • Rural development
BMWi - GERMAN ENERGY SOLUTIONS INITIATIVE | POLAND - Financing & Business Models 09 April 2018 9 Agenda
—Current State & Discussions —Community Energy in Germany —Financing Community Energy Projects —Business Models of Energy Coops
BMWi - GERMAN ENERGY SOLUTIONS INITIATIVE | POLAND - Financing & Business Models 09 April 2018 10 Financing Tools of Community Energy Companies
—Most important components of financing structure: equity + bank loans —Different equity ratios • From 20% to >80% [Holstenkamp et al., 2018a; Debor, 2014; Yildiz et al., 2015] • Smaller in case of community wind/large-scale investments, larger for PV coops —Bank loans: • Project finance (= cash-flow related, non/limited recourse) already for small loan volumes • Often local banks, some specialized larger banks in all three sectors (public, cooperative, private banks) => “co-evolution” of both sectors, banks as “enablers” [Hall et al., 2016] • Refinancing from KfW and Rentenbank —Other “tools”: • Sub-ordinated loans (optimizing financing structure/tax effect, reduce risk, closer ties to specific projects) • District heating: grants
BMWi - GERMAN ENERGY SOLUTIONS INITIATIVE | POLAND - Financing & Business Models 09 April 2018 11 Financing Tools - Equity
—Return+ motivation: environmental protection, regional development, participation in “Energiewende”, … —North-south differences: highly profitable onshore wind projects in the North; differences between EEG regimes: “PV boom” 2009-2012 —Availability differs locally: who can afford to participate? (discussion e.g. in federal states in the East) —Be aware of financial market regulations!
BMWi - GERMAN ENERGY SOLUTIONS INITIATIVE | POLAND - Financing & Business Models 09 April 2018 12 Agenda
—Current State & Discussions —Community Energy in Germany —Financing Community Energy Projects —Business Models of Energy Coops
BMWi - GERMAN ENERGY SOLUTIONS INITIATIVE | POLAND - Financing & Business Models 09 April 2018 13 Two Dominating Business Models among Energy Coops
—Roof-top solar PV • Often on top of public buildings, feed-in tariff • Fast development, medium investment volumes, low risk – relatively high returns under EEG 2009 • Many energy coops initiated or co-initiated by local cooperative banks • Alternative revenue models: local electricity label + market premium model, tenants’ electricity (“Mieterstrom”), contracting, sale & lease-back —Biomass-fired district heating (“bioenergy villages”) • Grant-based financing • Local private or municipal initiative • Often use of heat from biogas power plant (alternatively or additionally: solid biomass)
BMWi - GERMAN ENERGY SOLUTIONS INITIATIVE | POLAND - Financing & Business Models 09 April 2018 14 Business Model Innovation Necessary
—Diversification of business models of recently founded energy coops —Planned new business models: • often distribution/retail —Challenges: • Complexity: changing legal environment, longer lead times and/or more intensive acquisition process • Human resources development: mostly older, well-educated men => right education/skills? succession? —Qualification: • Gaps: especially marketing & sales • No compensation through complementary networks —Cooperation strategies: • Cooperative of cooperatives, service cooperatives • External partners: ecopower companies, developers, municipal utilities
BMWi - GERMAN ENERGY SOLUTIONS INITIATIVE | POLAND - Financing & Business Models 09 April 2018 15 Contact
Leuphana University of Lüneburg Institute of Finance and Accounting Dipl.-Volkswirt Lars Holstenkamp Universitätsallee 1 21335 Lüneburg Germany
Fon +49 4131.677-1931 Fax +49 4131.677-2169 [email protected] » www.leuphana.de
BMWi - GERMAN ENERGY SOLUTIONS INITIATIVE | POLAND - Financing & Business Models 09 April 2018 16 References Bauwens, T. (2016). Explaining the diversity of motivations behind community renewable energy. Energy Policy, 93, 278-290. Debor, S. (2014). The socio-economic power of renewable energy production cooperatives in Germany: Results of an empirical assessment. Wuppertal Papers, 187. Wuppertal: Wuppertal Institute. Hall, S., Foxon, T. J., & Bolton, R. (2016). Financing the civic energy sector: How financial institutions affect ownership models in Germany and the United Kingdom. Energy Research & Social Science, 12, 5-15. Holstenkamp, L. (2012). Ansätze einer Systematisierung von Energiegenossenschaften. Arbeitspapierreihe Wirtschaft & Recht, 11. Lüneburg: Leuphana Universität. Holstenkamp, L. (2014). Local investment schemes for renewable energy: A financial perspective. In M. Peeters & T. Schomerus (Eds.), Renewable Energy Law in the EU: Legal Perspectives on Bottom-up Approaches (pp. 232-255). Cheltenham & Northampton: Edward Elgar. Holstenkamp, L. (2018). Die Geschichte der Elektrizitätsgenossenschaften in Deutschland. In L. Holstenkamp & J. Radtke (Eds.), Handbuch Energiewende und Partizipation (pp. 403-419). Wiesbaden: Springer VS. Holstenkamp, L. (forthcoming). Akzeptanz durch finanzielle Beteiligung? In C. Lautermann (Ed.), Die Energiewende der Bürger stärken. Marburg: Metropolis. Holstenkamp, L., Kahla, F., & Degenhart, H. (2018a). Finanzwirtschaftliche Annäherungen an das Phänomen Bürgerbeteiligung. In L. Holstenkamp & J. Radtke (Eds.), Handbuch Energiewende und Partizipation (pp. 281-301). Wiesbaden: Springer VS. Holstenkamp, L., Centgraf, S., Dorniok, D., Kahla, F., Masson, T., Müller, J., ... & Yildiz, Ö. (2018b). Bürgerenergiegesellschaften in Deutschland. In L. Holstenkamp & J. Radtke (Eds.), Handbuch Energiewende und Partizipation (pp. 1061-1080). Wiesbaden: Springer VS. Holstenkamp, L., & Kahla, F. (2016). What are community energy companies trying to accomplish? An empirical investigation of investment motives in the German case. Energy Policy, 97, 112-122. Kahla, F., Holstenkamp, L., Müller, J.R. & Degenhart, H. (2017). Entwicklung und Stand von Bürgerenergiegesellschaften und Energiegenossenschaften in Deutschland. Arbeitspapierreihe Wirtschaft & Recht, 11. Lüneburg: Leuphana Universität. Yildiz, Ö., Rommel, J., Debor, S., Holstenkamp, L., Mey, F., Müller, J. R., ... & Rognli, J. (2015). Renewable energy cooperatives as gatekeepers or facilitators? Recent developments in Germany and a multidisciplinary research agenda. Energy Research & Social Science, 6, 59-73.
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