A new Mutual has been launched to provide temporary equity to help energy communities finance their projects, thus giving them time to raise equity locally.
What is REScoop?
REScoop.eu is the European federation for renewable energy cooperatives. It’s a growing network of 1500 European energy cooperatives and their one million citizens. Through REScoop.eu, these citizens – who after all are paying for the transition to a more sustainable energy system – can have their voices heard in the European energy debate. REScoop.eu empowers them and wants to achieve energy democracy.
What’s REScoop MECISE?
On 22 January 2019 at its international conference in Brussels, REScoop with five of its members announced the foundation of a European Mutual for Energy Communities Investing in a Sustainable Europe (REScoop MECISE). Dirk Vansintjan, president of REScoop.eu, explains its goals:
“Renewable energy projects are capital intensive investments, especially at the beginning. At the same time, citizens often only come on board once a project is up and running and they can see it with their own eyes. If you want to involve citizens in renewable energy projects, cooperatives need to be able to put in the upfront investment. REScoop MECISE will provide the bridge funding needed for cooperatives to achieve this goal.”
REScoop MECISE will facilitate renewable energy cooperatives in financing their projects with less risk for individual cooperatives. By pooling funds from cooperatives, local authorities and even private investors from across Europe, the Mutual can provide temporary equity to help energy communities finance their projects, thus giving them time to raise equity locally.
Moreover, the Mutual can act as a mediator to buy commercial projects from traditional investors and open them for local communities and citizens to invest. Once the project is up and running, aggregated funds from local citizens will replace the Mutual. REScoop MECISE will retain its revolving character and ensure the project directly benefits the local communities.
Aggregation of small community energy projects
REScoop MECISE will support the aggregation of small community energy projects and assist them in accessing financing tools typically reserved for larger projects. Upscaling projects to over €25 million would make them eligible for soft loans from the European Investment Bank or other institutional investors. Big projects produce more economies of scale, and increase negotiating and purchasing power.
Municipalities and citizens working hand in hand
Finally, REScoop MECISE will foster collaborations and solidarity between energy cooperatives and local authorities, particularly by helping the latter overcome the challenges they face. By aggregating renewable energy, energy efficiency and urban transport projects at the local level, municipalities and REScoops could for instance reach the €30 million threshold that is required to apply to the European Local Energy Assistance (ELENA) and get grants for those projects.
Energy communities are citizen-led. Other investors are welcome though shared governance is a sensitive issue. It appears easier for municipalities to take an equity participation than for business, industrial or utility organisations. Some utilities have financial participation schemes, but these are fundamentally different from ownership participation in energy cooperatives.
Do they work in cities?
Self-generation and local ownership are not options in cities. However, there are cooperatives that are able to bypass this constraint and set-up private purchase power agreements in cities. Som Energia is an example of an innovative business model in a market with existing barriers to renewable self-generation.
What is the role of non-citizen actors in energy communities?
The role of business and industry in energy communities is currently very limited. Could it be bigger? Shared control is probably an issue. Industrial operators are not well equipped to handle the complexity of distributed governance, yet they have an opportunity to locally engage the communities they are embedded in.
Participation of conventional utilities in cooperatives appears to be difficult. Utilities need a degree of control that is difficult to combine with the spirit of the cooperative model. Participation of municipal actors in energy communities is easier. The public sector requires transparency, but has fewer requirements for control, especially for its own citizens.
What are some of the ancillary benefits?
An energy community can act as a platform for other programmatic efforts related to energy sustainability, combining renewables with energy efficiency education, the provision of infrastructure for electromobility or even the management of a district heating network.