Recent French and German incentives schemes to engage citizen in the roll-out of renewables demonstrate two things. Firstly, there is a real move towards greater financial involvement of citizen. Secondly, there is no common approach across EU Member States.
Beginning this year France put a novel incentive scheme in place. Renewable producer can sell electricity up to 5% higher for the next 20 years, if citizen hold 40% of equity during the first 3 years of production or longer. It applies to all technologies: Solar, Wind Hydro, Biomass.
The impact is immense. An approximate of 8 GW of renewable capacity is expected to be built between 2018 and 2021. It implies French citizen may contribute up to EUR 300 Mio to the roll-out.
Crowdfunding and cooperatives are involved. For example, CrowdFundRES partner Lumo France already co-financed a 9,6 MW solar park in Torreilles, sourcing over EUR 800 000 from the crowd.
“Thank to this new incentive, our market is growing strongly and we see interest from almost every developer.” – Alex Raguet, Lumo-France
Germany took a different direction, benefitting cooperatives for on-shore wind projects.
In May 2016, the State Mecklenburg-Vorpommern passed a new law governing on-shore wind. For new capacity, at least 20% of the finance shall be sourced from citizen living within a perimeter of no more than 5 km. Since voting rights are a necessary criterion, crowdfunding is out of the picture.
Germany’s first onshore wind auction on May 19th 2017 was another landslide victory for cooperatives. 96% of the rights, 776 out of 807 MW were awarded to cooperatives. The auction design favoured cooperatives vis-à-vis other participants in several manners, such as: cooperatives got the highest price of all bids, realization deadlines were 54 instead of 30 months and financial securities and permit rules were less stringent.
The approach taken by France and Germany couldn’t be more different. In France, citizen invest alongside professional investors via crowdfunding or cooperatives. Regulation is technological-neutral and does not favour one particular corporate structure. In Germany, regulation and auction market design for wind energy clearly benefits cooperatives, leaving crowdfunding out of the picture.
Yet, companies and citizen are already thinking and working cross-border. The recent cross-border campaign between the French and Dutch crowdfunding platforms Lumo-France and OnePlanetCrowd show that market forces and citizen engagement is not limited to national and regional borders.
By Sissy Windisch, bettervest GmbH/Green Crowding
23 June 2017