CEC13 Slide Deck


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Slides from all of our speakers at CEC13

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  • grants, pioneer, whiproundEis,seis, £30m
  • CEC13 Slide Deck

    1. 1. #CEC13
    2. 2. Welcome Ramsay Dunning General Manager @Ramsaydunning @CoopEnergy
    3. 3. Case Studies Agamemnon Otero Repowering London @RepowerLondon John Malone Energy4All @Energy4allltd Andrew Clarke The Resilience Centre @ResilientEnergy
    4. 4. Co-operative Ownership of Renewable Generation 19 October 2013 Delivering Community Co-operatives
    5. 5. The Co-operative Model Works £18.5m+ raised through FSA regulated public offerings by Energy4All/Baywind • • • • • • • • • • Baywind – £1.9m Boyndie – £730k Westmill – £4.6m Fens – £2.9m Skye – £1.0m Great Glenn – £1.2m Kilbraur – £1.0m EP - £ 1.0m Drumlin - £2.5m S.o.L. - £1.7m (to date)
    6. 6. In development • Devon Community Wind Co-op • Easterly Wind Energy Co-operative • Four Winds Energy Co-operative • Baywind II (Harlock Hill repower) • Hampshire Renewable Energy Co-op • West Solent Solar Co-op • Multi-roof solar
    7. 7. Tel: 01229 821028 john@energy4all.co.uk www.energy4all.co.uk www.twitter.com/Energy4AllLtd
    8. 8. Pioneering A New Model for Community Renewable Energy by Andrew Clarke The Resilience Centre @ Coop Community Energy Conference 19th October 2013
    9. 9. A Social Purpose Business - aims to help build resilience in society in the context of climate change and diminishing resources. Self Financed – No direct grants or state aid Community Renewables - we aim to remove barriers to entry and maximise returns to the community and local economy, through our Resilient Energy partnerships All our profits are reinvested in our social purpose business 13
    10. 10. Challenges – Community Joint Ownership  Need to provide a low risk/low cost entry for Communities/Landholders by removing majority of the „At Risk‟ Planning & Development costs eg £45-60k risked instead of £180k-£240k+ for a wind turbine  Need to ensure only suitable projects are progressed – we screen 10+ Projects for every one that proceeds 14
    11. 11. Challenges - Community Joint Ownership • Needs a simple model to ensure maximum returns for Communities – easy to lose all revenue on Admin & „Reinventing the Planning Wheel‟ on Community Projects • Getting everyone to pull together, often easier if a skilled 3rd party can steer project around pitfalls • Skill in negotiating a proportionate response by regulators not defined in NPPF – Community projects are disproportionately affected by one size fits all approach 15
    12. 12. Successes of the Joint Ownership Approach  Ensures communities make best use of any available funds, we deliver projects for between 12-25% of typical costs for 50% equity  Ensures landowners are engaged and fairly rewarded without them communities seldom achieve projects  Resilience facilitates growth of social capital in bringing together projects to grow skills in local construction & support services  We share standard legal documents and financial models further reducing costs and timescales  Our model is very flexible, we are working on multiple equity parties Community-Landowner-Ourselves 16
    13. 13. How Value Generated is Shared  Community „Crowd Funding‟ Investors get ~= 38% Gross Revenue (8% Return on Capital)  JV Equity Partners ~= 23-25% Gross Revenue  Local Community gets 4% of Gross Revenue as a Community Fund ~ £20k/yr  We work to ensure local social capital is developed for installation, operation & maintenance ~= 16% Gross Revenues for O&M with Apprenticeships established  We share standardised documents to allow local professional services to setup & manage operational projects ~= 7% Gross Revenues  We close the loop on energy provision by working with Coop Energy to facilitate communities to buy back energy & share in benefits of supply as well as generation 17
    14. 14. Local 50:50 JV Equity Partners 23% Local O&M 16% Local Professional Services 7% Tax Incl. LA Business Rates 11% Community Investers 38% Gross Revenue Distribution The Resilience Centre Model Contingency Reserve 1% Community Fund 4% 18
    15. 15. #CEC13
    16. 16. The role of large organisations in supporting community energy October 2013
    17. 17. The research • • • • March – May 2013 Anafon case study Interviews with 30 individuals Benefits, barriers, role of the Trust http://www.nationaltrust.org.uk/document-1355801605221/
    18. 18. National Trust energy shift
    19. 19. Experience in energy
    20. 20. Abergwyngregyn • Gwynedd, N Wales • Pop 250 (100 households) • Abergwyngregyn Regeneration Company
    21. 21. Anafon • 300kW scheme • National Trust and Natural Resources Wales land • Funding from Ynni’r Fro, Co-operative Community Energy Challenge and Waterloo Foundation
    22. 22. Barriers Role of the Trust • • • • • • • • • • • • • • Access to land Finance Planning and licenses Skills, expertise, confidence Long term, complex work Differences of opinion Inconsistent policy Access to land Providing credibility Engagement with agencies Sharing knowledge Navigating the complexity Providing case studies Leadership and advocacy
    23. 23. Benefits to the National Trust • Financial – cost savings and income generation • Accessing funding and support – ‘at risk’ development funding • Supporting policies “These types of projects make a place more special” – Going Local, Fit for the Future • Other benefits – inspiration, awareness, reputation, efficiency
    24. 24. Risks to the National Trust • Development, operational & reputational risks • Opportunity costs • Regulatory risks
    25. 25. Opportunities • • • • • Many potential sites Community energy catalyst New sources of income Connect people & landscape Seen as valuable and relevant “We have a huge potential to harness the resources we own and manage.” Constraints • • • • • Limited resources Opportunity costs Organisational priorities Legality / regulation Organisational purpose “We need to be clear about how important such approaches are to the Trust and why.”
    26. 26. “Bees and Trees” “The bees are the small organisations, individuals and groups who have the new ideas, and are mobile, quick and able to cross-pollinate. The ‘trees’ are the big organisations - governments, companies or big NGOs which are poor at creativity but generally good at implementation, and which have the resilience, roots and scale to make things happen. Both need each other.” Mulgan et al, 2006 “When Bees Meet Trees: How large social sector organisations can help scale social innovation” by Owen Jarvis and Ruth Marvel, 2012 Clore Social Fellows
    27. 27. www.ntenvironmentalwork.net
    28. 28. Contacts Keith Jones National Trust keith.jones@nationaltrust.org.uk @WalesEPA Mark Walton Shared Assets mark@sharedassets.org.uk @shared_assets
    29. 29. #CEC13
    30. 30. Getting Started Jon Halle Shareenergy @shareenergy_uk Jim Brown Community Shares Unit @communitiesuk Clare Hierons Pure + Leapfrog @leapfrognews
    31. 31. Getting started 5 things we have learnt Community Energy Conference 19 October 2013 Jon Hallé jon@sharenergy.coop www.sharenergy.coop
    32. 32. Co-operative helping people to set up renewable energy co-ops Founded 2011, spin-off from Energy4All 28 co-ops set up across the technologies • • • • • • Finding projects Setting up the co-operative Financial planning Landowner negotiation Share offer setup, marketing Administration
    33. 33. Follow the land, follow the weather • Use local resources • Think bioregionally • Copy other people Private Sector Individual co-op members & other co-ops
    34. 34. The team • Choose who you work with • Choose people everybody knows • Tell a story people want to join up to Private Sector Individual co-op members & other co-ops
    35. 35. Do your sums • Financial planning from day one • Spend time on things that will work • The common currency – currency Private Sector Individual co-op members & other co-ops
    36. 36. It’s the landowner, stupid • Work with the willing • Sign them up early • Make them work Private Sector Individual co-op members & other co-ops
    37. 37. Resources are abundant • Development funding is easy • Selling shares is easy • Lots of people want to help Private Sector Individual co-op members & other co-ops
    38. 38. Jon Hallé jon@sharenergy.coop www.sharenergy.coop
    39. 39. Community Shares: an alternative form of community investment
    40. 40. What are community shares? “The sale of shares in enterprises serving a community purpose, with the aim of raising at least £10,000 in capital from no fewer than 20 members” Powered by Withdrawable Share Capital Unique to co-operative & community benefit societies Nontransferable, nonspeculative One Member One Vote Exempt from regulation under the FSMA 2000 Interest payment only sufficient to attract investment
    41. 41. Growth in community shares registrations
    42. 42. Community Shares Market Indicators Over 400 new societies registered Over 130 share offers undertaken Est. £20m raised from over 20,000 members (£28m targeted) Average offer raised £200,000 Average membership 200 members Creative and media 1% Sports 3% Food and Farming 8% Pubs and Brewing 15% Average investment per member £1,000 Regeneration and development 7% Energy and Environment 33% Community Retail 24% Social Care 2% Transport 2% CLT and Housing 3% Other 2%
    43. 43. Community energy and community shares Renewable energy schemes using community shares since 2009 37 share offers complete (3 further live) Median amount raised: £150,000 £13.5m equity raised 8,000 members approx Median membership: 100 Average individual investment (based on medians): £1,500
    44. 44. Community renewable societies
    45. 45. Four pillars of a successful share offer Business model Community engagement Governance Offer document Viable Scale and scope Legal form Accurate Profitable Attracting support Rules Informative Sustainable Building membership Conduct Share offer „campaign‟
    46. 46. Community Shares Unit enterprises advisers supporters
    47. 47. Developing best practice
    48. 48. Get in touch Jim Brown, Strategic Adviser Community Shares Unit jim.brown@bakerbrown.co.uk communityshares@uk.coop www.communityshares.org.uk www.microgenius.org.uk
    49. 49. Getting Started ……..or who dares wins Clare Hierons 19th October, 2013 energising communities
    50. 50. Pure Leapfrog – What we do We provide: • Low cost debt to finance, part finance or refinance renewables projects • Professional expertise to help with the non-financial barriers
    51. 51. Where to start….? • The pioneers fought to get their projects off the ground • The battle isn’t over but its now time to start professionalising and ? standardising ? • So what have we learned? ? ? ?
    52. 52. Sun Tzu, The Art of War “Thus we may know that there are five essentials for victory”
    53. 53. “He will win who knows when to fight and when not to fight” Pick your battles - don’t re-invent the wheel It’s not about limiting your ambition! Every project is unique, but: • Use tried and tested techniques and technologies • Learn from others
    54. 54. “He will win who knows how to handle both superior and inferior forces.” Know your strengths but acknowledge your limits • Community project teams wear many hats • Work out which ones fit • Be honest (but confident) • Be clear on capacity of volunteers
    55. 55. “He will win whose army is animated by the same spirit throughout all its ranks.” Common purpose • Projects will need a lot of energy – everyone needs to be on the same page • Make sure everyone is agreed on the ‘why?’ even if the ‘what?’ moves around • Know how will you make decisions when the goalposts move
    56. 56. “He will win who, prepared himself, waits to take the enemy unprepared.” You need a plan • Work out what you don’t know • Plan to plan • Stay agile!
    57. 57. “He will win who has military capacity and is not interfered with by the sovereign.” Leadership • Absolutely essential to the success of any project • Needs support of the team • Mustn’t be afraid to ask for help Interference is another issue – hopefully improving!
    58. 58. Getting ready for battle………
    59. 59. ………becomes doing business
    60. 60. Be careful out there!
    61. 61. energising communities Talk to us ... Eden House, 23-25 Wilson St, London, EC2M 2TE +44 (0)20 7825 4140 clarehierons@carbonleapfrog.org www.pureleapfrog.org
    62. 62. #CEC13
    63. 63. Finance Mary Walsh London Community Energy @LDNCommEnergy Bruce Davis Abundance Generation @AbundanceGen @Oikonomics
    64. 64. Community Energy Getting Investment Ready Mary Walsh
    65. 65. Halton Lune Hydro
    66. 66. What kind of investment?
    67. 67. Project Structure Owners Investors Financing & Security Agreements Operator Operation & Maintenance Agreement Construction and Supply Contracts Construction Supplier Fuel supply (if relevant) Government/ local authority Shareholders Agreement Articles of Association Share issue Licences and permits Subsidies Project Company Land Agreements Power Purchase or Connection Agreement Land Owners Offtaker/ Network Operator
    68. 68. risk • noun 1 a situation involving exposure to danger. 2 the possibility that something unpleasant will happen. 3 a person or thing causing a risk or regarded in relation to risk: a fire risk. • verb 1 expose to danger or loss. 2 act in such a way as to incur the risk of. 3 incur risk by engaging in (an action). — PHRASES at one’s (own) risk taking responsibility for one’s own safety or possessions. run (or take) a risk (or risks) act in such a way as to expose oneself to danger. — ORIGIN Italian risco ‘danger’. Source: Oxford English Dictionary
    69. 69. Opportunity to allocate the risks... • Where does the risk sit? • Possible to eliminate the risk? • If not, mitigate it or allocate it. • Who is best placed to take it? • Who will pay for it?
    70. 70. How do we deal with risk? Eliminate it Mitigate it Allocate it
    71. 71. “Classic” Project Risk Construction/Completion – construction contracts, sponsor support, contractor ability Technology – proven Developer – Experience/financial/track record Environmental/Social Insolvency – any of the parties Offtake – price, market forces, incentives Operational risk – experience, term Currency – liabilities in one currency, funding in another Force majeure Political – regime, tax, permits Legal risk – enforceability, dispute resolution
    72. 72. Community Specific Issues • Team – Experience – Commitment – “Stretched” • Contracts – – – – Counterparty “Robust” Risk allocation Formalities • Co-finance – Who? – Commitment • Multiple stakeholders – Objectors – Engagement • Consents and Permits – Conditions – Local concerns
    73. 73. Risk vs Return
    74. 74. Contact Us
    75. 75. #CEC13
    76. 76. Workshop Part 2 To what extent should community energy groups operate as a business? What to retain? What to lose?
    77. 77. #CEC13
    78. 78. Policy Caroline Julian ResPublica @res_publica @CarolineLJulian Dr. Jim Robinson DECC @DECCgovuk Ben Hall Cornwall Energy @Renewablesvoice Rebecca Willis Co-operatives UK @cooperativesuk
    79. 79. Community Energy Conference Policy Session Caroline Julian Saturday 19th October 2013 101
    80. 80. Overview 1. 2. 3. 4. 5. 6. The state of play The paradigm shift we need The role of government? “The Community Renewables Economy” How should government respond? Next steps 102
    81. 81. The state of play • • • • • Failings of the state and the market The UK’s energy market 30 licenced suppliers vs Germany’s 900 0.3% community renewables vs Germany’s 46% Localities have been airbrushed out of the market 103
    82. 82. The paradigm shift we need Communities should be enabled to participate in the market, not be subject to it 104
    83. 83. The role of government Buerger Energie St-Peter Government should provide the policy framework to enable community energy to flourish 105
    84. 84. The role of government Stadwerke München Ambitious, successful , local… but danger of local monopoly? 106
    85. 85. Community Renewables Economy 107
    86. 86. Community Renewables Economy BARRIERS 1. 2. 3. 4. Planning Lack of guidance and access to data Lack of financial support and investment Lack of legal, financial and technical expertise 108
    87. 87. Community Renewables Economy 109
    88. 88. Community Renewables Economy 110
    89. 89. Community Renewables Economy IMPORTANCE OF JOINT OWNERSHIP • Key to significant growth • Partner with private developers, public sector entities or businesses • Greater capacity, resource and financial capability • 20.6 MW of community-owned projects jointlyowned with commercial developers 111
    90. 90. How should government respond? 1. Incentivise joint ownership 2. Broker partnership opportunities 3. Profile leading local authorities and develop good models of co-operation 4. Encourage local institutions to act as financial intermediaries 5. Dissolve the planning barriers 6. Enable wider participation: Community Commissions 112
    91. 91. Next steps • • • • Beyond individual generation Participation in wider local market Opportunities for local demand and supply Incorporate role of communities in wider energy market reform • Transform energy infrastructure and market to a model that benefits all 113
    92. 92. ResPublica www.respublica.org.uk @Res_Publica @CarolineLJulian ResPublica (UK Think Tank) 114
    93. 93. Policy Dr. Jim Robinson
    94. 94. Connection and route to market issues 19 October 2013 Ben Hall
    95. 95. What I will cover…  Connection issues for community energy projects – – – – what the problems are what is being done what can be learned from other countries‟ experience recommendations  Competition in short-term and long-term offtake market – FiT generators opting out of export tariff – market shares and activity of smaller suppliers  The CfD FiT – government actions to improve offtake market • better understanding, targeted interaction, but needed now
    96. 96. Connection issues (1)  Cooperatives UK asked us to consider issues faced by community energy projects with network connections – Overcoming grid connection issues for community energy projects  Several barriers in connection process were identified, including: – Distribution Network Operators (DNOs) vary significantly in timeliness and consistency and this has impact on project timescales and costs of connection; – a number of process issues should be standardised with adoption of best-practice by DNOs; – high and variable connection cost quotations, dependent upon location, can cause surprises and derail projects; and – grid reinforcement can be a major problem for community schemes as it has the potential to significantly increase costs
    97. 97. Connection issues (2) Case studies  We have had access to project details, including connection costs, for 21 community schemes that have suffered grid connection issues  Substantial variation in cost of connection – £150,000/MW to £7.4mn/MW  19 of the projects reported very expensive connection costs as being primary reason for projects being reduced in size, delayed or abandoned – many of these were less than 1MW – projects scaled down to ensure they were financially viable
    98. 98. Connection issues (3) DNO actions  DNOs have made some progress with communicating with generators – DG forum is an annual event led by the regulator • meetings start in London next week – a new licence condition was imposed in Apr 2010 on DNOs to make more information publically-available – DG Standards Direction took effect from Oct 2010 • budget estimations for connection, quotations, and post connection scheduling  More still needs to be done to improve: – the transparency and predictability of grid connection processes and charges; and – the communication channels between the DNOs and generators
    99. 99. Connection issues (4) International comparison  Other European countries have more focused policies to support community energy projects  Costs of connections are socialised in Denmark and renewables receive priority grid access – this is despite many changes to government policies over the past 10 years as clear grid connection policy is in place  Grid connection process in Germany is transparent – generator receives a detailed timetable for grid connection – renewables also receive priority access to the grid – almost a half of all renewable energy projects are communityowned
    100. 100. Connection issues (5) Recommendations  Provide priority grid access to community energy projects  Allow community projects to pay back site-specific connection costs over time – one option is through perhaps through FiT payments over 20 years  Connection offers based on standard cost assessments with differences recovered in general cost recovery by DNOs  Socialisation of wider costs of reinforcement to reduce financial burden of works on one generator – combination of these two recommendations is that overall cost of achieving connection to grid is “shallow”, not “deep”  A further six informational remedies to improve transparency, consistency and communication
    101. 101. Route to market (1) Long-term power purchase agreements (PPA)  Issues for offtakers (acknowledged by DECC, Baringa) – economic climate has made lenders increasingly risk averse – risks of managing PPAs (including balancing costs) have led to higher discounts – Big Six generally don‟t need Rocs – becoming increasingly difficult for community energy and other independents to obtain bankable long-term PPAs
    102. 102. Route to market (2) Short-term PPAs  Larger FiT generators have tended to opt out of the guaranteed export tariff in favour of taking export to market – in some cases this has seen generator almost double its export revenue  Generation tariff within FiTs can be seen by lenders as a floor price – projects can sell power in more competitive short-term offtakes – discounts to full value of 2%-10% in short-term vs. 10%+ in longterm  Community energy projects will be able to receive FiT for schemes up to 10MW – provides further optionality for projects
    103. 103. Route to market (3) Share of small-scale FiT capacity by supplier Many independent suppliers punching above their weight Good Energy has more FiT customers than retail supply customers
    104. 104. Route to market (4) How will CfD impact the market?  CfD FiTs should “eliminate price risk, lower cost of capital and pull through investment”  Not the full picture – significantly increase in market complexity vs. RO and FiT RO and FiT • • • • Relatively simple Well documented Quick to accredit No allocation risk CfD • • • Allocation rules being defined First-come-first-served Supply chain plan for larger projects – do not diminish need for PPAs – systematic disadvantage once auctions kick in?
    105. 105. Route to market (5) Backstop offtaker (PPA of last resort)  DECC recognises the PPA issue and has put forward a proposal for a backstop offtaker – guaranteed route to market for generators with guarantees on all revenues for output at a fixed % of strike price – costs or benefits associated with offtaker are socialised across market By effectively providing a floor price it may lead to more projects able to sell in short-term PPAs Should enable increased competition in PPAs
    106. 106. Key points  Grid connection complexity and cost is a major barrier for community energy projects – connection costs can be a postcode lottery and disproportionate to the scheme – 10 recommendations put forward to help community energy projects connect to the grid  Renewables projects struggling to achieve “fair value” for their output through long-term PPAs – small-scale FiT scheme is seeing projects able to sell in more competitive short-term PPAs – CfD most suited to companies able to trade directly – DECC is acting to improve PPA market for CfD projects through backstop PPA proposal, but needed now
    107. 107. Policy Rebecca Willis
    108. 108. Closing Session Tom Hoines Renewables Manager @THoines
    109. 109. We want to buy your Power! • • • • Bankable Power Purchase Agreements (PPAs) Long Term Prices/Contracts Competitively priced Member Owned!
    110. 110. Thank You! #CEC13