The document discusses community power in Europe, emphasizing its financial, organizational, and participatory benefits, particularly in wind energy projects. It highlights that community involvement leads to lower costs, faster permitting processes, and a significant local economic impact, while also pointing out potential risks and strategies to mitigate them. Lessons for Ontario suggest fostering grassroots movements and educating the finance community to promote wind power entrepreneurship.

1. The Value Factory ™
Top ROI for community power
Presented by Dr. Ingo Koenig
Toronto, 29th of January 2010

2. AGENDA
! What is community power (in Europe)?
! Why does community power generate superior returns?
! Risks?
! Lessons for Ontario
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3. Wind energy value chain
Initiate Build Operate
and Develop and construct and Maintain
" Find suitable land " Public " Financing " Construction " Run " Sell energy
" Set-up technology support " Refund " Maintain
" Procure relevant scheme/
permits buyers
Community power makes a difference!
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02/02/2010

4. Wind power is leading new power
generation capacity in Europe
New power capacity in Europe 2008
18%
2%
10%
29%
6%
3%
0%
36%
Wind power Gas PV Oil Coal Hydro Nuclear
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5. Community power in Europe is....
Definition: A community wind farm is a consequent financial,
conceptual and organisational participation of citizens (local
community) in a wind farm.
 Exclusive investment and participation of
people living in the vicinity of the farm
 Management is done by local investors
Rigid
Community  Investment and participation of people
wind farms living in the vicinity of the farm, but also
from outside the community with max.
participation (e.g. $50,000)
Relaxed  Management is done by local investors
or professional service firms
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6. Legal Structure and Taxes
A German "GmbH & Co. KG" is a limited partnership in which the general
partner is a GmbH, a private limited company.
General Partner Limited partners
(GmbH) (Kommanditist)
 Limited partners can deduct losses whenever they
occur in personal tax statement!
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7. Financing
Debt: Private commercial banks, state owned banks with preferable rates
Equity: At first: Individual investors via closed funds, medium sized investment
groups, cooperatives; now utilities and larger cooperation, insurance companies
120%
100%
80% State sponsored
60% loans
Commercial banks
40%
20% Equity
0%
Community power Absantee
investors
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8. AGENDA
! What is community power (in Europe)?
! Why does community power generate superior returns?
! Risks?
! Lessons for Ontario
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9. Community power in Europe is more
profitable because...
" High personal involvement keeps “soft costs” low
(5-10% of investment compared to 15-40%
investment)
300
" High personal involvement improves information 295
flow, and peer pressure lead to short repair reaction 290
times and therefore higher availability and 285
revenues 280
Community
power
275 Other farms
" Lower land leases as everybody is a community
270
member (3% vs. 6%)
265
" Improved understanding in community leads to 260
faster permitting process; from push to pull (They 255
do not have to accept the park, they now want it!) Total payback
" Equity is relatively inexpensive, you do not deal
with professional investors and very expensive due
diligence processes
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10. Community power has other benefits than
an improved ROI
Local multiplier effect benefits everyone
" Every local dollar invested results in a minimum of 3 times the benefit
to the local community <--> If an external developer owns and controls
the project these benefits are lost
" Re-Powering of machines becomes much easier in the future
" Municipal, provincial taxes stay locally
Jobs
" ~ 110,000 new jobs have been created in Europe
" Potential construction jobs and training for local community
" Two local positions per project created to administer and maintain the
project and coordinate owners and finances
" Service personnel is regionally based (accountant, lawyers,
maintenance, etc.)
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11. AGENDA
! What is community power (in Europe)?
! Why does community power generate superior returns?
! Risks?
! Lessons for Ontario
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12. Community power has risks...
General risks:
! High investment, but
Specific risks:
 No planning
! Limits to financing consent/permits
e.g. for off-shore  Grid access delayed or
too costly if additional
projects infrastructure is
required
! Depending on
Risks
! Unprofitable project,
number of investors, because
decision making can  Analysis (e.g. wind
forecast) was too
be difficult and exit
optimistic
can be even more  Operations and
difficult maintenance becomes
too expensive
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13. …that can be mitigated
" Create a network of support and
knowledge
" Learn from comparable projects
" Employ experts as required
" Ensure access to sufficient capital
" Make allowances for bad wind years
" Choose your partners carefully
" Make long term maintenance contracts
with availability guarantees
" Get as much community involvement as
possible (partners and owners)
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14. AGENDA
! What is community power (in Europe)?
! Why does community power generate superior returns?
! Risks?
! Lessons for Ontario
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15. Lessons for Ontario...
! Make wind power a grass-roots movement by
including as many Ontarians as possible in the set-up
of farms, funds, and their future.
! The GEA and its Feed-in-tariffs are very strong
incentives to start the movement.
! Educate finance community, it is a profitable low-risk
investment.
! Do it yourself , do not let big developers “shave” the
profitability by including to many “soft costs”.
Ontarians become wind power entrepreneurs!!!
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16. Thank you for your attention!
www.koenigconsultants.ca
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