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THE EARTHS VAINS BREATH OF FRESH AIR?
everything you ever wanted to know about CO2 capture.
WE ARE GOING TO HAVE CHICKENS
a truly ‘backyard’ local energy initiative...
COMMUNITY ENERGY IN
How are countries dealing with price rises?
THE CROWD POWER PLANT from students to entrepreneurs.
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CONTENTS
6 PUTTING THE ‘WE’ BACK INTO POWER everything you ever wanted to know about community energy but...
22 “WE ARE GOING TO HAVE CHICKENS” a truly ‘backyard’ local energy initiative...
24 COMMUNITY ENERGY IN THE UK a question of funding...
26 THE CROWD POWER PLANT to entrepreneurs..
28 FINANCING COMMUNITY ENERGY PROJECTS been there, done it...
30 LIVING FROM THE AIR OF THE SKY a pioneering local wind turbine...
32 THE CROWD POWER PLANT - from students to entrepreneurs..
34 FINANCING COMMUNITY ENERGY PROJECTS -been there, done it...
38 LIVING FROM THE AIR OF THE SKY a pioneering local wind turbine...
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WELCO TO THE TRUTH
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The holiday season traditionally invites us to contemplate our lives, our relations, and our work. The energy sector has even more reason to. The energy market is on the verge of great changes. Large, traditional energy companies are facing a dilemma. They must sharply depreciate their fossil power plants, tolerate ever more sustainable niche players and deal with rapid technology developments in renewables and energy storage. E-on’s recent announcement to sell off their coal plants is a sign of the times.
In the shorter term, automation will play an increasingly important role, along with storage. The prospect of phasing out subsidies and net metering will provide a huge impetus. The likes of Samsung or Philips will be the energy companies of the future. They manufacture the appliances to make our homes completely self-sufficient in the long term. Electricity will simply be free, we will only pay for security of supply. Like your house insurance: when a ball goes through the window, they will replace the glass.
In short, renewable energy is growing as a local player: in terms of where it is produced (in our villages and regions) but also in terms of ownership (communities and crowdfunding). More and more local, sustainable energy initiatives are emerging across Europe, as you will read in this issue. For the long term, I see some big moves that will put the energy sector completely on its head. Solar energy is becoming an integrated application in existing buildings, infrastructure, transport and household appliances. It is the driving power source, supplemented by gas as a transition fuel for the coming decades. Wind energy will move out to sea completely, and off the land.
Free energy, we don’t have it yet. But we’ll see service bundles emerge, as in the telecom sector. In the medium term already for the exchange of surplus energy. For charging my Volvo I will be able to choose between my own solar power generation, or my neighbour’s momentary excess power. A social network like Facebook can play a very important role here: if we can help each other continuously with Candy Crush, why not get a little energy from our friends? Hope you enjoy the power of this Community Energy edition. Season’s greetings! Jan-Willem Zwang, guest editor.
COME
ABOUT US: 2050 Magazine is all about renewable energy and our journey towards the day when the whole world will have access to cheap, clean, sustainable sources of energy. Something which we think will happen by 2050. As long as we all pull together and do our bit. This is our bit.
EDITORIAL: We are very fortunate to have constant access to an incredibly talented pool of people, some of them with decades of experience in the field of sustainability. They tell us things and we write it down and add pretty pictures. Then we send it, all wrapped up in tinsel, to the world at large. That’s it in a nutshell really.
DISTRIBUTION: 2050 is a free publication which is distributed around the world through a variety of ‘friend’ networks. We are currently connected to more than 1 million supporters. A number which is growing on a daily basis. Please feel free to pass us on to your own networks if you think they might be interested in keeping in touch with what’s going on in the world of renewable energy and sustainability.
PUBLISHERS: 2050 Magazine is a joint effort by Planet B Ventures and Spinning Plate Media Ltd and is partly funded by crowdfunding on impactcrowd.com.
CONTACT: Editorial: info@planetbventures.com Advertising: ads@planetbventures.com
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Direct Air Capture is on everyone´s lips when it comes to the possiblity to have a real impact on reducing CO2 from our atmosphere, yet it is expensive..can we bring down the cost with investment from the global coporations?
By Elizabeth Prosser 6
AIR? IS ITA ABREATH BREATH FRESH OFOF FRESH
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2030 There was a time when the very mention of the word ‘power’ would evoke images of ugly old gas- and coal-fired power stations perched on windswept escarpments belching smoke and steam into the air like flatulent characters from a latter-day LS Lowry painting. Or the sinister curves of nuclear power stations, whirring silently but ominously on the edge of perpetually nervous coastal towns. But fortunately things have
northern Europe), tidal energy installations (nothing to get nervous about there) and waste-powered biomass generators (where there’s muck, there’s brass). But old dogs learn new tricks very slowly and the relatively small number of large and powerful energy companies responsible for generating and distributing the world’s electricity from their power stations to our front rooms, haven’t
the politicians of 2047 will be spouting lines like, “Don’t worry folks, something’s bound to turn up in the next few years,” and, “Still, there wouldn’t be much point owning a speedboat if we didn’t have regular floods now would there? What do you mean you don’t have one? Flood or a speedboat? Everyone has floods.” People power…
“Still, there wouldn’t be much point owning a speedboat if we didn’t have regular floods now would there? What do you mean you don’t have one? Flood or a speedboat? Everyone has floods.” changed a little over the last few decades. As the need to develop cleaner, less dangerous and more sustainable ways of generating and managing energy has increased, and the cost of the technology involved has continued to fall, new players have gradually entered the fray. Gangs of industrial strength wind turbines for example, which, if we leave the politics of rural aesthetics to one side for the moment, are becoming a far more common view on those windswept escarpments. As are offshore wind farms (despite the protestations of a certain ScottishAmerican golf resort developer), small solar farms (yes, even in 8
exactly been biting our hands off to switch to 21st century technology. (Hydroelectric power generation being the only real exception, due perhaps to its single location, manly, large-scale, nature.) Indeed the Energy Information Administration (EIA) in America estimates that only 11% of the world’s energy consumption currently derives from renewable energy sources (hydropower, biomass, biofuels, wind, geothermal, and solar) a figure which they reckon will only rise to a whoppingly disappointing 15% by 2040. Which can’t help me thinking that instead of today’s inane platitudes,
Thankfully however, it is quickly becoming clear that technology has changed the rules of the games so significantly - in terms of both the hardware and the systems needed to efficiently implement that hardware - that we won’t have to wait for the large powergenerating companies to wean themselves off their addiction to fossil and radioactive fuels after all. People, if I’m allowed to bastardise a well-known Eurythmics lyric for the purpose, are doing it for themselves. Yeah, sod it, why wait for the politicians and the power companies, burdened as they are by their financial responsibilities to their shareholders and their
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WHY MORE? & MORE OFTEN? 2030
As the climate is changing more extreme weather events are happening, why is this and what can we do about it?
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technology.”
planet, so what?
And while nobody seems to be pretending that setting up a community energy project isn’t without its challenges, the vast majority of the people who are getting involved are obviously happy they did.
“Broad community ownership of renewable energy in particular could go some way to transforming the distribution of wealth,” says Coxcoon. “Since some of the poorest areas have some of the best renewable energy resources. In fact, our energy use is perhaps the only issue that affects us all, which offers such enormous opportunities to generate and save money within local communities, and our elected representatives need to get their heads round that. Fast.”
“If you search for images of ‘community energy’ on the internet,” says Rachel Coxcoon, head of ‘Local & Community Empowerment’ at the Centre for Sustainable Energy, “there’s a local newspaper-type photo that’s emerging as a kind of standard. It’s of a group of happy people
Side benefits…
Insert quote here about the learning opportunities?? Getting projects off the ground… If there is one common denominator in all the new community energy projects we are seeing cropping up round the world - be it a village run wind turbine in New Zealand, a solar panel installation on a school roof in England, or a community funded biomass generator in the Netherlands - is the presence of a single person, or a small group of people, who really want to make it happen. The catalysts of change.
“I think generally we were seen as completely barmy,” surrounding their renewable energy installation, often waving their share certificates and looking jolly pleased with themselves. And so they should, since they have invariably laboured long, unpaid hours on top of full time jobs and family commitments to make their project a success.”
Aside from the obvious benefits to be gleaned from increased energy security, cheaper bills, and a more egalitarian division of profits, another less obvious benefit of locally managed energy projects is the positive effect they seem to be having on the communities they serve, bringing people together for a common cause.
“I think generally we were seen as completely barmy,” says Nicholas Gubbins, Chief Executive of Community Energy Scotland, which has helped launch dozens of successful community energy projects in the country since its formation in 2002. “There wasn’t a lot of theory or concept behind the idea, but in Scotland we have an incredibly well developed community infrastructure, with a very strong tradition of voluntary sector engagement. One of the major issues communities face is how the earn revenue to underpin their social purposes so we felt that renewable energy generation was a fantastic opportunity to bring in revenue to support
FLOODING HAS INCREASED 60% GLOBALLY
Such is the level of ground level enthusiasm to get on with the job of switching to clean renewable energy sources, rather than just talking about it. And even if, as some commentators are suggesting, these groups of people are more inspired by the prospect of cheaper energy bills and returns on their humble investments than the state of the
The “let’s all get stuck in and bring to the table what we can” nature of the beast often leading to opportunities for younger members to learn skills from older more experienced participants (and vice versa perhaps when it comes to the transfer of knowledge about climate change).
As the climate is changing more extreme weather events are happening, why is this and what can we do about it?
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as yet unrealised underground assets, to come to the table when all the know-how already exists for communities of like-minded people to get together to start harvesting their own clean power? From their own back yards. The official term for this, and one which you‘re likely to hear more and more over the coming years, is ‘community energy’. A concept which, according to a report released in January this year by the UK’s Department of Energy and Climate Change (DECC) entitled ‘Community Energy Strategy: People Powering Change’, is all
about “many different types of community getting involved in energy issues in many different ways. Be it a group of local people setting up their own solar installation or wind turbine; a local authority leading a collective purchasing scheme to help local people get a better deal on their energy tariff; an energy advice session at a local community centre; or a whole range of other schemes.” (Bordering on platitude? Only time will tell,) And, like the tortoise of unfunded community action steadfastly marching past the slumbering hare of corporate power generation,
it’s a concept which is fast gaining traction. And, most excitingly perhaps, not in a ‘one at a time’ sort of way, so much as all over the place all at the same time. From the craggy peaks of the Chilean Andes, past the rugged coasts of northern Scotland, to the sun-baked rooftops of the south pacific islands. As Joel Otero, a participant in a small solar project near Barcelona recently told me, “There’s near limitless free energy all around us, literally bombarding us from every angle; all we have to do is figure out a way to grab a hold of our slice of it. And frankly, we have the
“And even if, as some commentators are suggesting, these groups of people are more inspired by the prospect of cheaper energy bills and returns on their humble investments than the state of the planet, so what?”
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community based action and development. And also to save costs in many of the community facilities that need heating and energy and which could convert to renewable energy. Those were the driving forces for the idea of community energy development.”
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Once a possible scheme has been identified and the nucleus of a team with the determination to make it happen formed, the next logical port of call is usually the Local Authority, or government office. Certainly in terms of basic information, advice
their tracks,” says Michael O’Keefe, an independent renewable energy advisor based in County Kerry in Ireland. “But there are plenty of people like me around who know the ropes and how to convince the various planning bodies that the proposed project is not ony feasible in a technical and financial sense, but that it also has the backing of the wider community in which it will be based.” For more grandiose projects, the large energy companies, particularly those with a proven record in
house, “all I see is money being shaved off my electricity bill. As do my neighbours as most of us own a share in them. Plus I know that it is good for the environment. All in all a beautiful sight not an ugly one.” It’s not what you know, but who you know… The next logical step in the evolution of the project is the formation of useful partnerships. Partnerships with local authorities, commercial organisations, universities, local knowledge networks. Anyone who
“Finding your way through the complicated maze of planning requirements can be enough to stop many community projects in their tracks
and help evolving some sort of business plan. If governments are good at anything, it’s theory and rhetoric. In some countries though they will also perhaps be able to offer access to loan funds or other forms of financial support to help get the ball rolling. But most importantly, depending on the country concerned, is the support they can usually provide negotiating (their own) usually complicated planning processes and an idea of how the project might best fit into (their) overall plans for that particular locality. “Finding your way through the complicated maze of planning requirements can be enough to stop many community projects in 16
renewable energy installations, are also worth contacting. Many of them actively encourage approaches from local communities keen to buy clean, renewable energy from a local source. Local, part ownership evidently being one of the best antidotes to planning objections. As has been the case in countries with high levels of community ownership such as Germany and Denmark, where on-shore wind turbines don’t attract nearly as much ‘Not in my back yard’ (NIMBY) criticism as they do in countries such as the UK. “When I look up at the turbines on a nice windy day,” says Roland Muller, a freelance illustrator based in southern Germany, of the small wind farm located on a windy escarpment a few miles from his
has ‘been there and done it’. “You’d be surprised how much local knowledge you might have lurking in your community,” says O’Keefe. “Particularly in rural areas, which are home to commuting professionals. I recently helped realise a 30kw solar installation on the roof of a rugby club in a small village just outside Dublin and when we toldthe club’s membership about the plan it turned out we had access to 2 architects, an electrical engineer, a local councilor and a fully-qualified solar panel installer. To name but a few, all of whom were only too happy to get involved as volunteers, because they saw it as a chance to do something for their community. At the end of the day, your greatest local asset is often your people.”
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The sordid issue of cash… As anyone who has ever considered saving money by replacing all their electricity-hungry light bulbs at home with far more efficient LEDs will know, once you’ve done all the research and developed your game plan, the next major barrier to doing the sensible thing is usually cash. The same applies to most community energy projects. According to a report in the Guardian newspaper in the UK last year, the world needs to find $1tn a year of clean energy investment if we are to have any chance of avoiding runaway climate change. Last year we collectively managed just $254bn. Europe, often cited as one of the more advanced parts of the world when it comes to renewable energy investment, saw a worrying slump in investment of 41% in 2013 to $58bn. Some countries it would seem, take the whole business more seriously than others. Sweden for example, derives 51% of its energy from renewables, while Austria and Denmark also seem to be paying heed to the warnings with 32% and 26% respectively. The larger
economies fare less well though with Italy posting a score of just 14%, France 13%, Germany 12% and the UK, as rich as it is in all forms of natural energy, just 4%. (A figure that would have slumped even further if Scotland had voted to leave the Union last month.) With banks still seemingly unwilling to prise open their coffers for renewable schemes of any size, let alone small scale community projects, a far more common source of funding these days are what are known as ethical community lending schemes, whose charters require all the projects they fund to pass basic criteria tests in terms of their social and environmental impact. Organizations such as Ethex in the UK, whose stated remit is to “make positive investing easy to understand and do,” while providing “a direct and personal way for individuals to invest in businesses they believe in.” Which in a nutshell encapsulates a whole new approach to investment, particularly on a local level, which works on the basic tenet that a sufficiently large proportion of investors care as much about the ethics of their investment as their profits. (Hark, is that the sound of bankers scratching their heads in
puzzlement?) The role of the crowd… All of which is essentially an extension of the concept of crowdfunding, whereby the catalysts behind a project, rather than going cap-in-hand to the local bank and jumping through countless hoops to prove their worth, instead appeal directly to their local community. Indeed, while ethical funds such as Ethex and more traditional pensions and investment funds will be increasingly important in the future, in many countries crowdfunding is proving to be the potential savior of many community energy projects. For example a quarter of Germany’s electricity comes from renewable sources (as opposed to its total energy, which is 12%) the main reason being that nearly half of its renewable energy capacity is owned by individuals, community groups and private developers. They have collectively managed to leverage tens of billions of euros in the last two decades to bring about what is essentially an energy revolution. In Denmark, which produces 32% 19
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of its total energy from renewables, on a good day can produce more than they need and are able to sell their surplus to the perpetually hungry European grid. A huge contributing factor being legislation, which requires commercial wind developers to offer at least 25% of every project to the local community. In America, the country’s largest solar power provider recently forecast that crowdfunding will generate $5bn of investment for
with community energy groups and strategic partnerships with community energy crowdfunding sites such as Abundance Generation and community energy facilitators such as The Resilience Centre. However, the general concensus in Europe and the rest of the world, and one which is echoed in the Unlocking Finance report, is that governments and their respective financial service regulators need to broaden their view on risk, and
developed countries these days could also be opened up to include the debt-based securities offered by peer-to-peer lenders. The bottom line being that there is very significant ground level support around the world for renewable energy generation, and in particular for community energy projects that have a direct effect on the well being of local people. And that the key to unlocking that support in terms of providing the billions of dollars, pounds, euros, yen, roubles,
“In America, the country’s largest solar power provider recently forecast that crowdfunding will generate $5bn of investment for rooftop solar projects in the next five years.” rooftop solar projects in the next five years. A May 2014 report in the UK by the independent think tank ResPublica and the energy supplier Cooperative (who pledge to source electricity with a carbon content of less than half the national average) entitled ‘Community Energy: Unlocking Finance and Investment’, set out how crowdfunding could be used to bring about a community energy revolution in the UK. At the time of the report Cooperative Energy had in place six purchasing agreements 20
by adopting a longer term view on investment proposals, play a more proactive role in facilitating far more diverse financial sectors. Thereby allowing smaller but more innovative players such as crowdfunding platforms and peer-to-peer initiatives to expand their influence in the community energy sector. Many analysts are also calling for governments to introduce real tax incentives to investors in community businesses, such as the Social Investment Tax Relief (SITR) scheme launched in the UK last year. The rules governing the sort of tax-free saving schemes common in most
rand, francs and yuan needed to bring about real and immediate change, lies in the crowd. As the UK’s minister for climate change, Greg Baker, recently said of the situation in the UK, “Crowdfunding could be an incredibly powerful way to deliver a decentralised energy system, and help achieve the goal of turning the ‘Big 6’ energy companies, into the ‘Big 60,000’.” As the title of this article suggests, putting the ‘we’ back into ‘power’, both figuratively and literally.
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WE ARE GOING TO HAVE
CHICKENS!
As everyone surely knows, the first step in the process of starting a community energy scheme is to set up a chicken pen. Don’t they? “A random thought to many people, but not apparently to community energy expert Pauline Westendorp, who decided that the perfect way to instigate her vision of a community energy project in her district of Amsterdam, was to start a small chicken pen and then take it from there.
clean local energy to the whole of the Amsterdam Metropolitan Area by 2018. The idea for WAGTHC was first hatched in December 2012 as one of the eight projects of the ‘Innovation Climate Neutral Cities’ organized by the NL Agency, who also sponsor the scheme, as do local businesses and individuals.
The idea behind the novel approach being to place early emphasis on the need to build the community first. To put in place all the basic connections on a far more achievable scale and then ramp those connections up to the real project, the community energy scheme.
Local citizens and interested parties are encouraged to visit the WAGTHC site to peruse information about local sustainable energy: the experiences of others, organization, techniques, and/or contact them with any questions or ideas or maybe to suggest other ways to participate. Every week, on Thursdays, they organize ‘Energy Breakfasts’ where people who want to get involved can come along and exchange ideas, ask questions, speak to experts and generally get involved in the initiative.
In short ‘We are Going to have Chickens’ (WAGTHC) is an informal cooperative, a swarm of residents, businesses and people from government and education in Amsterdam South and beyond who are working together to bring 22
WAGTHC’s founder and project
manager, Pauline Westendorp, certainly believes in leading by example. She lives on a houseboat in Amsterdam Zuid which is equipped with solar panels, a solar water heater and a pellet stove. She also believes strongly in the power of the local community and steers WAGTHC towards working with neighbours, employers, employees and officials in Amsterdam Zuid (and beyond) to produce their own clean energy with local resources. They offer residents cooperatives, community businesses, one-on-one customized coaching, content and process. An extension of the ‘train the trainer’ learning principle. Indeed, they are open to broadening themes: besides local sustainable energy also food, green management, care, etc. If required, they also offer hands-on courses such as building solar collectors, installers and energy educating coaches.
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We all know we need to reduce fossil fuel production, but how can we as normal people reduce our CO2 output? Unlike other countries, the majority of renewable energy projects in the UK have been and still are owned by commercial companies. While such companies do make financial contributions to local communities, the sums involved are small compared to what could be contributed from fully community owned projects. The lack of local benefit is one factor that contributes to strong opposition to some renewable energy developments. Until 2010, small-scale renewable energy projects were not viable. The introduction of a feed-in tariff scheme changed this, and provided a market driver for smaller scale community-owned projects. A number of community energy companies were started and they raised funds to install solar roofs on community buildings such as schools. The business model is simple: the community energy company rents roof space through a long-term 24
lease; it finances the installation of the solar roof and receives income from the feed-in tariff and sale of electricity; it covers the operation and maintenance costs from income. The building owner benefits through the supply of cheaper electricity. The investors in the community energy company benefit through a return on their investment. The community benefits since surplus profits are paid into a fund that is available for grants. This model ensures a more resilient local society, not only through the provision of more sustainable energy supplies but also through economic development, since much of the cash generated from the projects flows into the local economy. Community energy is generally funded through crowd funding either via local share offers or through share offers on new platforms such as Ethex,
Abundance and Trillion Fund. The legal structure of a community energy company is normally an Industrial and Provident Society of which there are two forms: a bona fide cooperative or a community benefits society (“bencom”). The difference between a coop and a bencom is that the former trades for the benefit of its members and the latter trades for the benefit of the community. Both have to be registered with the Financial Conduct Authority (FCA) and recently the FCA has refused to register co-ops as community energy companies since the member investors do no trade with the co-op. Bencoms can issue 2 types of shares: withdrawable and transferable. Withdrawable shares cannot be sold to a third party whereas transferable shares can be sold. A share offer of withdrawable shares is not subject to FCA regulation, whereas a share offer of transferable shares is regulated. Both shares always
remain at par value and the bencom can pay interest on the shareholding “at a rate sufficient to attract the investment”. Typically share offers have target interest rates of 5-7% - these are not guaranteed returns and actual interest payment will depend on the performance of the bencom. As a principle, equity investors in a business should receive a higher interest rate than a secured lender, which means that interest rates of 7% are needed to attract capital for the larger projects. The maximum investment in withdrawable shares is limited by law to £100,000 and share offers generally have a lower limit
(typically £500) to avoid excessive administrative costs. The average investment is around £4,000 to £5,000. Investors are attracted by both the ethical nature of the bencom and the potential longterm returns. One emerging issue is what qualifies as a community energy investment. A share offer that is offered nationally and does not use surplus profits for the local communities benefit is not really a “community share offer”. There are over 200 groups in the UK actively developing projects. Some are building on their early projects and are looking at larger solar and wind farms. If
community energy is to become a significant player in the UK’s energy sector, it needs to scale up, otherwise it will run the risk of becoming a side issue and eventually fizzling out. Ultimately, a vibrant community energy sector can offer an alternative energy supply to local consumers. This will not happen if changes in government support pull the rug from under the sector. So far, there has been positive support from the Government. Investments in bencoms and coops qualify for tax relief of 30% of the investment. This relief is not available for commercial projects. The Government has published the
FOSSIL FUEL HOW DO WE REDUCE?
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THE CROWD POWER PLANT
Crowd Power Plant was founded in January 2014 by Dominic Jacobson and James Winfield, two students from Imperial College London, who, after scooping first prize in the Low Carbon Entrepreneur awards in London, were described by the city’s mayor Boris Johnson as, “the future leaders who will be powering London’s booming green economy.” “Money makes the world go round”: whoever said that first was correct. If we want to solve climate change and change our energy infrastructure, we need to be innovative and entrepreneurial. We need to have green ideas that make more money than their dirty predecessors. We all know that the UK’s fossil-fuel-heavy energy mix is a big problem for our future. The solution must include increased revenue and increased profits, but for a cleaner alternative. At the start of this year I decided to commit to making a difference. I took what I called a “productive gap year” to have a go at setting up a business to tackle this problem. It meant moving back in with my parents, scratching around in the penny jar for a pint at the weekend and eating far too many tins of baked beans. But my efforts paid off: a few weeks ago my business Crowd Power Plant won the mayor of London’s low carbon
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entrepreneur award. The award, which looks for the most innovative ideas to help reduce London’s CO2 emissions, is a competition open to students and recent graduates in London. The process really tested out the business plan and my ability as an entrepreneur. The idea for Crowd Power Plant came to me by deconstructing contemporary ideas such as crowdfunding and crowdsourcing, and seeing what other industries the notion of the crowd could be applied to. I combined this idea with my academic background in environmental technology and came up with a business proposition that signs up members and rewards them financially through a profit share for becoming part of a crowd. After a few weeks of thinking through the idea I asked my friend Dominic Jacobson, who specialises in solar cell fabrication, to come on board
as a co-founder. Our strategy is to offer our members cash in return for the excess electricity that their renewable energy installations generate. We aggregate surplus electricity from lots of small renewable energy installations across the UK, to form a “crowd”. Using the bargaining power of this crowd we then sell electricity to suppliers or the wholesale market for a better price. Finally, we share the profits with our members. Our hope is that Crowd Power Plant will revolutionise the UK energy market by further encouraging the uptake of small scale renewable technologies. Winning the award is opening up lots of doors for us and we are talking to generators and suppliers. Our £15,000 prize is mainly being spent on ensuring that our business is legally water tight.
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FINANCING COMMUNITY ENERGY PROJECTS 2050 co-founder Jan Willem Bode gets to grips with the everyday financial challenges of launching your own community energy project. Recently I have become fascinated with community energy projects. It has always felt like a great idea: generating renewable energy in the community, financed by the community, delivering clean, cheaper electricity to the community. However, unfortunately it is not as simple as it sounds. First of all, you need people in the community who want this as well. Then you need to actually develop a project (or a number of projects) to generate it, you need to get it financed, built, commissioned, and operational. And then you need to get the electricity to the community (which is not just a matter of pulling a cable from the project to the end-user.... what happens if it’s not sunny? And do you really want to build a whole new infrastructure?). Not being one to shirk a challenge though, I have recently become involved with a fab community energy company, BWCE, near where 28
I live in South West England. From working with them, I have learnt a lot of stuff, not in the least about getting the first step done - the actual building of a renewable energy project in the community. The investment proposition for these projects is simple and beautiful. Become a member of the local community company by investing a certain amount of money. The community company aims to pay 7% ‘interest’ per annum, with the balance of the cash coming out of the project payable into a community fund (that will be used to finance clean projects in the community). Sounds simple, no? However, what does not become clear from that is the complexity behind the project, particularly the complexity behind the financing of a project. One of the main characteristics of a community project is that
the development process is a continuous balancing act, even more so than a normal project development process. The first phase of the project development process is very similar to a normal project development process. Site selection, planning permission (which could even be a bit simpler than a non-community project as in theory at least, you should have the community to support you) leases, grid connection offer, etc. Then it becomes a bit more complex. Fund raising. In a noncommunity (or traditional) project without bank loans, you have one, or a small number of equity investors. In a community project however, the idea is to get many of them, and as many as possible from your (local) community. This means that a fund raising process needs to be designed, started and managed. And with average ticket sizes of 5 to 10k, this means accessing a lot of people, if you want to raise enough
money for let’s say a 5 MW solar project (approx 6 million GBP, or 7.5 million Euros). This means convincing hundreds of people to put significant chunks of money into a project. This is a process that can take a significant amount of time. In parallel, negotiations with the installers, or EPC (engineering, procurement and construction) contractors need to take place.
Typically, they would either want to wait until the fund raise is finished, or want additional security that the project will actually be built. And in order for the project to be completed on schedule, and therefore benefit from the Feed In Tariff under which it was registered, money needs to be paid to various contractors, before the fund raise is completed. In other words, before it is certain that the project will actually be funded. This is money at risk.
Question:Would it not therefore be more sensible to wait until an adequate fund raise has been achieved before trying to grab a feed in tariff? It becomes even more complex when debt financing (from a bank or financial institution) is brought in. On one hand, it reduces significantly the amount of equity that needs to be raised, and it can increase the return on equity, but on the other hand, it comes with a lot of 29
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additional requirements. Question: am I right in thinking that debt financing comes from a bank or financial institution? Question: this is the first mention of the need to borrow money from a bank? Is that always the way? Or can it be done 100% from the community? Seems to contradict the previous para starting: ‘In a community project however…
additional cash out for the project during its development phase. Significant cash out as well, as due diligence like this goes easily into the tens of thousands of pounds, which is a lot of money for a community project developer. Also, a bank is likely to put additional requirements on both the cashflow of the project and the EPC counter party.
company guarantees, warranty bonds, retention of payments until the project has been operating for at least 12 months without problems, etc. These are also likely to push up the cost of the project. The EP counterparty will also ask for guarantees from the developer, in order to ensure that the money is and will be there. They will have to order large volumes of kit, and will not necessarily have received all the
Not trivial, but a satisfying moment nonetheless. Even better when the project delivers its first electricity to the grid. Most importantly, the due diligence requirements. Even though a project developer will carry out a degree of due diligence on contractors, legal documentation, and the like, this is different when debt finance is involved. As the bank will lend purely against the expected cashflow from the project, with the assets as their only security, their main risk sits in the quality of the EPC contractor and the performance of the project once it is completed. Both legal and technical due diligence are therefore very important to a bank - which means 30
For example, with regards to the cashflow of the project, the bank will ask to keep debt service reserves in a separate account, so that interest and capital repayments for a period of let’s say 6 months are guaranteed. The bank will also ask to have a maintenance reserve, so repairs and spare parts can be paid for in case they are not covered under a warranty, or in case the coverage is disputed. With regards to the EPC counterparty, the bank is likely to have additional requirements both from a contractual point of view (Quality Assurance processes are typically very strict) and from a credit risk point of view. Think parent
funds required to deliver the project. This is likely to put additional strain on the community developer. Solutions typically can be found in financial structuring and in timing. An example of financial structuring can be found in the instrument of underwriting. This basically means that a portion of the equity (or debt) part of the project is guaranteed by a third party (individual, financial organisation, etc). Typically this costs between 1 and 3% of the sum that is underwritten, and if the underwriting needs to be called, the interest terms are typically higher than the projected equity returns and the debt returns. It helps the
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‘LIVING FROM THE AIR OF THE SKY’ Celebrating the 30th anniversary of Catalonia’s first electricity generating wind turbine. On March 10th 2009, a large group of people commemorated the 25th anniversary of the public opening of a project known as ‘Ecotècnia 12/15’, the first modern wind turbine to be connected to the grid in Catalonia, Spain. On the very same day in 1984, hundreds of people took part in the inauguration party of this remarkable wind turbine, installed in the Catalan town of Valldevià, in the windy Empordà region, by the workers of the Ecotècnia cooperative. Its name deriving from the 12m diameter of its rotor blades and its 15kW capacity. To mark the anniversary, the European Association for Renewable Energy in Catalonia launched a pioneering initiative to bring about the installation of another suitably placed wind turbine, also financed and owned by local citizens. The initiative, which roughly translates from the original Catalan to ‘Living from the air of the sky’, was made public on the same day as the anniversary. To turn the initiative into a reality, 34
four people came together to found Eolpop SL, a limited partnership responsible for the promotion and facilitation of the project, and the issuance of shares to local investors and those connected to the area. The project’s founders realized that rural areas are often marginalised by Spain’s prevailing economic system to the point that many of their citizens are often forced to move away to the relative wealth of the cities. The ultimate irony being that once there they often have scant choice but to deposit their savings in bank accounts over which they have little control and which give them very small returns, while the rural areas many of them have left behind are rich in natural assets, such as solar and wind power, but often lack the necessary capital to harness those assets. The project’s founders therefore wanted one of the main goals of the project, aside from the egalitarian benefits of shared ownership and the environmental common sense of clean and ‘green’ electricity, to be the strengthening of ties and solidarity between those rural and
urban groups. An additional objective being the chance to enable individuals and families to be proud of the fact that the energy they use in their everyday lives is not only ‘green’ and ‘clean’, but locally generated by their very own community owned wind turbine. The plan is for the cost of installation and commissioning to be covered by the funds raised by the rural and urban community as shareholders of a non-profit organization, but with priority being given to people and families living nearest to the site. The chosen site is within the municipality of Pujalt, Anoia, Catalonia, given its good wind conditions, accessibility and connection to the medium voltage electricity grid. The chosen wind turbine model is the Alstom ECO-122 (formerly Ecotècnia), a wind machine specially designed for low wind areas. Any individual, group of people, or
The environmental common sense of clean and ‘green’ electricity, to be the strengthening of ties and solidarity between those rural and urban groups.
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CREATING NEW
CAREERS
In the new normal we are reaching out to our younger generation to carve out new careers in sustainability.
You’ve found the best list of 150+ sustainability careers on the web.
sustainability jobs. Jobs in renewable energy— including renewable energy internships.
What makes it great?
All green careers salary data are medians from Salary.com, ZipRecruiter, PayScale, and Glassdoor. Half the people with these jobs make less, and half make more.
It’s packed with real green jobs grouped by skill. There are over 10.3 million green jobs—and skyrocketing. That’s according to the International Renewable Energy Agency. Jobs in sustainability are out there. You just need a good guide to find them. This guide contains: Over 150 sustainability careers, grouped by industry and skill set. Tips for how to find entry-level environmental engineering jobs. 36 Solar power careers and other
What Is a Green Job? As defined by the U.S. Department of Labor, green jobs are jobs that preserve the environment and jobs that make an organization more environmentally friendly. Green jobs are work in traditional sectors such as agriculture and manufacturing, as well as in green sectors such as renewable energy and waste management. Sustainability Careers List This sustainability careers list is grouped by job type.
Click any of the links below to jump to jobs in sustainability in this article. Entry-Level careers in sustainability Solar power careers Green careers for engineers and entry-level environmental engineering jobs Sustainability careers for scientists Green technology jobs Green business jobs Solar panel jobs in sustainability Environmental internships Great environmental companies to work for How to Use This Green Jobs List There’s a massive list of sustainability careers below. Names of jobs in sustainability are great, but— How do you find the actual
job? Here’s how: First do a Google search for: Environmental jobs + [location] Sustainable jobs + [location] Sustainability jobs + [location] Green jobs + [location] Bioenergy jobs + [location] Biofuels jobs + [location] Geothermal jobs + [location] Solar jobs + [location] Hydroelectric jobs + [location] Ocean jobs + [location] Hydrogen jobs + [location] Wind jobs + [location] Green Design jobs + [location] Recycling jobs + [location] Water Quality jobs + [location] Clean Car Manufacturing jobs + [location] Natural Sciences jobs + [location]
Energy Efficient Construction jobs + [location] Farm jobs + [location] Entry-Level Green Jobs Entry-Level Environmental Engineering Jobs—$46,985 Wind Turbine Technician—$53,880 Assistant Research Scientist—$65,000 Biological Monitor Assistant—$43,000 Entry-Level Environmental Specialist—$46,549 Conservation Technician—$43,411 Resource Science Aide— $24,000 Entry-Level Environmental Scientist salary— $43,623 Entry-Level Environmental Technician—$30,000 Sustainability Advocate—$55,000
Environmental Field Consultant—$59,000 Entry-Level Environmental Planner—$39,000 Entry-Level Wetland Scientist—$46,623 Industrial Hygienist—$69,000 Stormwater Compliance Inspector—$59,000 Consulting Forester—$50,398 Field Service Technician—$47,128 Environmental Investigator—$36,000 GIS Analyst—EntryLevel—$35,000 Environmental Records Specialist—$46,549 Environmental Analyst—$50,909 Entry-Level Solar Technician salary—$32,000 General Laborer—$31,271 Office Assistant, Environmental
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