STIMULATING INVESTMENT
IN COMMUNITY ENERGY:
BROADENING THE OWNERSHIP OF RENEWABLES
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CitationIRENACoalitionforAction()Stimulating investment in community energy: Broadening the ownership
of renewablesInternationalRenewableEnergyAgencyAbuDhabi
AbouttheCoalition
TheIRENACoalitionforActionbringstogetherleadingrenewableenergyplayersfromaround
theworldwiththecommongoalofadvancingtheuptakeofrenewableenergyTheCoalition
facilitatesglobaldialoguesbetweenpublicandprivatesectorstodevelopactionstoincrease
theshareofrenewablesintheglobalenergymixandacceleratetheglobalenergytransition
Aboutthispaper
ThiswhitepaperhasbeendevelopedjointlybymembersoftheCoalition’sWorkingGroupon
CommunityEnergyBuildingonseveralcasestudiesthepapershowcasespolicymeasures
and financing mechanisms that reflect best practices in community energy and oers
recommendationstogovernmentsandfinancialinstitutionsonhowtoacceleratecommunity
energydevelopment
Acknowledgements
ContributingauthorsHans-JosefFellandCharlotteHornung(EnergyWatchGroup)RohitSen(ICLEI–Local
Governments for Sustainability) Shota Furuya (Institute for Sustainable Energy Policies) Monica Oliphant
(InternationalSolarEnergySociety)AnnaSkowron(WorldFutureCouncil)StefanGsänger(WorldWindEnergy
Association)and StephanieWeckend EmmaÅberg Kelly Taiand AnindyaBhagirath under theguidanceof
RabiaFerroukhi(IRENA)
Furtheracknowledgements Malte Zieher (Bündnis Bürgerenergie) Erik Christiansen (EBO Consult) Johan
Hamels (Ecopower) Rainer Hinrichs-Rahlwes (European Renewable Energies Federation) Vasilios Anatolitis
andJanGeorge(FraunhoferInstituteforSystemsandInnovationResearch)MollyWalsh(FriendsoftheEarth
Europe)AnaAmazo(Guidehouse)EcoMatser(Hivos)JohnFarrell(InstituteforLocalSelf-Reliance)Namiz
Musafer(IntegratedDevelopmentAssociation)DavidRenné(InternationalSolarEnergySociety)Jan-Gerald
Andreas(KfWDevelopmentBank)OusmaneOuattaraandIbrahimTogola(Mali-FolkecenterNyetaa)Elizabeth
Doris (National Renewable Energy Laboratory) Leire Gorroño-Albizu (Nordic Folkecenter for Renewable
Energy)LeaRanalder(REN)HarryAndrews(Renew)JoshRobertsandDirkVansintjan(REScoopeu)Glen
Estill(SkyGenerationInc)LukeWilkinson(SustainabilityVictoria)PatrickDevine-Wright(UniversityofExeter)
PaulGipe(Wind-Works)AnnaLeidreiter(WorldFutureCouncil)TimoKarl(WorldWindEnergyAssociation)
SergioOceransky(YansaGroup)MelaniFurlanLinHerenčićandBorisPavlin(Zelenaenergetskazadruga)and
DialaHawilaEmanueleBiancoandCostanzaStrinati(IRENA)
StevenKennedyeditedandMyrtoPetroudesignedthereport
CoverphotographsarefromtheHokkaidoGreenFundChristopherHolzemBürgerwerkeandMali-Folkecenter
Nyetaa
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FIGURES, TABLES AND BOXES .................................................................................................... 4
ABBREVIATIONS
........................................................................................................................ 5
1. COMMUNITY ENERGY: AN INVESTMENT WITH IMPACT
.......................................................... 7
2. THE BENEFITS OF COMMUNITY ENERGY AND BARRIERS TO ITS FINANCING
.......................... 9
2.1 Community energy supports an inclusive energy transition .............................................................................. 9
2.2 Barriers to mobilising investment still hinder community energy growth ..................................................... 11
3. ENABLING ENVIRONMENTS FOR COMMUNITY ENERGY INVESTMENT
.................................. 13
3.1 Supportive legislation and government policies are key to community energy growth .......................... 13
3.2 Policy design can be tailored to community energy ........................................................................................... 15
4. FINANCING COMMUNITY ENERGY PROJECTS
..................................................................... 18
4.1 Ownership and financing of community energy are interrelated ....................................................................18
4.2 Public sources of financing can be leveraged for community energy investment .....................................21
4.3 Private financing must step up .................................................................................................................................. 22
5. KEY TAKEAWAYS FOR GOVERNMENTS AND FINANCIAL INSTITUTIONS
................................ 24
ANNEX I. CASE STUDIES: ENABLING ENVIRONMENTS FOR COMMUNITY ENERGY INVESTMENT..... 26
Victoria, Australia
.................................................................................................................................................................... 27
Denmark
..................................................................................................................................................................................... 28
Germany
..................................................................................................................................................................................... 29
Japan
........................................................................................................................................................................................... 30
Scotland, United Kingdom
................................................................................................................................................... 31
United States
............................................................................................................................................................................ 32
ANNEX II. CASE STUDIES: FINANCING COMMUNITY ENERGY PROJECTS
....................................... 33
Mindanao, Philippines
............................................................................................................................................................ 34
Guanacaste, Costa Rica
......................................................................................................................................................... 35
Department of Quiché, Guatemala
.................................................................................................................................... 36
REFERENCES
............................................................................................................................ 38
CONTENTS
STIMULATING INVESTMENT IN COMMUNITY ENERGY:4
FIGURES, TABLES
AND BOXES
Figure 1: Potential benefits of community energy .............................................................................................................. 10
Figure 2: Potential barriers to mobilising investment in community energy
................................................................ 11
Figure 3: External financing options for community energy projects
..........................................................................20
Table 1: Government measures, past and present, that can enable community energy investment
................... 16
Table 2: Legal forms of community ownership
..................................................................................................................... 19
Box 1 : Community energy in European Union Renewable Energy Directive and Electricity Directive
................14
Box 2: Impact investing
............................................................................................................................................................... 22
Box 3: Crowdfunding in sub-Saharan Africa
........................................................................................................................ 23
BROADENING THE OWNERSHIP OF RENEWABLES 5
ASHDINQUI Asociación Hidroeléctrica de Desarrollo Integral Norte del Quiché
CARES
Community and Renewable Energy Scheme
CCA
Community choice aggregation
DFI
Development finance institution
FIT
feed-in tari
ICE
Instituto Costarricense de Electricidad
IRENA
International Renewable Energy Agency
KfW
Kreditanstalt für Wiederaufbau
kW
kilowatt
LLC
limited liability company
OLADE
Organización Latinoamericana de Energía
PAYG
pay-as-you-go
USD
United States dollar
VNM
virtual net energy metering
ABBREVIATIONS
STIMULATING INVESTMENT IN COMMUNITY ENERGY:6
Photo: Hokkaido Green Fund
Launch ceremony for community wind project in Ishikari city, Japan
BROADENING THE OWNERSHIP OF RENEWABLES 7
The COVID-19 pandemic has spurred recovery
measures that have the potential to drive a
lasting shift in the global energy mix. While some
governments have announced more ambitious
climate commitments, many others have yet to
take decisive action to move towards a green
recovery. Renewable energy, with its inherent
adaptability and decentralised nature, is well
positioned to help build more equitable, inclusive
and resilient economies, while fostering increased
citizen participation in the energy transition
(IRENA, 2020b).
Citizen-driven renewable energy projects –
referred to here as “community energy” – can play
a considerable role in the post COVID recovery by
promoting local social and economic prosperity
while helping to meet climate and sustainability
objectives.
The International Renewable Energy Agency
(IRENA) Coalition for Action has defined
community energy as the “economic and
operational participation and ownership by citizens
or members of a defined community – be it at
the village, city or regional level – in a renewable
energy project, regardless of the size and scope of
the project”.
1
1 The IRENA Coalition for Action (2018) white paper “Community Energy: Broadening the Ownership of Renewables” defines
community energy as any combination of at least two of the following elements: (1) local stakeholders own the majority or
all of a renewable energy project; (2) voting control rests with a community-based organisation; (3) the majority of social and
economic benefits are distributed locally.
A diverse range of approaches to community
energy development is found around the world.
Successful approaches leverage the project’s
direct social and economic benefits (led by the
creation of revenues and jobs from renewable
energy generation) as well as its broader
contribution to local socio-economic development
(e.g. through the expansion of access to electricity).
While community energy projects can be found
across the electricity, heating and cooling, and
transport sectors, this white paper, developed by
the Coalition’s Community Energy Working Group,
reviews measures that stimulate and sustain
community energy initiatives in the electricity
sector. Although renewable energy investments
by citizens and communities have gained traction
in many countries, knowledge exchange on a
global level has been limited. This paper fills the
gap by showcasing policy measures and financing
mechanisms that reflect best practices and oering
recommendations to governments and financial
institutions on how to accelerate community
energy development and reap its benefits.
COMMUNITY ENERGY:
AN INVESTMENT WITH
IMPACT
01
STIMULATING INVESTMENT IN COMMUNITY ENERGY:8
A number of public and private investors are
increasingly prioritising environmental and social
performance in their practices. Nevertheless, the
lack of supportive policy frameworks and enabling
market environments remains a major barrier for
the mobilisation of investments in community
energy. Findings reported in this paper demonstrate
that public support and non-discriminatory access
to the electricity market and grid have key roles
to play in community energy development, even in
countries where communities already have access
to aordable and low-cost financing.
In addition to adopting specific policy targets
for community energy, policy makers can unlock
further investment by providing a stable,
predictable and non-discriminatory policy
environment. To raise private capital, innovative
alternative financing mechanisms such as
crowdfunding have emerged to meet the needs
of communities. If insucient private capital
is available, communities often rely on public
grants or other support schemes to get started.
The financial community can further support
investment by facilitating access to debt and equity
financing for small- and medium-scale renewable
energy projects and helping to create partnerships
among community energy investors.
The next chapter explores the substantial benefits
of community energy, as well as the barriers that
face communities seeking financing for their
projects. Chapter 3 surveys policy measures that
shape community energy development around
the world. Chapter 4 provides an overview of
how community energy projects are financed
and the role played by public and private actors.
Chapter 5 summarises key takeaways on enabling
community energy investments. Nine case studies
of community energy initiatives from around the
world make up the
Annex.
Photo: Nordic Folkecenter for Renewable Energy
Community solar thermal district heating project in Snested, Denmark
BROADENING THE OWNERSHIP OF RENEWABLES 9
THE BENEFITS OF
COMMUNITY ENERGY
AND BARRIERS TO
ITS FINANCING
02
Community energy projects can bring substantial
benefits to the communities involved, as well
as broader benefits to society. Yet much more
investment is needed to realise community energy’s
full potential. By removing the regulatory, financial
and institutional barriers that continue to hinder
investments, more communities can contribute
to the energy transition (IRENA Coalition for
Action, 2018).
Community energy projects involve citizens and
communities as producers, distributors and sellers
of electricity – and as consumers. The projects
may benefit communities socially, economically,
environmentally and institutionally, with many of
the benefits filtering through to society at large
(see Figure 1). The extent to which communities
and society can benefit from community energy
may vary depending on local political frameworks,
ownership models and other factors.
Community energy adds local socio-economic
value through investment, job creation and
improved welfare. The transition to a renewables-
based energy system can play a key role in the
economic recovery from the COVID-19 pandemic
(IRENA, 2020b). Community-owned renewable
energy projects are of particular importance as
they are likely to employ local contractors and
re-invest in local enterprises, services and goods
and thus support local resilience (Gancheva et
al., 2018). Furthermore, successful community
energy projects often invest in capacity building
and skill development so that local populations
can maintain and operate installations, thereby
creating jobs along the entire renewable energy
value chain (Callaghan and Williams, 2014). In
some cases, the financial returns of projects can
be re-invested in public facilities such as hospitals,
used to retrofit buildings or channelled into other
renewable energy and energy eciency projects
(IZES, 2015). Finally, community energy projects
help generate welfare gains, such as health benefits
through reduced air, water and land pollution and
greenhouse gas emissions.
2.1 Community energy supports an inclusive energy transition
Photo: Mali-Folkecenter Nyetaa
Community solar project in Mali
STIMULATING INVESTMENT IN COMMUNITY ENERGY:10
Broadened participation
in the energy system
Accelerated access
to renewable energy
through citizen-driven
innovation
Increased energy
security through lower
energy costs and
greater price certainty
Socio-economic gain
through investment,
job creation and
improved welfare
Figure 1: Potential benets of community energy
Community energy improves energy security
through lower energy costs and greater price
certainty. Renewable generation, when locally
owned and managed, enables communities to
increase energy independence from external
energy suppliers often still reliant on fossil fuels,
reducing their exposure to fluctuating energy
prices and saving on costs. Community energy
projects may also be able to generate long-term
income through the sale of (excess) renewable
energy. Shareholders may elect to oer low-cost
power to people in disadvantaged areas, thereby
reducing energy poverty (Friends of the Earth
Europe and REScoop.eu, 2017), or otherwise share
savings across the community.
Community energy widens access to renewable
energy through citizen-driven innovation. In
developing countries, and in some developed ones,
many rural and remote communities continue to
struggle with access to aordable and reliable
energy. Community energy projects have spawned
innovative business models and technological
solutions that expand access, improve the
reliability of service, help build climate resilience,
increase possibilities for new productive activities
and improve livelihoods (IRENA, 2020c).
Such grassroots innovations can make significant
contributions to the broader energy transition
by expanding the development and uptake of
renewable energy and complementing existing
energy access initiatives (Callaghan and Williams,
2014; Ornetzeder and Rohracher, 2012; Rogers et
al., 2012).
Community energy broadens participation in
the energy system and expands awareness and
acceptance of renewable energy. Engaging
community members in shared decision-making
processes can lead to increased transparency
and inclusiveness in the planning, construction
and management of installations. By making
collective decisions about the use and distribution
of investments and generated income, as well as
exercising direct control over local financial and
energy resources, communities achieve greater
autonomy and self-governance. Citizen investment
in community energy projects can also foster
more positive attitudes towards renewable energy
development (Bauwens and Devine-Wright, 2018).
All of these forms of participation can increase
citizens’ sense of ownership and community unity,
as well as raise awareness, acceptance and active
support for the energy transition (IRENA, 2020c;
Renn, 2014).
Active citizens form the base of the successful energy transition in the Rhein-Hunsrück district
of Rhineland-Palatinate, Germany, as represented by the honorary municipal council of Horn
Photo: Energieagentur Rheinland-Pfalz
BROADENING THE OWNERSHIP OF RENEWABLES 11
2.2 Barriers to mobilising investment still hinder community
energy growth
Community energy development continues to face
regulatory, financial and institutional barriers. The
nature and extent of the obstacles experienced
vary between projects and across countries, but
also depend on project size: Smaller projects and
organisations are more prone to encounter the
challenges listed.
Overall, community energy has unique
characteristics that distinguish them from the
structures and practices of other renewable energy
projects. These characteristics include, but are
not limited to, a strong reliance on decentralised
organisation, voluntary contributions from
community members with limited prior experience
in energy development and trust in collective
investments (see Figure 2). These dierences make
establishing financial viability and accessing third-
party financing particularly challenging, especially
for smaller projects.
Community energy and its benefits are not yet
widely understood and accepted. Attracting buy-
in from policy makers, financiers and citizens may
prove challenging owing to limited awareness,
understanding and support of community energy
and its associated benefits. Stakeholders may
question the reliability of renewables to cover
base load at all times or have reservations about
new technologies. For various reasons, they may
also mistrust or oppose the idea of collaborative
business models more generally (Brummer, 2018).
These underlying biases against community
energy projects may also increase distrust among
2 Community energy can take place on both large and small scales. For example, some co-operatives in Europe have invested
in gigawatt-scale renewable energy projects.
the general public, whose broad support is needed
to leverage investments and other resources from
local citizens and outside investors.
Policy frameworks for renewable energy are
structured around centralised, large-scale
projects. Traditional energy market structures
and regulatory frameworks are mostly designed
around centralised, large-scale energy generation
(IRENA, 2020e). Policy makers often do not have
community energy on their agendas, which
may lead to the implementation of policies
that (unintentionally) discriminate against
community energy. For example, small- and
medium-sized actors (such as communities) carry
disproportionate risks when participating in
auctions, discouraging diversity among auction
participants and leaving communities behind.
Communities are thus left to navigate an
unfavourable landscape that creates additional
investment uncertainties and subsequent planning
challenges (Brummer, 2018).
Community energy projects may have limited
access to capital and third-party finance. In many
countries, securing financing from traditional
sources still presents a challenge for community
energy projects, particularly those that require
early-stage support (Caramizaru and Uihlein,
2020; Haggett and Aitken, 2015). Community
energy projects below a certain size
2
may not
attract interest from commercial lenders since they
come with high bank transaction costs and oer a
limited return on investment.
Figure 2: Potential barriers to mobilising investment in community energy
Risk profiles of
individuals and
communities that dier
from those of private
sector companies
Limited access
to capital and
third-party
finance
Lack of knowledge
in and experience
with renewable
energy projects
Policy frameworks
structured around
centralised,
large-scale projects
Insucient awareness
and acceptance of
community energy
and its benefits
STIMULATING INVESTMENT IN COMMUNITY ENERGY:12
Moreover, debt and equity financing are typically
extended with a view to earning a profit. A
community energy project focused on creating
socio-economic and environmental value may not
generate sucient profits to attract debt financing
from local commercial financial institutions.
Communities that cannot meet collateral
requirements may also find it hard to secure loans
from commercial financial institutions (Ottinger
and Bowie, 2015).
The risk profiles of individuals and communities
are dierent from those of private sector
companies. In many countries, citizen-driven
investment in renewable energy has been absent,
as policy frameworks have typically not accounted
for the risks that communities face when investing
in individual projects. Coupled with the prospect
of facing direct personal risks and exposure
when investing, community members may be
reluctant to invest upfront in community energy
projects. Furthermore, many communities new to
renewable energy development develop stand-
alone projects. Unlike companies with several
projects in development, these communities
are unable to spread risks across a portfolio of
projects. Diculties in securing funding and
reliance on single projects means that these
communities also have more trouble covering costs
and expenditures incurred in the initial stages of
project development (Brummer, 2018). All of these
factors ultimately slow down the development of
community energy projects.
Community energy projects often rely on the
voluntary commitment and engagement of
citizens who may lack knowledge, capacity
and experience in setting up renewable
energy projects. Unlike established private or
commercial developers, who are experienced in
drafting project proposals and business plans
and have existing relationships with banks and
institutional investors, in many cases communities
have no track record in renewable energy
development (Haggett and Aitken, 2015) and
encounter diculties accessing related support
structures (Avelino et al., 2014). These factors
compound the challenges of securing both early-
stage and long-term financing for community
energy.
Participants of the 2nd World Community Power Conference in Bancoumana, Mali
Photo: Mali-Folkecenter Nyetaa
BROADENING THE OWNERSHIP OF RENEWABLES 13
ENABLING
ENVIRONMENTS FOR
COMMUNITY ENERGY
INVESTMENT
03
Overcoming the barriers described in Chapter 2
requires a conducive enabling framework that
will allow community energy’s untapped potential
to benefit citizens and communities. To unlock
investments, policy frameworks should be non-
discriminatory and provide market access to all
types of investors, including communities.
Such frameworks include regulatory measures
that promote market entry for community energy
projects; financial measures that support their
funding; and administrative measures that help
communities acquire the skills and knowledge
needed to develop a renewable energy project.
Enabling frameworks proposed for a given
national or subnational jurisdiction should be
considered in the context of the jurisdiction’s
institutional environment and broader socio-
economic objectives.
3.1 Supportive legislation and government policies are
key to community energy growth
As is the case for all renewable energy projects,
stable, predictable and non-discriminatory policy
frameworks are key to enabling community
energy. Apart from mandating the establishment
of legal frameworks to promote and facilitate
the development of community energy, as in the
European Union (see Box 1), governments can
encourage community energy development by
implementing a range of individual measures or
making adjustments to existing policies.
Community wind project owned by Thyborøn-
Harboøre Vindmøllelaug I/S af 2002, Denmark
Photo: Nordic Folkecenter for Renewable Energy
STIMULATING INVESTMENT IN COMMUNITY ENERGY:14
The development of community energy in the European Union (EU) has historically been driven by local and
national legislation. Community energy initiatives are now widespread in several countries in western and
northern Europe but remain comparatively rare in eastern, central, and southern Europe. As of 2020, there are
an estimated 1 750 energy communities (including renewable energy communities) in Germany, another 700
in Denmark, 500 in the Netherlands and several hundreds more throughout Europe (Caramizaru and Uihlein,
2020). Additionally, approximately 3 500 renewable energy co-operatives operate within the EU (RESCoop
MECISE, 2019).
The European Commission’s new Clean Energy Package (approved in 2019) mandates EU member states
to create an enabling legal framework to promote and facilitate the development of community energy.
“Energy communities” are recognised in two EU legislative documents under the formal definitions of “citizen
energy communities” (revised Internal Electricity Market Directive [EU] 2019/944) and “renewable energy
communities” (revised Renewable Energy Directive [EU] 2018/2001).*
The two directives set out specific criteria to ensure community energy projects can compete in the market
based on non-discriminatory and proportional terms. Member states are required to transpose both directives
into national frameworks and offset market and regulatory barriers in order to promote and facilitate the
advancement of community energy.
*
“Energy communities” are not only limited to renewable projects. They “may engage in generation, including from
renewable sources, distribution, supply, consumption, aggregation, energy storage, energy efficiency services or charging
services for electric vehicles or provide other energy services to its members or shareholders” (Electricity Market Directive
[EU] 2019/944).
Box 1 Community energy in European Union Renewable Energy Directive
and Electricity Directive
A multitude of renewable energy support
schemes exist and have been implemented in
dierent countries. As shown in Table 1, several
existing measures for renewable energy can be
tailored and designed to encourage community
energy development. First and foremost, a
policy environment generally conducive to
renewable energy is also beneficial for community
energy. More specific tools may include setting
sub-targets for community energy and creating
local ownership quotas for renewable energy
projects.
As per their non-discriminatory design,
administrative feed-in taris set by government
(FITs) have been very eective in supporting
renewable energy market growth, including
smaller community energy projects. Virtual net
energy metering schemes have also emerged
more recently to enable multiple customers to
share billing credits produced by o-site projects,
thus encouraging the growth of subscription-
based community energy projects (IRENA, 2019a).
The transition from FITs to auctions in countries
like Denmark, Germany and Japan has proven
challenging for community energy projects.
Some key features of auctions – such as bidding
procedures and prequalification requirements
that necessitate upfront investments without
being guaranteed a contract – disproportionately
increase financial risks for community actors (Fell,
2019; IRENA, 2019b; WWEA, 2019). Community
actors are consequently likely to limit their
participation to bidding processes where their
likelihood of being awarded a contract is high (e.g.
in auctions where the lowest bid is not the sole or
even the primary criterion for award).
BROADENING THE OWNERSHIP OF RENEWABLES 15
Some countries have implemented auction design
elements aimed at favouring small and new players,
creating local jobs, contributing to subnational
development, and engaging communities (IRENA,
2019b). Policy design elements such as mandated
quotas and preferential rules for community
energy projects, legal limits on the involvement of
large private investors, and bonus payments for
community participation could contribute to the
growth of community energy projects. However,
the case study of Germany (see Annex) suggests
that auctions need to be carefully designed,
implemented and evaluated in order to avoid
unintended consequences and yield the intended
results. Engaging communities successfully in
auctions remains broadly challenging and further
adjustments to auction designs remain necessary
to promote community energy.
Legislation and government policies aimed
at community energy should be developed in
early and close consultation with citizens and
communities to ensure the desired outcome.
Streamlined administrative procedures and
capacity building opportunities are key for
community involvement and implementation of
projects. Governments can put in place a variety
of measures, such as one-stop shops, to break
down knowledge barriers by raising citizen
awareness of community energy, disseminating
best practices, assisting communities with the
project development process, and connecting
communities with funding sources. Governments
can also provide training opportunities to
communities to help them develop long-term
capacity in renewable energy.
Lastly, governments may opt to oer fiscal and
financial incentives to support the financing of
community energy projects: Options for direct
support include grants, loans, revolving funds,
and tax incentives. Public funding measures will
be further discussed in Chapter 4 on financing
community energy projects.
3.2 Policy design can be tailored to community energy
While many countries already have in place
ambitious targets and supporting policies for
renewable energy, there is ample scope to improve
community and citizen participation to ensure an
inclusive energy transition.
Through policy design, governments can tailor
renewable energy measures to provide better
support for community energy investment. As
Table 1 highlights, measures supporting community
energy can be implemented at various levels
of government, ranging from local to regional
to national. Many of these measures are already
being used to support grid connected community
energy projects in developed countries;
their application in other areas may require
modifications to accommodate local contexts.
Finally, governments must work in close co-
operation with financial institutions, the private
sector, communities that have developed projects
and other key stakeholders to design and
implement policy measures that remove barriers
to investment in community energy projects.
STIMULATING INVESTMENT IN COMMUNITY ENERGY:16
MEASURE
DESIGN OPTIONS ENABLING
COMMUNITY ENERGY
LIMITATIONS
REPRESENTATVE
JURISDICTIONS
IN WHICH
OPTION
HAS BEEN
IMPLEMENTED
SEE CASE STUDIES
IN
ANNEX
Renewable
energy
targets
Renewable energy targets that define specific
sub-targets for a broad range of types and sizes
of renewable energy projects, such as for community
energy, provide long-term signals to investors
about governments commitment and can therefore
increase investors’ confidence in community energy
investments (IRENA, 2015b).
Renewable energy targets are not
eective on their own and need
further policy measures to incentivise
implementation. They are highly
dependent on political commitment
(IRENA, IEA and REN21, 2018).
Scotland, UK
Local
ownership
quotas
By requiring project developers to oer a minimum
percentage of local ownership shares in a new
renewable energy project, governments can ensure
citizens have an opportunity to participate in and
benefit from projects (IEA-RETD, 2016a).
Quotas need to be well defined and
monitored to ensure they achieve
desired policy outcomes (IEA-RETD,
2016a).
Denmark
Virtual net
energy
metering
A variant of net energy metering, virtual net energy
metering enables multiple customers to share billing
credits produced by o-site projects and encourages
the growth of subscription-based community energy
projects (IRENA, 2019a).
As the penetration of distributed
renewable energy resources increases,
net metering may create cross-
subsidisation between prosumers
and those who do not self-consume
(IRENA, IEA and REN21, 2018).
United States
Feed-in
taris and
premiums
Feed-in taris or premiums can easily be designed
in a non-discriminatory manner and may also be
based on criteria such as project size and technology
to encourage certain types of projects, including
community energy (IRENA, 2015a).
Feed-in taris require active tari
setting and adjustment. In times of
rapidly decreasing costs and volatile
fossil fuel prices this may require
regular monitoring and adjustments
(IRENA, IEA and REN21, 2018).
Denmark
Germany
Japan
Scotland, UK
Auctions
While auctions have typically been designed to
procure electricity at lowest cost, a variety of design
elements may be implemented to achieve objectives
such as facilitating the inclusion of small and new
players and achieving a just and inclusive transition
(IRENA, 2019b).
Bidders have to fulfil certain
administrative, technical and financial
requirements in order to qualify
to bid in an auction. Since bidders
bear the risk of not being awarded
projects, auctions are likely to
pose disproportionate barriers for
community actors unless they are
specifically designed to encourage
participation from small and new
players (Fell, 2019; WWEA, 2019).
Denmark
Germany
Japan
Table 1: Government measures, past and present, that can enable community energy investment
Regulatory
TYPE
RegulatoryRegulatoryRegulatoryRegulatory
BROADENING THE OWNERSHIP OF RENEWABLES 17
MEASURE
DESIGN OPTIONS ENABLING
COMMUNITY ENERGY
LIMITATIONS
REPRESENTATVE
JURISDICTIONS
IN WHICH
OPTION
HAS BEEN
IMPLEMENTED
SEE CASE STUDIES
IN
ANNEX
Grants
Grants can help de-risk community energy projects
by osetting expenses for early-stage community
energy project development as well as project costs
(IRENA, IEA and REN21, 2018).
Grants provided by foreign investors
do little to assist local capital markets
when local equity investment is small.
Grant financing in the form of
crowdfunding may be aected by
exchange rate fluctuations, unless it
is a donation (KfW Entwicklungsbank,
2005).
Victoria, Australia
Denmark
Department of
Quiché, Guatemala
Japan
Mindanao,
Philippines
Scotland, UK
Loans
Concessional loans with lower interest rates, longer
repayment periods or extended grace periods can
improve access to capital and reduce the costs of
borrowing for community energy projects (IRENA,
IEA and REN21, 2018),
The positive impacts of concessional
loans will extend beyond the projects
benefitting from the loans only if
supplemented by capacity building
for local lending institutions (IRENA,
2016).
Guanacaste,
Costa Rica
Revolving
funds
Revolving funds are a long-term source of credit for
community energy projects. The funds funnel all or
a portion of loan payments towards sustaining and
growing the funds for additional projects (Burke and
Stephens, 2017).
Management and monitoring play a
crucial role. Because the creditor bears
the credit risk, failed projects reduce
the amount of the revolving fund
(Setyawan, 2014).
Mindanao,
Philippines
Tax
incentives
Tax relief such as production tax credits, investment
tax credits and accelerated depreciation (IRENA,
IEA and REN21, 2018) can incentivise investments in
community energy projects by oering a higher rate
of return to prospective investors (Bauwens, Gotchev
and Holstenkamp, 2016).
Community energy projects
owned by non-taxable entities
(e.g. municipalities, non-profit
organisations) are unable to benefit
from such incentives (Farrell, 2016).
Scotland, UK
United States
One-stop
shops
One-stop shops dedicated to facilitating community
energy projects streamline the interface between
communities (or individuals) and government.
While their main aim is to reduce regulatory and
administrative burden, some one-stop shops also
provide information and advice including capacity-
building (OECD, 2020).
One-stop shops require political
commitment if they are to be eective.
Time and other resources must
be invested towards developing
sta capabilities to deliver services
eectively (OECD, 2020).
Victoria, Australia
Japan
Scotland, UK
FinancialFinancialFinancialFinancialAdministrative
TYPE
STIMULATING INVESTMENT IN COMMUNITY ENERGY:18
FINANCING
COMMUNITY ENERGY
PROJECTS
04
Key to scaling up investment in community
energy are contributions from community
members themselves and the availability of
external financing from public and private sources.
Since public resources are limited, the growth
of the community energy sector increasingly
depends on communities’ ability to access private
sources of financing. That they can do so under
the right circumstances has been borne out by
the experiences encapsulated in this section
and described more fully in the case studies
(see Annex).
4.1 Ownership and financing of community energy
are interlinked
The ownership structures and financing of
community energy are closely related. The optimal
mix of financing for a given project depends not
only on the characteristics of the project (e.g.
size, technology), but also, and especially, on the
ownership model and level of autonomy desired
by the community.
Table 2 provides an overview of common
ownership models through which community
actors collectively invest in and own energy
assets. While many community energy projects
strive for large shares of community ownership,
achieving this depends on the availability of local
knowledge and resources – services, labour, land
and financial capital. In some models such as co-
operatives, ownership comes with a direct level of
decision-making. In most co-operatives, individuals
are required to contribute to the common capital
by investing in membership shares as a condition of
membership (International Co-operative Alliance,
2017). In addition to individuals, other stakeholders
– such as conventional energy companies (e.g.
utilities, retailers etc.), non-profit organisations
and local authorities may also participate as
community members. In other models where
the community does not own the entire project,
these other stakeholders may serve as partners.
Partners can also contribute in a variety of ways
beyond owning a part of the project. For example,
municipalities can enter into agreements with
community actors to host community energy
projects on their infrastructure (e.g. public roofs)
(Roberts, Bodman and Rybski, 2014).
A rural community solar photovoltaic
micro-grid in Burkina Faso
Photo: Sahelia Solar
BROADENING THE OWNERSHIP OF RENEWABLES 19
OWNERSHIP MODEL DESCRIPTION
Co-operative
Co-operatives are jointly owned by their members to achieve common economic,
social or cultural goals based on the democratic principle of “one member, one
vote”. A co-operative may be formed to provide services (consumer co-operatives)
or to pool investment capital (investment co-operatives). Maximising return on
capital is usually not a key objective.
Non-profit organisation
Non-profit organisations are formed by investments from members, who are
responsible for financing the organisation but do not take profits.
Association
Associations are private, non-profit organisations established around a common
cause. Decision-making power usually stems from the association’s statutes or by-
laws and rests with its members. A renewable energy association can take many
forms. Examples include enterprise associations and housing associations.
Community trust
Community trusts act as vehicles for broader community benefit, rather than
generating profits for investors. Returns from investments are used for specific
local purposes and are shared with people who are unable to invest.
Partnership
Partnerships are formed between individuals or legal persons to achieve a common
business purpose. A partnership can take the form of a general partnership (where
all partners can be held individually liable for the partnership’s debts) or a limited
partnership (where partners who do not participate in management activities have
limited liability for the partnership’s debts).
Corporation
Corporations are separate legal entities owned by their shareholders; as such,
shareholders benefit from limited liability for the corporation’s debts. Shareholders
holding more shares have greater voting power. The profits of a corporation are
paid out to shareholders as dividends.
Limited liability
company
LLCs combine the characteristics of a corporation with those of a partnership. Like
shareholders in a corporation, members of an LLC benefit from limited liability
for the company’s debts. Like partners in a partnership, the profits of an LLC are
passed through directly to its members.
Sources: Gancheva et al., 2018; IRENA, 2020d; Roberts, Bodman and Rybski, 2014
Table 2: Legal forms of community ownership
STIMULATING INVESTMENT IN COMMUNITY ENERGY:20
Most community ownership models will draw on
multiple financing options to cover the costs of
their energy projects, including contributions from
community members and financing from external
public and private sources. Figure 3 presents an
overview of external financing options available to
a community throughout the project development
and construction process. In many cases, smaller
projects may be financed entirely through direct
investments from community members. In others,
a combination of grants and debt financing (loans)
may be necessary. Larger projects are more likely
to rely on equity investments from external
parties. Debt-to-equity ratios for community
energy projects vary widely due to factors such
as the specific risk profile of a community and the
institutional environment within which it operates
(Dukan et al., 2019; IEA-RETD, 2016b).
To increase the number of available financing
options, multiple community projects can
be bundled to reduce transaction costs and
investment risk. Community energy projects are
often funded through project financing; however,
in situations where one community partners with
another entity the project may also be supported
through corporate or balance sheet financing.
Project financing implies that lenders are repaid
from the cash flow generated by the project or
the value of the project’s assets. Under corporate
financing, lenders have full recourse to all assets
and revenues of the funded entity in the event of
default. Financing is secured based on the balance
sheet of the entity (Yescombe, 2014).
Figure 3: External nancing options for community energy projects
Grant
Funds are awarded
and do not need to
be repaid by the
recipient.
• Governments and government agencies,
development finance institutions, climate
funds
• Private non-governmental organisations
and foundations
• Crowdfunding
Debt
Funds are borrowed
and repaid by the
recipient over time
with interest.
• Financial institutions (e.g. state and
commercial banks, non-banking financial
institutions, micro-finance institutions)
• Development finance institutions and
climate funds
• Crowdfunding
Equity
Funds are invested
in return for partial
ownership of assets.
• Public/private utilities
• Renewable energy project developers
• Private investors (e.g. angel investors,
venture capitalists, private equity firms)
• Crowdfunding
BROADENING THE OWNERSHIP OF RENEWABLES 21
Public sources of financing for community energy
include governments, government agencies,
development finance institutions (DFIs), other
public banks and climate funds.
3
Public financing has the potential to accelerate
community energy, provided it is accompanied
by arrangements to involve communities in
participatory decision making, eorts to build the
technical and financial capacity of communities
and local partners, and opportunities for
communities to assume ownership should they
elect to do so.
DFIs and climate funds are governed by national
governments and have specific mandates to
support development outcomes; consequently,
they have a prominent role to play in directing
investments in community energy projects in
developing countries. DFIs are increasingly
deploying targeted measures to improve access
to debt and equity financing for small- and
medium-scale renewable energy projects. Such
measures include concessional loans at below-
market interest rates for renewable energy
projects and on-lent debt to local commercial
financial institutions. For example, the IRENA/
Abu Dhabi Fund for Development Project Facility
allocated USD 350 million in concessional loans
to 32 renewable energy projects with sustainable
development benefits, at a tenor of up to 20 years
and a five-year grace period (IRENA, 2020a).
While these public financing measures are partly
applicable to community energy projects, they
would need to be tailored further to fully unlock
the potential of community energy.
Given the challenges some communities still
face accessing capital and third-party financing,
in many countries grants remain an important
financial measure for directing targeted support
to community energy projects, bringing viable
projects to bankability and profitability. National
and regional governments in Australia, Guatemala,
3 For the purposes of this paper, DFIs include global and regional development banks, bilateral development agencies, and
national development banks.
Japan and Scotland (see Annex) as well as
DFIs have awarded grants to oset the costs of
early-stage project development activities as well
as project construction costs. An example is the
Pacific Renewable Energy Investment Facility, a
multi-donor fund providing loans and grants to
support renewable energy projects in smaller
Pacific island countries. From 2017 to 2019, eight
projects approved under the facility were allocated
over USD 141 million in financing, including over
USD 77 million in grant funding from the Asian
Development Bank (ADB, 2020).
Given the limited resources of public funding,
it is well recognised that public measures must
be used strategically to leverage debt and
equity financing (IRENA, 2016). Some countries
have put grants in place to further encourage
commercial lenders to finance community energy
projects by mitigating political, policy, credit and
currency risks. Governments and DFIs have also
implemented risk-mitigation measures aimed at
mobilising additional private investments in small-
and medium-scale renewable energy. Examples
include first-loss loans and first-loss guarantees
to address potential losses borne by commercial
lenders (IRENA, 2016).
Additional community energy investment can
also be supported through revolving funds. In
the Philippine province of Mindanao, the Asian
Development Bank has provided financing for
community energy projects and a revolving fund
to support local economic development. The fund
is replenished as loan recipients make repayments,
creating the opportunity to issue new loans
to other businesses that can make productive
use of renewable energy. Revolving funds can
therefore become a long-term source of credit for
community energy projects and local enterprises
(see
Annex).
4.2 Public sources of financing can be leveraged
for community energy investment
STIMULATING INVESTMENT IN COMMUNITY ENERGY:22
Private sources of financing for community energy
include renewable energy project developers
as well as financial institutions (e.g. commercial
banks, non-bank financial institutions, micro-
finance institutions) and private investors (e.g.
angel investors, venture capitalists, private equity
investors). In some countries where community
energy is a well-known and established form of
investment (e.g. Denmark, Germany), communities
have been able to raise financing through private
sources. However, communities in many countries
– particularly developing countries – still find it
dicult to gain access to private financing.
Although public finance has enabled private
finance to play a more prominent role in renewable
energy projects, direct investments in community
energy from the private sector continue to be
limited.
One option for communities is to make use of
joint-venture models to access financing. In a
model where a community energy project partners
with a private developer, the developer may raise
capital for its share of the project through equity
financing based on its track record and the income
projections of its portfolio. For example, in a joint
venture in the United Kingdom, Falck Renewables
and the Fintry Development Trust negotiated an
agreement in 2007 whereby Falck loaned capital
to the trust for “virtual ownership” of 1 of 15
turbines in a Scottish wind farm. The loan is to be
repaid over 15 years through the sale of electricity
generated by the turbine (Haggett et al., 2014).
Innovative financial and business models can also
help communities reduce their upfront investment
requirements, particularly equity. Under a pay-as-
you-go (PAYG) business model, a private partner
leverages its access to equity to finance the
community’s share of the project. The community
can then direct project revenues (or cost savings
realised from the project) to make regular
payments to the partner over a mutually agreed
time frame. Ownership transfers to the community
once it has repaid the partner (Muchunku et al.,
2017). PAYG schemes have been used to deploy
energy solutions to communities. For example,
with grant support from the United States African
Development Foundation, social enterprise Sosai
In addition to project financing (i.e. grants, debt
and equity), community energy may be indirectly
supported through investments in energy access
and local development programmes.
By linking energy access initiatives with community
energy, governments and DFIs can spur additional
local socio-economic development and strengthen
long-term community growth.
To support energy solutions for poor communities
in the “last mile”, a range of combinations of
public and private funding sources – within a
strong local ecosystem and with strengthened
local financial institutions – can play a critical role
(Rajagopal, 2019). For example, responsAbility
Investments launched a USD 200 million fund in
early 2020 in partnership with public and private
partners, including the European Investment Bank,
the International Finance Corporation, the UK
Department for International Development and the
government of Luxembourg, to support companies
providing energy access solutions in emerging
markets (responsAbility, 2020). Public programmes
for decentralised energy solution providers have
great potential to support community energy,
provided they are further tailored to create the
on-the-ground partnerships needed to give
communities access to energy.
Impact investing is an approach that intentionally
seeks to generate measurable social and
environmental impact alongside financial returns
(Global Impact Investing Network, 2020). It
comes in a variety of forms and vehicles. Some
approaches prioritise impact and generate
financial returns at below-market rates, while
others emphasise market-rate financial returns
for the investor alongside societal benefits.
Impact investments are becoming increasingly
widespread in both emerging and developed
markets, attracting a wide range of public and
private investors including individuals, non-
governmental organisations and foundations,
banks and development finance institutions.
Box 2 Impact investing
4.3 Private financing must step up
BROADENING THE OWNERSHIP OF RENEWABLES 23
Renewable Energies successfully deployed solar
mini-grids in two villages in Kaduna State, Nigeria,
in 2017. The mini-grids provide electricity to over
800 individuals using a PAYG model (IRENA, 2018).
Alternative finance, developed outside the
traditional banking system (i.e. regulated banks
and capital markets), provides communities with
another potential source of funding. An example of
alternative finance is crowdfunding, which enables
a project or an organisation to raise capital from
a large number of individuals or entities (Mollick,
2014). By using predominantly online channels,
instruments and systems funding beneficiaries can
present proposals to the public and engage with
potential funders (see Box 3 on crowdfunding in
sub-Saharan Africa).
Crowdfunding models can be distinguished based
on the funders’ primary motivation for investing
and expected return. Non-investment-based
crowdfunding approaches (such as donation
and rewards-based crowdfunding) have been
leveraged to fund single and multiple community
energy projects in part or in full. For example,
Citizens Own Renewable Energy Network Australia
(corenafund.org.au) uses crowdfunded donations
to create a revolving fund for community energy
projects.
Other approaches replicate the traditional debt
and equity financing modalities. Examples include:
• Peer-to-peer lending platforms that provide
investors with a debt instrument. Abundance
Investments (www.abundanceinvestment.com)
oers debt-based investments in projects and
businesses in the renewable energy, energy
eciency and housing sectors.
• Equity platforms that allow investors to
acquire shares in projects. Windcentrale
(www.windcentrale.nl) is a Netherlands-
based organisation that has facilitated
co-operative wind turbine purchases
through its crowdfunding platform.
• Hybrid platforms oering a range of
investment options, including debt
instruments, shares and bonds. Triodos Bank
(www.triodoscrowdfunding.co.uk) operates
a crowdfunding platform through which it
connects investors with bond and equity
oerings from organisations focusing on
social and environmental impact.
Crowdfunding can thus facilitate individual
investors’ access to impact investment
opportunities in community energy, and even
help governments and other key actors to identify
– and direct investments towards – community
energy projects that have gained local community
support.
Crowdfunding has played a role in enhancing the
financing opportunities available to small and
medium-sized enterprises, including companies
deploying renewables-based solutions to widen
access to energy. Social enterprise Pawame
– a provider of pay-as-you-go solar home
systems to households across sub-Saharan
Africa – has successfully raised debt financing
through crowdfunding platforms such as TRINE
(trine.com) and Bettervest (bettervest.com).
In 2020, Pawame crowdfunded debt to finance
2 300 solar home systems for households (Solar-
Home-Systeme für Kenia – Pawame, 2020).
Box 3 Crowdfunding in sub-Saharan
Africa
STIMULATING INVESTMENT IN COMMUNITY ENERGY:24
KEY TAKEAWAYS
FOR GOVERNMENTS
AND FINANCIAL
INSTITUTIONS
05
When integrated into post-COVID recovery
measures, community energy oers vast untapped
potential to maximise socio-economic benefits
and local value creation, as well as to strengthen
the broader resilience of communities and beyond.
Drawing from the case studies in this paper (see
Annex), the following takeaways may serve
as guidance and inspiration for governments,
DFIs and other financial institutions on how to
design policies and mobilise finance to scale up
community energy investments.
Build awareness and develop a shared
understanding of community energy. There is a
need for broader awareness around the concept
of community energy and of the role communities
and citizens can play in the energy transition. A
common and widely recognised understanding
of community energy makes it easier for
governments and financial institutions to identify
best practices, design policies and mobilise funds
that reflect the specificities of community energy
actors. As the legal forms for community energy
may vary across jurisdictions, a strict definition of
community energy may be dicult to establish.
However, identifying a set of key characteristics
– such as minimum requirements for ownership,
decision making and profit sharing – may be used
to identify projects that qualify as community
energy and are thus eligible for support.
Adopt targets and policy designs that value
citizen participation and local socio-economic
development. While communities may not
always be able to compete on cost with large-
scale commercial renewable energy projects,
their participation in the energy transition is
widely recognised as an important way to
ensure inclusiveness and maximise local socio-
economic benefits. To fully realise the potential
of renewables to achieve broader development
goals, governments should establish community
energy targets and consult with community energy
representatives to ensure that supporting policies
(e.g. FITs, auctions, grants, tax incentives) are
designed to enable the participation of small and
new actors. Further policy frameworks addressing
sector coupling or energy eciency need to be
developed to strengthen positive eects on local
socio-economic development. More broadly,
governments should work towards establishing
non-discriminatory regulatory environments
which allow all investors – including communities
– to invest and access energy markets, including
clearly defined policies for access to the electricity
grid.
Establish dedicated agencies or one-stop shops
to support community energy. Community
energy projects are often initiated by committed
individuals who have limited expertise and
experience in setting up renewable energy
projects or navigating complex administrative
procedures. In addition to expanding awareness
of community energy, a dedicated entity (e.g.
public agency or non-governmental organisation)
can support communities and citizens by
helping streamline administrative procedures,
providing templates for project documentation,
oering other capacity-building activities and
even connecting communities with financing.
BROADENING THE OWNERSHIP OF RENEWABLES 25
The Community and Renewable Energy Scheme
(CARES) in Scotland is an example of a one-stop
shop for communities and citizens interested in
investing in community energy.
Facilitate community access to capital through
targeted public finance. Access to debt and equity
financing can be particularly dicult for smaller
community energy projects, especially at the initial
stages of project development. Perceived or actual
risks throughout the project development process
result in less favourable lending terms at high
costs. Governments, DFIs and other public finance
institutions can oer support by establishing
grants, revolving funds and concessional loans at
below-market interest rates, and by on-lending
debt to local commercial financial institutions
for community energy projects. Public funds can
further be used to provide guarantees that de-
risk community energy projects, thereby enabling
access to commercial loans at a lower cost. Fiscal
and financial incentives can also reduce capital
costs. Financial instruments should be tailored to
the specificities of community energy projects,
as well as to national and local contexts, so as to
make renewable energy economically viable for
even the most vulnerable communities.
Support innovative financing mechanisms and
business models for community energy projects
and the most vulnerable. Given the limited
access to debt financing that many community
energy projects have, policy makers and financial
institutions can support innovative mechanisms
for raising equity financing that take into account
the unique characteristics of community energy
while preserving project ownership and control.
Community assets such as land rights and labour
can be converted into equity shares. Regulatory
environments that encourage financial institutions
to oer green investment options (e.g. debt
instruments, shares and bonds) can lower costs for
renewable energy projects, including community
energy. Additionally, innovative business models
and alternative financing mechanisms like
crowdfunding can support new partnerships
between community and private actors. Flexible
payment schemes such as PAYG can help to
distribute electricity across communities without
overlooking their most vulnerable members.
Other innovative finance mechanisms include
subscription-based models such as virtual net
energy metering (VNM) that allow citizens who
lack the means to invest in renewable energy to
take part in the energy transition. Such financing
mechanisms and business models should also
consider how communities will finance ongoing
operation and maintenance costs for their projects.
Encourage aggregation of and collaboration
between community energy projects. Partnerships
between communities through aggregation, or
project bundling, can enable smaller community
energy projects to gain access to financing schemes
typically available only to large-scale projects. The
aggregation of projects may reduce investment
risks by spreading them across several projects,
while also cutting transaction costs. To facilitate
the aggregation of community energy projects,
policy makers can create enabling frameworks for
communities to form partnerships, as showcased
by Community Choice Aggregation policies in the
United States. Aggregation also strengthens the
negotiating power of communities in purchasing
equipment and services from commercial
suppliers. For example, in Costa Rica, four regional
co operatives formed a consortium, Conelectricas,
to increase the profitability of their operations.
Integrate community energy in energy access
and local development programmes. Community
energy projects can play an important role in
providing access to aordable and reliable energy
for productive applications (e.g. agricultural
processing facilities, heat/cold storage facilities,
etc.) – particularly for vulnerable communities,
which are often located in remote or rural areas.
Combined with cross-sectoral policies (e.g.
concessional financing for productive equipment
and appliances), community energy projects
can also contribute to the broader development
of local economies. For example, a revolving
fund was established in Mindanao, Philippines to
support livelihood activities, leveraging electricity
produced by community energy projects.
Projected revenues from productive uses of
energy can be used to pay back investors and
reinvested in other community-led activities such
as energy eciency, infrastructure enhancements
or additional renewable energy projects.
STIMULATING INVESTMENT IN COMMUNITY ENERGY:26
ANNEX I. CASE STUDIES:
ENABLING ENVIRONMENTS
FOR COMMUNITY ENERGY
INVESTMENT
BROADENING THE OWNERSHIP OF RENEWABLES 27
A number of community energy policies have
emerged in Australia over the past decade, reflecting
interest in community energy at the state and
national levels (Parliament of Victoria Economic,
Education, Jobs and Skills Committee, 2017). As
of 2019, Australia had over 105 community energy
groups, approximately 50 of which were based in the
state of Victoria (Coalition for Community Energy,
2019).
Victoria’s state government implemented a range
of programmes to promote community energy
under its 2015 Renewable Energy Roadmap (State
of Victoria Department of Economic Development,
Jobs, Transport and Resources, 2015).
4
To support
community energy project development, the
Victorian government awards grants through
initiatives including its New Energy Jobs Fund,
Community Renewables Solar Grants Initiative and
Renewable Communities Program. The Renewable
Communities Programme has awarded over
USD 800 000 in funding to nine community energy
projects (Victoria State Government, n.d.).
4 The road map included a commitment to “encourage household and community development of renewable generation, products
and services”.
5 For example, see Citizens Own Renewable Energy Network Australia (corenafund.org.au) and the People’s Solar (thepeoplessolar.
pozible.com).
From 2017 to 2019, the Victorian government also
funded and supported a pilot programme to establish
three regional community power hubs. Each hub –
hosted by a local not-for-profit or social enterprise –
assists communities with testing project ideas, turning
viable ideas into bankable projects and connecting
them with capital (Community Power Hub, 2020). In
two years, the hubs have also helped in the financing
and commissioning of 15 community energy projects
with a combined capacity of over 1.3 MW. In the
process, they have generated local socio-economic
benefits valued at almost USD 8 million (Sustainability
Victoria, 2019).
The Victorian government continues to identify how
it can support communities’ eorts to tackle climate
change. Victoria’s 2017 renewable energy auction
scheme incorporated design elements requiring
proof of community engagement (IRENA, 2019b).
While community energy groups have welcomed
government support for business case development,
feasibility studies and project implementation, they
have described grant application processes as onerous
(Parliament of Victoria Economic, Education, Jobs
and Skills Committee, 2017). As a result, grassroots
organisations have emerged throughout Australia to
fill in financing gaps for community energy by raising
funding via donation-based crowdfunding.
5
In 2017,
the Australian government also lowered barriers
for small businesses seeking to raise capital by
establishing a legislative framework for investment
crowdfunding (Australian Securities & Investments
Commission, 2019).
• Government grants for community energy
have been administered through various
renewable energy programmes.
• Regional one-stop shops facilitate community
access to skills and knowledge, and connect
bankable projects with sources of capital.
Victoria, Australia
KEY FEATURES
Photo: SSustainability Victoria/Esther Lloyd
Community Power Hub members attending a site demonstration of earlier prototype solar thermal
technology in Victoria, Australia
STIMULATING INVESTMENT IN COMMUNITY ENERGY:28
With regulations to support local renewable energy
in place as early as the 1970s, Denmark may be
considered the birthplace of modern community
energy. Denmark’s first phase of policy measures
included restricting the ownership of wind projects to
local actors within close proximity of the project and
limiting a single investor’s maximum ownership share
(Gorroño-Albizu, Sperling and Djørup, 2019), as well
as granting tax exemptions for income from wind
turbines and implementing fixed FITs (Gancheva et
al., 2018). Geographic eligibility for investment was
later expanded to the entire country, thereby allowing
external private ownership.
In the late 1990s, Denmark initiated a set of policy
reforms to liberalize its electricity market. Its FIT
scheme was initially phased out in favour of a
renewable portfolio standard (RPS), but a few years
later the government introduced a feed-in premium.
In part because premiums were set at levels too low
to attract projects and local ownership requirements
were changed, almost no new wind energy projects
– including community energy – were developed
between 2003 and 2008.
Consequently, wind power capacities flatlined almost
completely (IEA-RETD, 2016a). These developments
reduced local interest in wind power (WWEA, 2018b).
Because of the negative impacts of these reforms
on renewable energy deployment, Denmark began
a policy rollback in 2009 and partly reinforced
community energy measures. That year’s Promotion
of Renewable Energy Act mandated wind power
developers to oer at least 20% of ownership to
residents and enterprises living within a 4.5 kilometre
radius (Gancheva et al., 2018). Feed-in premiums
were increased, making projects economically
viable again. The Danish government also created
a guarantee fund that provides grants to local co-
operatives to reduce the costs of preliminary studies
for wind energy projects (WWEA, 2018b). These
changes revived the community energy movement.
By the end of 2016, 52% of installed wind capacity
in Denmark was again under community ownership
(Gorroño-Albizu, Sperling and Djørup, 2019). However,
major hurdles to development remained – namely
price volatility (Bauwens, Gotchev and Holstenkamp,
2016), competition from large investors, and local
opposition (Roberts, Bodman and Rybski, 2014).
More recent policy changes may also impact future
community energy development. Since 2018, feed-
in premiums for solar and wind projects have been
awarded through technology-neutral renewable
energy tenders (Energistyrelsen, 2020b), creating
additional challenges for communities to be awarded
projects. Moreover, the Promotion of Renewable
Energy Act was amended in June 2020 to repeal the
20% local ownership requirement (Energistyrelsen,
2020a).
Denmark
• From 2009 to 2020, wind energy projects were
required to oer an ownership share of
at least 20% to local residents and enterprises.
• Feed-in premiums guarantee a fixed premium
on top of the wholesale market price for
electricity.
• A guarantee fund osets the costs of
preliminary studies for local co-operatively
owned wind energy projects.
KEY FEATURES
Photo: Nordic Folkecenter for Renewable Energy
Since 2010, a community wind farm comprising three 3 MW turbines has operated in Hvide Sande, Denmark
BROADENING THE OWNERSHIP OF RENEWABLES 29
Citizen-led renewable energy projects are a
cornerstone of Germany’s early success in the energy
transition (Energiewende). In 2018, renewables
accounted for 35% of electricity generation in
Germany (IRENA, 2020f) – partly attributable to
the participation of relatively small actors such
as community based enterprises, green start-ups,
municipal utilities,
6
farmers and other individuals.
Over 50% of Germany’s total net electricity generation
in the first half of 2020 was estimated to come from
renewable energy sources (Fraunhofer Institute for
Solar Energy Systems, 2020). Amendments to the
German Co-operative Law also supported the rise
of community energy in Germany (Debor, 2014). As
of 2019, approximately 200 000 individuals were
actively involved as members in about 880 energy
co-operatives, the vast majority of them active in
producing solar photovoltaic power (DGRV, 2020).
Historically, renewable energy policy measures in
Germany have not included explicit supports for
community energy but have paved the way for
community energy projects to become a common
form of investment. The Renewable Energy Act
(Erneuerbare Energien-Gesetz), which came into
force in 2000, is considered the key driving force
6 Owing to the recent re-municipalisation of energy utilities, more than 150 new municipal utilities (Stadtwerke) were formed
between 2005 and 2016 (Berlo, Wagner and Schäfer, 2018), thereby creating a more localised decision-making environment
and facilitating the formation and co-ordination of energy communities.
for Germany’s Energiewende. Setting fixed FITs over
20 years and providing grid priority for renewable
energy, it allowed for a fast, decentralised expansion
of renewable energy based on investments from
a wide variety of actors, including individuals and
community actors. As a result, newly founded energy
co-operatives, a major legal form of community
energy initiatives in Germany, peaked at about 170
in 2011.
However, with the nationwide shift from FITs to an
auction scheme and revisions of the regulatory
framework in 2014 and 2016, Germany has seen
a sharp decline in the number of new community
energy projects. Although the German government
introduced special privileges for such projects into
its renewable energy auction scheme, the enacting
legislation failed to achieve its intended eect,
because the definition of community energy only
took into account voting rights in a renewable
energy project. Most of the successful projects
in the 2017 auction were developer-led projects
with nominal community involvement (WWEA,
2018a). In 2018 and 2019, just 14 and 9 new energy
co-operatives were formed, respectively.
The policy shift to auctions seems to have played a
role in decreasing investments in community energy
projects and reducing the initiation of new projects
in favour of larger investors (Fell, 2019; WWEA,
2019). Possible reasons for this include the heavier
bureaucratic burden and increased financial risks
associated with participating in auctions (e.g. due to
prequalification requirements), and, more generally,
the increasing complexity of permitting processes.
Germany
• Prior to 2014, feed-in taris guaranteed
remuneration at a fixed price over 20 years.
• Amendments to the German Co-operative
Law in 2006 facilitated the establishment
of energy co-operatives.
KEY FEATURES
Photo: Christopher Holzem/Bürgerwerke
Founded in 2010 by a group of students, the co-operative Heidelberger Energiegenossenscha
in Germany has built more than 25 solar plants
STIMULATING INVESTMENT IN COMMUNITY ENERGY:30
Community energy in Japan began to emerge in the
2000s through the actions of engaged individuals
(Furuya, 2016). The Fukushima nuclear power
accident in March 2011, coupled with various steps to
open up Japan’s electricity market further accelerated
interest in community energy.
In 2012, Japan introduced its first FIT scheme with
premiums among the highest in the world. Renewable
energy projects under the scheme were also granted
priority access to the grid. In addition to the FIT
scheme, the Ministry of Environment launched, under
its Plans for Community-led Renewable Energy
Projects, a three-year grant programme aimed at
building local capacity for community energy projects
(Institute for Sustainable Energy Policies, 2014).
From 2011 to 2013, 25 communities received annual
grants of USD 95 000 and help in organising local
stakeholder meetings, developing business plans and
other activities (Furuya, 2016).
7 Eligible energy sources and the percentage of costs covered by the subsidy have been adjusted year by year. For example, solar
photovoltaic has been removed from the list of eligible energy sources because its cost has dropped significantly.
Building on the national government’s grant initiative,
several local governments set up tailor-made
programmes to further encourage community energy
projects. In 2013, Nagano Prefecture established its
Profit Repayment Subsidy for Community Power
Planning and Development programme, which
invited proposals for FIT-eligible community-based
projects to apply for additional financial support.
Selected projects were eligible for subsidies covering
50% to 67% of feasibility study costs, or 25% to 30%
of installation costs.
7
From 2014 to 2019, 33 projects
received a total of USD 2.7 million in funding (Nagano
Prefecture, 2020).
Although interest in community energy projects
has grown substantially in Japan, generation
capacity amounted to just 90 megawatts (MW) as
of 2018 (Yamashita, 2018). While several cities and
prefectures continue to expand renewable energy
and community ownership, the national government
has scaled back support schemes such as the FIT.
As of 2020, any projects larger than 250 kilowatts
(kW) must compete in auctions (Colthorpe, 2020),
aecting the further rollout of community energy
(Bellini, 2019; Yamashita, 2018).
Japan
• Feed-in taris were established in 2012.
• From 2011 to 2013, national government grants
were available to support communities with
local capacity building.
• Local governments oer tailor-made support
programmes, such as Nagano Prefecture’s
profit repayment subsidy scheme.
KEY FEATURES
Photo: Japan Community Power Association
Minamata Susubaru community solar photovoltaic project in Minamata city, Japan
BROADENING THE OWNERSHIP OF RENEWABLES 31
Empowering communities by fostering innovative
and integrated local energy systems and networks
has been identified as one of the key priorities of
Scotland’s energy strategy (Scottish Government,
2017). As such, Scotland has set an explicit target
to reach 1 GW of community and locally owned
renewable generation capacity by 2020. This
represents an update of Scotland’s initial target of
500 MW, which it met and surpassed three years
earlier than expected. A target of 2 GW has been set
for 2030 (Energy Saving Trust, 2020).
Community energy in Scotland has benefitted
from the national FIT scheme introduced by the
British government in 2010. To reach its ambitious
community energy targets and provide support
for community energy development, the Scottish
government established the national charity
Community Energy Scotland in 2007, followed by the
Community and Renewable Energy Scheme (CARES)
in 2011. Community Energy Scotland and CARES
both provide advice and support to community
groups, local authorities and businesses in Scotland
interested in investing in locally owned renewable
energy projects through all stages of project
development. Since 2013, CARES has been delivered
by a government-funded consortium, Local Energy
8 Categories of ownership under the “community and locally owned” target include community groups (82MW), farms/ estates (290MW),
local authorities (130MW), local Scottish businesses (92MW), housing associations (70MW) and public sector/charities (67MW).
Scotland, consisting of the national energy agency,
an environmental charity and three social businesses
(Community Energy Scotland, n.d.; Local Energy
Scotland, 2019a).
CARES oers loan finance, grant-to-loan funding
assistance and specialist advice to community groups
(Energy Cities, 2019). Its main financial oerings are:
1) grant funding of up to USD 33 000 to fund early-
stage activities; and 2) development loans and grants
of up to USD 200 000 to fund the development
costs of renewable energy projects (Local Energy
Scotland, 2019a). CARES also assists projects with
funding applications for the Energy Investment
Fund, which supports community energy projects
that have received planning permission but still face
challenges accessing funding. The fund is delivered
by the Scottish Investment Bank and oers a lending
service that can be tailored to each community
project through a case-by-case assessment.
Scotland has higher growth rates of community
energy than the rest of the United Kingdom. As of
June 2019, Scotland had over 20 000 community
and locally owned renewable electricity generation
projects accounting for approximately 730 MW of
installed capacity
8
(Energy Saving Trust, 2020).
Roughly 20% of community energy projects to date
have received funding under at least one scheme
provided by CARES (Local Energy Scotland, 2019b).
While preferential financial schemes have supported
community energy project development in Scotland,
enabling frameworks have remained essential to
community energy growth. Scotland has seen a
significant reduction in new projects due to ongoing
shifts in British energy policy since 2015, including the
removal of various forms of tax relief for community
energy investors and the termination of Britain’s FIT
scheme. The annual growth rate of community energy
electricity and heat generation capacity decreased
from 37% in 2015 to 4% in 2018 (Edgar, Ahern and
Williams, 2020).
Scotland, United Kingdom
• Explicit targets were set for community energy.
• Feed-in taris, in place from 2010 to 2019 in
the UK, were succeeded in 2020 by the Smart
Export Guarantee.
• Dedicated financial support schemes (grants,
loans) are in place for both early-stage
activities and development of projects.
• Until 2015, investors in community energy
projects were eligible for tax relief oered
through the Enterprise Investment Scheme,
Seed Enterprise Investment Scheme, and Social
Investment Tax Relief.
• Community energy enjoyed dedicated advice
and support through one-stop-shops.
KEY FEATURES
Photo: Shota Furuya
Udny Community Wind Project in Aberdeenshire, Scotland
STIMULATING INVESTMENT IN COMMUNITY ENERGY:32
Community energy development in the United States
has largely been driven by state policies. While
federal production and investment tax credits have
historically been a key driver of renewable energy
development, many community energy projects are
owned by entities that do not pay federal income tax
and thus are unable to benefit from these incentives
(Farrell, 2016). State electricity regulatory schemes
vary widely, influencing how community energy
projects are implemented across the country. Many
dierent community energy ownership models
have emerged, including projects led by utilities,
projects owned by special purpose entities, and
projects organised and implemented by non-profit
organisations (Heeter, Xu and Fekete, 2020).
Virtual net energy metering (VNM) has played a
key role in enabling community energy projects
in the United States. As of 2020, 20 states and the
District of Columbia had legislated community solar
programmes or pilot projects, all of which rely on
some form of VNM that allows a customer to buy
or lease a portion of an o-site renewable energy
project and receive bill credits for their share of
the electricity generated by the project (Heeter, Xu
and Fekete, 2020).
9
As of June 2020, over 2.6 GW
of community solar projects had been installed in
the country, with approximately half of the total
capacity concentrated in the states of Massachusetts
(436 MW), Minnesota (663 MW), and New York
(243 MW) (NREL, 2020). Growth in Minnesota can
be attributed in part to its VNM-based Community
Solar Gardens scheme,
10
under which customers are
9 One of the main drivers for VNM is to reduce participation barriers for those who cannot take advantage of net metering, which is
predominantly associated with solar energy.
10 Minnesota’s legislation applies only to the state’s largest electric utility. However, municipalities, cooperative utilities and at least one
additional investor-owned utility have developed their own community solar programs (Chan et al., 2018).
compensated at a value of solar rate representing the
direct benefit that projects provide to the utility and
its ratepayers. One key factor that has contributed
to the scheme’s success is that there are no annual
caps on how much new solar generation capacity can
participate in the scheme (Paulos, 2019).
As of 2020, nine states had also adopted legislation
for community choice aggregation. CCA empowers
local governments to aggregate customer load and
procure electricity on their behalf (Farrell, 2020).
Despite customer interest in renewables, however,
most CCAs outside California and Illinois have not
emphasized local renewable energy (O’Shaughnessy
et al., 2019). This is because the aggregator’s ability
to procure renewables is heavily influenced by other
state policies and whether it operates in a regulated
or deregulated jurisdiction. For instance, aggregators
in California can sign long-term contracts directly
with renewable energy developers, while aggregators
in deregulated states procure energy through
shorter-term contracts with competitive suppliers.
The durations of these shorter contracts generally
do not provide sucient financial certainty to allow
suppliers to develop local renewable energy projects
(O’Shaughnessy et al., 2019).
To date, community energy development in the
United States has been concentrated in a few
states, suggesting that enabling policies such as
VNM and CCA, on their own, are not sucient to
drive community energy growth. In states where
community energy has flourished, VNM and CCA are
part of broader policy packages supporting renewable
energy development. Improved policy alignment
at the state and federal levels, combined with non-
discriminatory incentives accessible to all renewable
energy projects, would accelerate community energy
development in the country.
United States
• Several states in the United States have
implemented virtual net energy metering and
community choice aggregation policies
encouraging community energy.
KEY FEATURE
Photo: Dennis Schroeder/National Renewable Energy Laboratory
Kaupuni Village, an affordable housing, net-zero community in Oahu, Hawaii, United States
BROADENING THE OWNERSHIP OF RENEWABLES 33
ANNEX II. CASE STUDIES:
FINANCING COMMUNITY
ENERGY PROJECTS
STIMULATING INVESTMENT IN COMMUNITY ENERGY:34
Rural electrification has been one of the top priorities
for the government of the Philippines. While the
electricity access rate is as high as 98% in the capital
region, remote regions still face significant problems
with energy access. On the island of Mindanao, the
electrification rate in 2016 stood at 74% (Department
of Energy (Philippines), 2017).
To increase electricity access in rural areas of
Mindanao, in 2010 the Asian Development Bank
– in collaboration with the National Energy
Administration, non-governmental organisations,
electric co-operatives and local communities –
supported the installation of micro-hydro power
generation projects and created a revolving fund to
assist households in paying for electrical connections
and livelihood development (Ludwig, 2015). A total
of USD 2 million in grants under the bank’s Clean
Energy Financing Partnership Facility was allocated
to the initiative (ADB, 2016).
Local community-based organisations were
established to manage the power generation projects
and administer the revolving fund. They received
training on project operation and maintenance as
well as financial training from dierent entities,
including local non-governmental organisations.
Administration of the revolving fund involves
overseeing and processing loan applications from
households focusing on agricultural production or
micro-enterprise development. In the first cycle of
the fund, successful applicants received between
USD 1 000 and 6 820 for a duration of about three
months. In most cases, loans were paid back in
weekly instalments (Ludwig, 2015).
By 2015, two micro-hydro power projects totalling
55 kW of capacity had been installed and operated
under net-metering agreements. All household
beneficiaries in the first cycle of the revolving fund
were able to pay back their loans. Women also
played a significant role in the initiative, making up
over a quarter of the community members trained
to operate the projects. As of 2016, more than 1 500
households gained access to renewable electricity
and local economic development has increased
through the establishment of small- and medium-
sized enterprises powered by the micro-hydro
projects (ADB, 2016).
This project illustrates the potential of community
energy to contribute to the broader development of
local economies when supported by cross-sectoral
policies. Similar models could be replicated in
other communities that have an unmet demand for
electricity in productive applications.
Mindanao, Philippines
• An Asian Development Bank grant was
leveraged to expand household access to
renewable energy services and establish a
revolving fund for local economic development
initiatives.
KEY FEATURE
Photo: Shutterstock
BROADENING THE OWNERSHIP OF RENEWABLES 35
In 1965, 229 local members in the northwestern
region of Guanacaste in Costa Rica established a rural
electricity co-operative with the financial support of
the United States’ Alliance for Progress programme.
At that time, only around half of the national
population had access to electricity and achieving
100% electricity access was one of the Costa Rican
government’s top priorities (Madriz-Vargas et al.,
2016; Teske, Morris and Nagrath, 2020).
The Alliance for Progress initially provided a USD 3000
loan at 1% interest (to be repaid over 30 years with
a ten-year grace period) for the establishment of
Coopeguanacaste. From the onset, the co-operative
received support from state-owned utility, Instituto
Costarricense de Electricidad (ICE), and the National
Bank of Costa Rica. The co-operative was granted a
concession to operate within a certain area, and all
electricity generated in that area had to be sold to
the national utility before being re-sold to end users.
With the loan, Coopeguanacaste built distribution
lines to connect the concession area to the national
grid. While technical assistance was provided by
ICE at the outset, Coopeguanacaste was able to
operate autonomously approximately five years after
construction. In addition to electricity distribution,
11 Under a build, lease and transfer model, a private sponsor builds a facility, transfers ownership to the commissioning entity, leases
the facility from the entity and operates it up to the expiry of the lease (Infrastructure Consortium for Africa/Public-Private Infrastructure
Advisory Facility, 2009).
Coopeguanacaste and the other three rural electric
co-operatives in Costa Rica established Conelectricas
in 1989 for the purpose of developing new renewable
energy projects (Madriz-Vargas, Bruce and Watt,
2018). By leveraging their previously generated
revenues and bundling their finances, the four
co-operatives were able to make investments in
power generation.
Using revenues generated through Conelectricas,
its distribution network and further diversification
(e.g. branching into telecommunications),
Coopeguanagaste was able to develop a 17.5 MW
mini-hydro power plant in 2008 under a 15-year
build, lease and transfer contract.
11
Co-operative
members were given technical training on how to
operate a renewable energy project (Madriz-Vargas
et al., 2016). The success of this initiative led to
Coopeguanacaste’s decision to develop a second 17.5
MW hydro-power plant in 2018.
By 2015, Coopeguanacaste was managing a
concession area of 3 915 square kilometres, covering
over 70 000 connections and serving nearly 100 000
end users, including 28 000 households, eco-tourism
businesses, and agro-industry. The co-operative also
employed some 400 local community members
(Madriz-Vargas, Bruce and Watt, 2018).
Although the case of Coopeguanacaste illustrates a
successful community-led renewable energy venture,
the cooperative faces some challenges due to policy
uncertainty surrounding Costa Rica’s electricity sector
and the fluctuating prices it receives for electricity
sold to ICE (Madriz-Vargas, 2018).
Guanacaste, Costa Rica
• An electric co-operative was established with
a foreign government loan and support from
national government institutions.
• A consortium of co-operatives minimises
investment risks in renewable energy projects.
KEY FEATURES
Photo: Shutterstock
STIMULATING INVESTMENT IN COMMUNITY ENERGY:36
Guatemala is rich in renewable energy resources
yet depends heavily on hydrocarbons and is a net
importer of energy. As of 2018, 95% of the population
had access to energy, though some villages, most of
them with indigenous populations, remained o-grid
(IEA et al., 2020).
As in many other parts of the world, lack of access
to aordable debt and equity financing is one of the
major challenges to investment in community energy
in Guatemala. In an eort to expand electricity access
to o-grid location in the country and address the
challenge of financing, the Latin American Energy
Organisation (OLADE) supported the government
by piloting a multi-stakeholder model that
combined public sector finance with corporate social
responsibility financing from private sector companies
and contributions from communities (Kolmsee and
Wiemann, 2017). Approximately USD 600 000 in
grants and aid was raised, the majority of which came
from non-governmental organisations and the public
sector (ENERGIA and IUCN, 2015).
12
12 Funding sources for the project are HIVOS (40%), the National Electrification Institute (19%), the Ministry of Energy and Mines/OLADE
(15%), Clean Energy Guatemala (ELGUA) (13%), the Municipal Government of Nebaj (9%), TELUS International (3%) and ASHDINQUI (1%)
(ENERGIA and IUCN, 2015).
13 ASHDINQUI is made up of an equal number of men and women, including indigenous community members, who participated actively
in the project implementation process and in new productive business ventures (ENERGIA and IUCN, 2015).
As a result, a 90 kW micro-hydro project was built
in 2014 to provide electricity to the villages of
Batzchocolá, Laguna Batzchocolá and Visiquichum
in the Department of Quiché. The project provides
electricity to 141 households, 19 micro- and small
businesses, and other community services through
a total of 170 connections. Project operation,
maintenance and management are carried out by
the Asociación Hidroeléctrica de Desarrollo Integral
Norte del Quiché (ASHDINQUI),
13
a community energy
service company formed to administer electricity
generation and distribution.
A portion of the funding was also deployed
to establish a revolving fund administered by
ASHDINQUI to support productive uses of energy
produced by the Batzchocolá micro-hydro generation
project. Three communities have benefitted from
improved living conditions as well as new job and
business opportunities. Many community members
have been successful in opening new micro- and
small businesses that generate enough revenue to
cover the project’s operational costs. Moreover, as the
project’s funding came in the form of grants and aid,
the communities do not face pressure to provide a
return on investment. The project nevertheless faces
some challenges. The communities must manage
funds to cover operation and maintenance costs, and
set up a more sustainable energy plan for the dry
season when the project is not in operation.
Department of Quiché, Guatemala
• Corporate social responsibility was combined
with public financing and community
contributions to fund a community energy
project.
KEY FEATURE
Photo: Shutterstock
BROADENING THE OWNERSHIP OF RENEWABLES 37
STIMULATING INVESTMENT IN COMMUNITY ENERGY:38
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