Solar Cities and Regions: Cities financing solar
Cities are at the frontline of the energy transition. Solar is one of the key solutions to support cities in reducing their energy-related emissions and providing access to cheap, reliable energy for all! Furthermore, cities offer lots of rooftops and building space for solar PV to be placed, vital to ensuring Europe meets its energy and climate ambitions.
Ultimately, solar can support cities, and cities can support solar.
In this blog series, we will highlight 21 solar solutions for cities in the energy transition, starting off with how solar can help drive city climate and energy security goals. Below you can read solutions 9, 10, and 11 in our series. You can find solutions 1-8 in our previous blog posts.
Photo: © Centrales Villageoise
Cities provide a direct interface with the citizens, and they are also the administrative level which is often the closest to the local population. Regions and local energy agencies can play an important role as an intermediary authority, and in facilitating access to national and EU funding when financing individual and collective solar projects.
The growing demand for renewable electricity from citizens often forces cities to look for funding for PV projects beyond their public buildings stock.
But good news! There are different solar solutions to address these issues, from co-funding solar, Power Purchase Agreements (PPAs), to facilitating citizen fund access.
‘Centrales Villageoises’ are local companies whose shareholders are mainly citizens, local municipalities, and local companies. ‘Centrales Villageoises’ contribute to energy objectives by incorporating cross-cutting territorial issues, such as local economic development, landscape integration, and social links, amongst others.
This model is now implemented in several French regions. The concept was born in 2010 and originates from a project supported by European and regional funds. The agency Auvergne-Rhône-Alpes Energie Environnement (AURA-EE), and 5 natural regional parks, launched the project. In 2018, a national association was created to continue expanding the network.
Another example is Kehoe’s Ketripack is a family-owned, local agribusiness, involved in packing and selling animal feed to agriculture sectors based in Lacken New Ross, Co. Wexford. Before installing solar and improving its energy efficiency, the agribusiness was spending upwards of € 2,443 a month on electricity alone. The South-East Ireland Energy Agency (SEAI) Better Energy Communities (BEC) programme provided the business with 30% of the funding towards energy efficiency improvements. To meet the challenge, SEAI installed 40 KWp solar PV modules, and upgraded 103 energy-efficient light fittings.
Photo: © Rufus O’Dea
A renewable Power Purchase Agreement (PPA) is a contractual agreement between an electricity generator and a power purchaser. Under a PPA, the generator agrees to sell a specified amount of electrical energy over a predetermined period, at an agreed-upon price. PPAs are commonly used in the renewable energy industry to facilitate the development and financing of renewable energy projects. They provide long-term revenue stability for the generator, and often allow the purchaser to secure a reliable, and cost-effective source of renewable energy. PPAs can be structured in various ways, including through fixed-price agreements, indexed agreements, or agreements with escalating prices over time.
The city of Ghent, Belgium aims to make its municipal buildings climate neutral by 2050, and to drastically increase the share of locally produced renewable electricity. The municipality is already investing into its own PV installations on its public land and rooftops. However, in order to achieve the target of generating 30% of its electricity needs from local renewable sources, additional space is required. The municipality decided to start a public procurement procedure for a PV installation, coupled with a Power Purchasing Agreement (PPA).
At the end of 2021, the contract was granted to the citizen cooperative ‘Beauvent,’ and a PPA was signed for a period of 15 years. Starting in 2030, the cooperative will provide the municipality with 7,000 MWh of electricity per year (which is equal electricity from 2,000 households).
Due to the typically small size of projects, the administrative complexity and the lack of financial expertise, citizens and small project promoters sometimes have difficulties to access support for renewables. Additionally, tenants might have difficulties accessing funding and expertise, since they do not own the rooftop. Complementary to providing access to information on the economics of solar PV projects through one-stop-shops, cities can assist their citizens and local companies in channelling funding to solar projects.
The city of Bristol’s Council provides a dedicated funding scheme for community-led energy projects: the Bristol Community Energy Fund. Established in 2015, it helps to support local people to deliver energy efficiency projects, increase Bristol’s renewable energy supply, and help change people’s energy behaviour. To date, 39 projects have been funded, around £224,000 GBP has been granted to community projects, and around £128,000 GBP dispensed as loans.
Header image: © Adam Jones