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As benchmark interest rates are near zero or even negative, it makes no sense to save your money in the bank. Energy communities throughout Europe are launching projects for the construction of small solar power plants in which people can safely invest very small amounts and still get relatively high profits.
As part of the European Union’s efforts to become carbon neutral by 2050, member states are enabling the creation of energy cooperatives. The movement is rapidly expanding and joint investments in solar power projects are the most popular. On top of securing a green power source for themselves, members are usually entitled to dividends. But there is also a model for external participants to lend them money and get interest income.
Doing business requires large funds and implies a range of risks. In the era of low or negative interest rates, it doesn’t make sense to keep money in banks. Some bet on real estate, but ordinary people usually can’t afford an extra house and don’t have the time or the skills to upgrade or maintain it.
Whopping 6% interest rate at Hyperion
Among the thousands of energy cooperatives that are springing up across Europe, some are calling on people to commit even symbolic sums and still get a fairly high return from small photovoltaic projects. Hyperion, the first virtual net metering solar energy community in Athens, will give its lenders a stunning 6% back per year for their loans.
The group was founded less than a year ago and already it declared success in a crowdfunding campaign through which it secured EUR 40,000. Earlier, the energy community, which is what such energy cooperatives are officially called in Greece, said its thirty members gave a total of EUR 20,000 for the project.
Hyperion intended to build a 60 kW solar power plant, but after the seed capital funding round it revealed a system of 80 kW would be installed in nearby Thebes in the region of Boeotia or Beotia. It will produce electricity for 30 households and the offices of Greenpeace Greece and WWF Greece, which joined early on.
Genervest gets idea closer to reality
Twenty citizens participated in the crowdfunding with small, medium and big sums. The project was launched through Greenpeace’s participatory platform Genervest, on which there are several more energy communities seeking investments for solar power.
One of them is Minoan Energy, constituted by more than 200 local citizens and public authorities in Crete including the regional government and the Municipality of Minoa Pediados. The group is looking to borrow EUR 160,000 out of the EUR 326,430 that it needs to install a 405 kW solar power unit.
The law in Greece allows energy communities to build their photovoltaic systems away from where the members reside
The advantage of projects such as the one that Hyperion is developing is that the law allows energy communities to build their photovoltaic systems away from where the members reside.
“By investing in Hyperion, you are contributing to meaningful change to the lives of many people and the environment,” founding member Chris Vrettos said. The 80 kW solar power plant is planned to be finished by the end of the year.
As it is a virtual net metering solar energy community, Hyperion will secure that each member’s share of electricity produced in the joint-owned photovoltaic system is free. They will only pay for the difference when they consume more power than they produce.
Joining hands to build a solar power plant and getting funds through microloans or bigger deals is an alternative solidarity financing model, the cooperative stressed. According to Vrettos, challenges mostly concern the lack of financial mechanisms – big banks won’t lend to such nonprofits. The other issue is an unstable institutional framework after the December reforms.
Solidarity component
Hyperion vowed to use any unallocated money to provide free electricity to homes suffering from energy poverty and create educational campaigns about the activity. The group revealed the next project would be bigger and that it may include municipalities. There is also the possibility that an agrisolar facility could be installed.
As for the financial model of microloans for small solar power plants, Genervest said that it ensures competitive interest rates of 4% to 6% as it is keeping transaction costs to a minimum.
The other goal for Hyperion is to expand to energy efficiency, electricity, energy distribution and storage. It organizes trainings for members in the sector and in participatory decision making.
Members of the grassroots initiative have the right to exit the project and get their money back within three months. Hyperion underscored that it aims to tackle energy poverty “to showcase new ownership model and to help shift into a new societal paradigm.”
Pioneering achievements
Greenpeace said that it earlier secured free electricity from photovoltaics for eight financially vulnerable families in the island of Rhodes and for a shelter for women victims of violence.
Those who are interested in establishing an energy community can calculate their annual electricity consumption and figure out how many kilowatts of solar capacity they need. Hyperion said local businesses can join it as well.
Romania saw its first energy cooperative raise money through crowdfunding earlier this year
Energy cooperatives are still in the development phase in Southeastern Europe. The first one in Romania raised almost EUR 410,000 this year for the acquisition of a power supply firm, at an interest rate between 3.7% and 5.2%. The mechanism is about to get off the ground in Bulgaria. The Green Energy Cooperative (ZEZ) from Croatia completed two crowdfunding projects so far.
As for the Western Balkans, a group of countries in the region that aren’t members of the European Union, some progress has been recorded in Serbia. For instance, the City of Niš intends to enable the establishment of citizens’ energy cooperatives and help them develop solar power projects. Energy cooperatives Elektropionir and Sunny Roofs have made their first steps in mainstreaming the activity in the country.
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