Funding Community Renewable Energy

Following the principles outlined in High Cost Money can reduce the cost of finance for Community Renewable Energy.

An example is people funding a local renewable energy projects with their superannuation or with other savings. A Co-operative of savers and buyers of renewable energy work together to supply their homes with renewable energy with solar panels. The Co-operative sets its own rules that suit its purposes. One set of rules could be:

Savers receive their money back plus 50% more over five years. The renewable energy infrastructure built with the funds backs the investment. Other members of the co-operative purchase energy at 10% less than the market price over N years where N is greater than five. If the income from buyers is less than the amount to be paid to investors, then the unpaid amount accumulates and is treated as though it were invested and paid when funds become available. A person can be both an investor and a buyer, so they could install the solar panels on their roof and buy the power from the Co-op.

The following table describes an installation where the retail price of energy is 20 cents per kWh and where the cost of solar panels is $10,000 and delivers on average 20 kWh per day of energy. The Co-op negotiates the retail price of energy with a retail supplier and the cost may be higher or lower than 20 cents per kWh for members of the Co-op.

Assumption for a Solar Panel Co-op

If the investor cannot be paid the unpaid amount accumulates and continues to earn 10% on the unpaid amount.
At the end of 14 years the Co-op owns the installation and can continue to supply electricity at a 10% discount and return the profit to the Co-op.

Yearly Cash Flows for the Solar Panel Investment

The investor gets a high return on a very safe investment where the Capital Value is protected from inflation in energy prices. If energy prices drop it takes longer for the repayments to be made but the investor does not lose their money.

For people who cannot afford the $10,000 investment the Co-op can get investment money from other Co-op members and the home occupier can receive the benefit. People may not have a roof on which to put panels. For those cases the community can find space on other people’s houses or on community infrastructure or community space.