Since benchmark interest rates are close to zero or even negative, it doesn’t make sense to save your money in the bank. Energy communities across Europe are launching projects to build small solar power plants in which people can safely invest very small sums while achieving 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 booming and joint investments in solar power projects are the most popular. In addition to securing a source of green energy for themselves, members are generally entitled to dividends. But there is also a model for external participants to lend them money and earn interest income.
Doing business requires significant funds and involves a range of risks. In the age of low or negative interest rates, it doesn’t make sense to keep money in the banks. Some bet on real estate, but ordinary people generally can’t afford an additional home and don’t have the time or skills to upgrade or maintain it.
Huge 6% interest rate at Hyperion
Among the thousands of energy cooperatives that are emerging across Europe, some are calling for commitments even for symbolic sums while obtaining a fairly high return from small photovoltaic projects. Hyperion, the first virtual net-metering solar power community in Athens, will offer its lenders a stunning 6% per annum discount on their loans.
The group was founded less than a year ago and has already achieved success with a crowdfunding campaign through which it got 40,000 euros. Earlier, the energy community, which is the official name of these energy cooperatives in Greece, said its thirty members had donated a total of 20,000 euros for the project.
Hyperion intended to build a 60kW solar power plant, but after the seed money round was revealed that an 80kW system would be installed in the nearby city of Thebes in the region of Boeotia or Boeotia. It will generate electricity for 30 homes and the offices of Greenpeace Greece and WWF Greece, which joined early.
Genervest brings the idea closer to reality
About twenty citizens participated in the crowdfunding with small, medium and large sums. The project was launched through Greenpeace Genervest participatory platform, on which there are several other energy communities seeking investment for solar energy.
One of them is Minoan Energy, made up of over 200 local citizens and public authorities in Crete, including the regional government and the municipality of Minoa Pediados. The group is looking to borrow 160,000 euros out of the 326,430 euros it needs to install a 405 kW solar power plant.
The law in Greece allows energy communities to build their photovoltaic systems away from the place of residence of the members
The advantage of projects like the one Hyperion is developing is that the law allows energy communities to build their photovoltaic systems far from where members live. The group is also specific as it said it would use any financial surplus to provide electricity to poor households and create education campaigns on the activity.
“By investing in Hyperion, you are making a significant change in the lives of many people and in the environment,” said Chris Vrettos, Founding Member. The 80 kW solar power plant is expected to be completed by the end of the year.
As this is a net-metered virtual solar power community, Hyperion will ensure that the production of each member’s share in the production of the PV system is compared to their consumption so that they do not pay the difference. only when they use more energy than they produce.
Joining hands to build a solar power plant and obtain funds through microloans or larger transactions is an alternative model of solidarity financing, the cooperative said. According to Vrettos, the challenges mainly relate to the lack of financial mechanisms – the big banks will not lend to such nonprofits. The other problem is an unstable institutional framework after the December reforms.
Hyperion has pledged to use all unallocated money to provide free electricity to households suffering from fuel poverty. The group revealed that the next project would be larger and could include municipalities. It is also possible that an agrosolar installation is installed.
As for the microcredit financial model for small solar power plants, Genervest said it guarantees competitive interest rates of 4-6% while keeping transaction costs to a minimum.
Hyperion’s other goal is to expand into energy efficiency, electricity, energy distribution and storage. It organizes training for members of the sector and in participatory decision-making.
Members of the popular initiative have the right to leave the project and get their money back within three months. Hyperion stressed that it aims to tackle energy poverty “to present a new model of ownership and to help shift to a new societal paradigm”.
Greenpeace said it had previously obtained free electricity from photovoltaic panels for eight financially vulnerable families on the island of Rhodes and for a shelter for abused women.
Those who wish to create an energy community can calculate their annual electricity consumption and determine how many kilowatt hours of solar capacity they need. Hyperion said local businesses can join it as well.
Romania saw its first energy cooperative raise funds through crowdfunding earlier this year
Energy cooperatives are still in the development phase in South-Eastern Europe. The first in Romania raised nearly 410,000 euros this year for the acquisition of an electricity distribution company, at an interest rate of between 3.7% and 5.2%. The mechanism is about to start in Bulgaria. Croatia’s Green Energy Cooperative (ZEZ) has completed two crowdfunding projects so far.
As for the Western Balkans, a group of countries in the region that are not members of the European Union, progress has been made in Serbia.