New Financial Solutions
Financing mechanisms for Citizen Energy Communities are crucial for an ecological and social energy transition in Europe. Lightness has recently published a report that can be found in the Resources section. As the European Union (EU) is committed to climate-neutrality by 2050, governments and private entities suggest that alternative forms of finance are needed to empower citizens to contribute to a clean and fair energy transition.
Today, almost all the initiatives related with the energy and ecological transition are carried on by business operators pushed and pulled by a stronger demand of consumers. Under this perspective, the green alternative finance can represent an untapped power and opportunity. The importance of a transparent financing model that includes more people is not just a real possibility, but the only chance to meet the 2050 Paris Agreement. In this sense, an additional 0,1% of financial resources from EU households could boost the energy transition by $12,5 billion per year, producing direct economic and environmental benefits for all the stakeholders.
To thrive, Citizen Energy Communities need more incentives to be cost-effective. However, traditional forms of financing are barely useful for Energy Communities, given the complex nature of the borrowers. The most suitable tools identified have an innovative nature. These are equity crowdfunding and lending crowdfunding.
Even though the financial aspect is still a challenging part of Energy Communities to operate in Europe, all member states are legislating in their favor. In the countries where the Lightness project is consolidating Energy Communities, the following emerged:
- In Spain, almost all incentives are regional, and there is no national policy for energy incentives.
- In France, there are mainly incentives for green electricity production and for the renovation of existing buildings.
- The Netherlands is probably the country with the highest incentives for end-user systems and for a decisive decarbonization, with benefits for energy associations and cooperatives.
- Poland has one of the highest levels of pollution in Europe; incentives are mainly for replacing inefficient systems in private homes with more innovative and less polluting ones.
- In Italy, the method of tax deduction or direct incentives on energy production is widely used
To see the particularities of these countries and the keys to forward new financial solutions, read the full report.