Mobilising Local Energy Investment Project Development Assistance (MLEI-PDA), supported by Intelligent Energy Europe assists local and regional authorities develop sustainable energy projects. It aims to bridge the gap between sustainable energy plans and real investment by funding activities necessary to prepare, and mobilise finance for public investment programmes.
The types of projects supported include investment funds, citizen financing, project bundling, public ESCO schemes, Pay-As-You-Save schemes and district heating. To date €384 million has been invested with an average leverage of €22 invested for each euro of project development assistance.
So far, two MLEI project calls have been funded (for 2011 and 2012). One of the beneficiaries of the 2011 call was the OTR project led by Oxford City Council and Oxfordshire County Council, in partnership with the Low Carbon Hub, an independent social enterprise that works with communities to advance renewable energy projects and lower carbon emissions. They will receive over €1 million of European grant funding to develop local renewable energy and energy efficiency projects. This funding will mobilise citizen investment triggering energy demand reductions of 19,600MWh on public estates through a suite of energy efficiency projects. The total investment is estimated at €30 million. The expected impacts are 6.1MW of renewable energy and 300 whole house retrofits in Oxfordshire County. The potential for replication of this approach is mobilising citizen financing for community-owned renewable energy projects.
Low Carbon Hub is a commercial entity providing technical assistance to communities around renewable energy and the mobilisation of citizen financing. It aims to reduce energy demand in Oxford and Oxfordshire by increasing the share of renewables and, in a second step, retrofitting existing buildings. There are over 60 low carbon community groups that work closely with the Low Carbon Hub.
Low Carbon Hub is set up as two entities: Low Carbon Hub CIC (Community Interest Company) and Low carbon Hub IPS ( Industrial and Provident Society), similar to a co-operative).The IPS arm mobilises investment in energy infrastructure through special purpose financial vehicles (SPVs), financed by the local community. Shareholders (individual citizens) get dividends on their investment and the surplus money is donated to the CIC to fund community engagement activities. This company structure enables Low Carbon Hub to keep capital in one entity (IPS) while running services through CIC resulting in some tax benefits. Low Carbon Hub recognised that renewable energy projects can be more profitable than energy efficiency because of electricity feed-in-tariffs and electricity sales. Upgrades works, such as external insulation, tend to have much longer payback periods, as such profits for renewable energy projects are used to finance energy efficiency works in the community.
A recent project supported by the Low Carbon Hub is the Osney Lock Hydro project, a 49kW community hydro scheme. The scheme will harness the power of the Thames to generate 159,000 kW/annum of renewable electricity in Oxford. It will power 50 homes, and save 83 tonnes of CO2. The income from the sale of electricity and the feed-in tariff will give investors a financial return for their support and fund future community initiatives to further reduce carbon emissions.
Low Carbon Hub launched a share offer for the hydro project in April 2013 and had 5 weeks to raise the community share of €290,000 from the community and €400,000 from debt financing from a charity bank. The charity bank funds community projects with a lower rate of return because the money is funding a community project. The final sum raised from citizens was over €600,000, 60% of which was funded by people within a mile of project and 90% from the county of Oxford.
“It needs to become normal practice that community groups tender for renewable energy projects, as the benefits go back directly to the community ”, Barbara Hammond, CEO of the Low Carbon Hub.