Showcases Of Successful Renewable Energy Financing

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Case Studies SHOWCASES OF SUCCESSFUL RENEWABLE ENERGY FINANCING February 2016 ©Sergey Nivens/Fotolia

description

This brochure highlights innovative solutions for renewable energy financing that should help policy makers to better understand how policies can be improved to facilitate financing. The materials are provided by contributors who are working or have a direct contact with the projects. The target audiences of the brochure are policy makers, as well as private stakeholders such as: project developers, project owners, financiers, consultants, etc. The following renewable energy technologies are included: all biomass, geothermal, solar, tidal and wind projects of diversified size, ranging from 0.2 MW to 600 MW, and across OECD countries, particularly in this book: Chile, Estonia, Germany, Latvia, Netherlands, Scotland, Turkey, United Kingdom and United States of America.

Transcript of Showcases Of Successful Renewable Energy Financing

Page 1: Showcases Of Successful Renewable Energy Financing

Case Studies

SHOWCASES OF SUCCESSFUL

RENEWABLE ENERGY

FINANCING

February 2016

©Se

rgey

Niv

ens/

Foto

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CASE STUDIES

S H OWC A S ES O F S U C C ES S F U L

R E N E WA B L E E N E R GY F I N A N C I N G February 2016

S C O P E

This brochure highlights innovative solutions for renewable energy financing that should help policy makers to better understand how policies can be improved to facilitate financing. The materials are provided by contributors who are working or have a direct contact with the projects. The target audiences of the brochure are policy makers, as well as private stakeholders such as: project developers, project owners, financiers, consultants, etc.

The following renewable energy technologies are included: all biomass, geothermal, solar, tidal and wind projects of diversified size, ranging from 0.2 MW to 600 MW, and across OECD countries, particularly in this book: Chile, Estonia, Germany, Latvia, Netherlands, Scotland, Turkey, United Kingdom and United States of America.

The projects are arranged alphabetically, based on the category and then, the name of the projects. The project alloca-tion into each category is only relative, some projects could belong to more than one category.

C O P Y R I G H T

This publication should be cited as:

IEA-RETD (2016), Case studies – Showcases of successful renewable energy financing, [Mai Nguyen, et al., IEA-RETD Op-erating Agent], IEA Implementing Agreement for Renewable Energy Technology Deployment (IEA-RETD), Utrecht, 2016.

Copyright © IEA-RETD 2016

(Stichting Foundation Renewable Energy Technology Deployment)

First edition

©Sergey Nivens/Fotolia

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Renewable energy (RE) already plays an important role

in today’s energy landscape. But its role will and has to

increase even further, if societies want to build future

sustainable energy systems and economies. Due to Go-

vernment incentives and the improved business case

for RE, global investment in renewable power and fuels

was 17%1 higher in 2014 than the previous year, and

renewable energy may become the first priority energy

source for investors in the future.

However, the business case for renewable energy often

differs from business as usual: through the current de-

pendency on government support, the relative high

specific upfront capital expenditures, the particular real

and perceived risks, the increased number and different

type of actors (like prosumers), to name a few. It is hen-

ce fair to say that the accelerated deployment of RE will

strongly depend on the success of new, innovative fi-

nancial structures. RE financing faces challenges, but

challenges bear innovation, and in many places in the

world, new, improved or truly innovative ways of finan-

cing are explored.

IEA-RETD, the implementing agreement under the Inter-

national Energy Agency dealing with policies and mea-

sures to accelerate the deployment of renewable ener-

gy, believes in the approach of sharing good examples,

which can spread the successful enthusiasm to more

places in the world. Governments, developers,

financiers, consultants and other parties may learn from

each other and get inspiration for solutions in their own

region or domain.

In this brochure, we chose 21 renewable energy pro-

jects in OECD countries with a new or innovative finan-

cing approach. The brochure is expected to give rene-

wable energy policy makers a better understanding on

how to improve their policy instruments. Well designed

policy instruments that remove risks for investors can

reduce costs of capital significantly, hence the cost of

renewable energy, which in turn will accelerate its de-

ployment. Project developers and financiers may be

triggered to explore solutions for their own particular

challenges. We include the contact of the contributors

and please feel free to contact for more information.

The brochure addresses the following types of finan-

cing:

Community funding

Crowdfunding

Private funding, and

Public-private cooperation

We are happy to receive comments and contributions

from you, allowing us to constantly learn and improve

on financing practices, on their relation to policy instru-

ment design.

1: Global Trends in Renewable Energy Investment 2015, Frank-

furt School-UNEP Centre/BNEF, 2015.

TA B L E O F C O N T E N T

Name of the project Type Category Page

Oxfutures Programme All Community funding 4

Westermeerwind Wind Community funding 5

Bettervest All Crowdfunding 6

Hawaii Green Bonds Solar Crowdfunding 7

Hellegatsplein Wind Crowdfunding 8

Oakapple Berkwickshire Solar Crowdfunding 9

Windcentrale Wind Crowdfunding 10

Zelfstroom Solar Crowdfunding 11

Efeler Geothermal Power Project Geothermal Private funding 12

Gemini Wind Private funding 13

Gode Wind 1 Wind Private funding 14

Graanul Invest Biomass Projects Biomass Private funding 15

Ivanpah Solar Electric Generating System Solar Private funding 16

Nordsee 1 Wind Private funding 17

Tiburcio Vasquez Health Center Solar Private funding 18

Veja Mate Wind Private funding 19

European Energy Efficiency Fund All Public-private cooperation 20

National Energy Savings Fund All Public-private cooperation 21

Meygen Tidal Project Tidal Public-private cooperation 22

Thüga Erneuerbare Energien All Public-private cooperation 23

Vicuña Solar PV Solar Public-private cooperation 24

Glossary 25

F O R E W O R D

Matthew Kennedy

Sustainable Energy Authority of Ireland (SEAI)

Chairman of the IEA Implementing Agreement for

Renewable Energy Technology Deployment, IEA-RETD

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Hawaii Green Bonds

$150 million - Asset-backed securities

DBEDT

Gemini offshore wind

600 MW - Project finance

Northland Power Inc. (60%)

Hellegatsplein onshore wind

12 MW - Crowdfunding

Qurrent

Westermeerwind farm

144 MW - Community funding

Siemens

Windcentrale wind farm

Various projects - Crowdfunding

Windcentrale

Zelfstroom solar PV

70 houses - Crowdfunding

Zelfstroom

Netherlands

Ivanpah Solar Generating System

377 MW - Private funding

BrightSource Energy

United States

Vicuña Solar Project

6.8 MW - Public-private cooperation

Ecosolar and DCIF

Chile

Gode Wind One offshore

330 MW - Project bond

DONG Energy

Nordsee One offshore wind

332 MW - Project finance

Northland Power Inc. (85%)

Veja Mate offshore wind

402 MW - Project finance

Highland Group Holdings

Bettervest platform

Various projects- Crowdfunding

Bettervest GmbH

Thüga Erneuerbare Energien

207 MW - Public-private cooperation

Thüga Erneuerbare Energien

Germany

Oakapple Berwickshire solar

1.44 MW - Crowdfunding

Abundance

Oxfutures Programme

Various project - Community funding

Oxfutures

Meygen Tidal Project

398 MW - Public-private cooperation

Atlantis Resources

United Kingdom

European Energy Efficiency Fund

€265 million - Public-private cooperation

EIB, EC and Deutsche Bank

Luxembourg

Tiburcio Vasquez Health Center

0.2 MW - Private funding

Demeter Power

National Energy Savings Fund

€300 million - Fund

BZK, Rabobank, ASNBank

Efeler Geothermal Power Project

170 MW - Private funding

Gurmat Elektrik Uretim AS

Turkey

Graanul Invest Biomass Projects

148 MW - Private funding

AS Graanul Invest

Estonia & Latvia

Background ©cunico/Fotolia

Icons ©Ecofys

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OxFutures is a partnership among Oxford City Council,

Oxfordshire County and the Low Carbon Hub, co-funded

by the Intelligent Energy Europe programme of the EU.

Oxfutures is mobilising large-scale investment to devel-

op renewable energy and energy efficiency projects

across the city and county. The majority of investments

are through community energy projects supported or

delivered by the Low Carbon Hub.

The Hub is a social enterprise established with seed

funding from the city council. It works with corporate

partners to develop, finance and manage renewable

energy schemes for community benefit.

The Hub includes two organisations (Industrial & Provi-

dent Society - IPS and Community Interest Company -

CIC). This structure benefits from UK tax incentives and

arrangements for social enterprises, in combination

with the UK feed-in tariff scheme for small-scale solar

PV.

This business model was designed to be flexible and

respondent to feed-in tariff (FIT) degressions. To avoid

massive uncertainty for investors and huge inefficien-

cies in running a business, our recommendations for

government would be:

Manage policy transition carefully by avoiding rapid

change.

Continue to support community benefit models

which provide energy investment, and potentially

energy efficiency investment and demand manage-

ment services.

Account for the wider benefits of community bene-

fit models for energy investment when considering

costs/benefits of policy.

Chain of benefits: Under this model, projects gen-

erate cheap, green electricity for businesses; inves-

tors receive a fair return; and the Hub gains a sus-

tainable income stream. The income is used to sup-

port local communities to develop renewable

schemes, attract local investment and create an

income stream to help householders reduce energy

use.

Local resources: The Hub makes use of local re-

sources, such as solar, biomass, farm waste, etc.,

which may be overlooked by commercial develop-

ers, as well as attracts new financing sources from

local investors, which not only creates benefits for

local economy, but also increases awareness of

climate change, helping scale up renewable energy

or energy efficiency projects in Oxfordshire.

Oxfutures

: Oxford, United Kingdom

: www.oxfutures.org

: Mairi Brookes

: +44 1865 252212

: [email protected]

INTRODUCTION WHAT IS INNOVATIVE? WHAT ARE OUR POLICY RECOMMENDATIONS?

Type: All renewable energy and energy efficiency projects

Size: £1.2 million (around €1.63 million) with 75% co-

funded by the European Union’s Mobilising Local Energy

Infrastructure programme

Location: Oxford, United Kingdom

Timeline: Run from November 2012 - November 2015

Financial structure: Community shares

Total investment: £18 million (around €24.4 million), de-

livered within 4 years of initiation

Developer: OxFutures

Community funding

FURTHER CONTACT

PROJECT INFORMATION OXFUTURES PROGRAMME

Low Carbon Hub

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Westermeerwind is the largest nearshore wind farm in

the Noordoostpolder, Netherlands. It was being devel-

oped for and by the polder: an investment model for

residents of the municipalities of Noordoostpolder.

The Westermeerwind project involves the first turnkey

agreement for Siemens, which will develop and operate

the project for a minimum of 15 years, with Eneco as

power off-taker through a 15 year Power Purchase

Agreement. The project will generate electricity as of

2016.

The engagement of renowned construction company

Siemens and the long-term contract for the purchase of

electricity with Eneco make the project attractive to the

banks. A consortium of Dutch Banks led by ING and Ra-

bobank, provide the non-recourse debt, whereas EKF

Credit Export Agency provide the guarantee facilities.

Stable regime: The project benefits from the

Dutch stable framework regime, based on an SDE+

subsidized feed in tariff (contract for difference)

scheme. The long-term stability of this line of

scheme is essential for investors and project opera-

tion.

Community share offer after construction: The

project company is aiming to involve as many local

subcontractors as possible. Once completed, the

project will issue shares and bonds to local resi-

dents, a major step forward to social acceptance

through community financing. The issuance will be

offered one year after completion of the wind farm,

which is why participants will run no financial risk

during construction of the wind farm.

Ownership of wind turbines: There is a decree of

the region according to which some 32 residents

can become owners of approximately 1 MW each,

aside to the ones that will buy shares once the pro-

ject is operational. The idea behind the project was

that it is from the community and to the communi-

ty.

WESTERMEERWIND FARM Type: Nearshore wind farm

Size: 144 MW

Location: Netherlands

Timeline: Financial close in July 2014, completed in 2015

Financial structure: Project finance for construction and

community funding after construction

Total investment: €450 million

Developer: Siemens (turnkey agreement)

INTRODUCTION WHAT IS INNOVATIVE? FURTHER CONTACT

EWEA - The European Wind Energy Association ASBL/VZW

: Rue d'Arlon 80, B-1040 Brussels, Belgium

: www.ewea.org and www.westermeerwind.nl

: Ariola Mbistrova - Public affairs analyst - Finance

: +32 2 213 18 22

: [email protected]

Westermeerwind farm

WHAT ARE OUR POLICY RECOMMENDATIONS?

Community funding

PROJECT INFORMATION

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Bettervest is the world’s first crowd investment

platform where people are able to collectively invest an

amount of money (starting at €50) in energy efficiency

and renewable energy projects of established enterpri-

ses, NGOs and local authorities.

In return, the investors annually receive a part of their

investment plus a fixed interest rate until they have got

their investment (plus interest) back and the contract

period is over.

Coherent laws across EU: The different laws and

regulations in each country with regard to crowd

funding (platforms) are obstacles for a European

expansion and in this case for the energy transition

in Europe. Therefore we advise the members of the

European Union to enact coherent laws for crowd

funding that apply in all countries of the European

Union.

Public funds: The energy transition is the biggest

challenge of the 21th century; therefore govern-

ments and private companies like Bettervest have

to give incentives in order to promote it. Public

funds for energy efficiency projects could be one

solution, though we know that public institutions

work slowly.

Split the relatively high initial cost between many

single investors: Banks often require relatively

high collateral and small financing volumes

(especially <€500,000) are not emphasized by the

commercial interests of the banks. Whereas Better-

vest offers SMEs, NGOs and local authorities an

unbureaucratic financing instrument, it did not re-

quire further equity capital.

Marketing tool: Bettervest offers the project

owners (companies) an added value for communi-

cations. Through social media the sustainability

engagement of the project owner is communicated

to the crowd, customers and employees. This com-

munication offers companies a benefit in market

research, engagement of the crowd in the project

and increase in awareness of the brand. Therefore,

Bettervest is an alternative financing instrument

and valuable marketing tool for companies.

Bettervest GmbH

: Wilhelm-Leuschner Straße 70, 60329 Frankfurt, Germany

: www.bettervest.de

: Frederik Schleunes

: +49 69 3487 7347

: [email protected]

BETTERVEST Type: Renewable energy & energy efficiency projects

Size: Various projects

Location: Germany

Timeline: Established in 2012

Financial structure: Crowd investment platform

Total investment: Various projects

Developers: Patrick Mijnals, Marilyn Heib, Torsten

Schreiber, Evgenij Terehov, Ingo Birkenfeld (founders)

INTRODUCTION WHAT IS INNOVATIVE? WHAT ARE OUR POLICY RECOMMENDATIONS?

Crowdfunding

FURTHER CONTACT

PROJECT INFORMATION

©bakhtiarzein/Fotolia

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Hawaii State issued green bonds which are used for

raising funds for solar projects. The bond is structured

as asset-back securities (ABS) and is backed by a Green

Infrastructure Fee put on utility electricity bills. This

means that investors did not have to assess the cash

flows from the solar projects, but instead look at the

cash flows from the Green Infrastructure Fees. The fee

is offset by a reduction in the Public Benefits Fee, a fee

collected to pay for the state’s conservation and energy

efficiency programs, that is already on the bills to en-

sure no net increase in fees for most customers.

Hawaii’s use of this type of financing structure for re-

newable energy was pioneering, but importantly it’s a

tried and trusted structure used to finance power plants

and funds for storm recovery in the utility industry. This

meant investors were more comfortable with the struc-

ture, and allowed the issuance to achieve an AAA-

rating.

Placing Green Infrastructure Fee on the bill: Ha-

waii’s green financing model is a scalable solution

that could potentially be replicated in some forms

by states and the federal government. Other states

with energy surcharges have already made inquiries

with Hawaii officials about potentially replicating

the program. The challenge for states lacking ener-

gy surcharges is changing legislation to approve

placing a Green Infrastructure Fee on utility bills.

Once the structure is approved, coming back to

market for more is much simpler.

The Green Infrastructure Fee, a flat fee put on utili-

ty bills, is collected to pay the debt service on the

bonds. The proceeds from the sale of the bonds

were used to finance the Green Energy Market Se-

curitization (GEMS) Programme. The GEMS Pro-

gramme offers loans for people who cannot afford

the upfront cost or are unable to secure a bank loan

for green products.

Diversified investor base: The green bond was

issued successfully with a diversified investor base,

including retail investors. The investor base was a

mix of ABS investors, municipal bond investors and

socially responsible investors.

Tapping into retail investors can provide the crucial

benefit of building community support for renewa-

ble energy. The government (DBEDT) also provided

an additional investor incentive by making interest

on the bonds exempt from state taxes, which is

common in the municipal bond market in the US.

Besides, with a green label, the State achieved a

bonus of attracting different investors, as well as

marketing its pioneering efforts in renewable ener-

gy to the investment community and wider public.

Lower cost of capital: The AAA rating of the bonds

provides Hawaii with a lower cost of capital for its

renewable energy investments.

Climate Bonds Initiative

: 40 Bermondsey Street, London, SE1 3UD, UK

: www.climatebonds.net

: Beate Sonerud - Policy analyst

: +44 75 3827 8855

Department of Business, Economic Development &

Tourism (DBEDT), Hawaii State, USA

: No. 1 Capitol District Building, 250 S. Hotel Street,

Honolulu, Hawaii 96813, USA

: www.dbedt.hawaii.gov

: Merissa Sakuda - Clean Energy Solution pro-

gramme manager

: +1 808 587 9010

HAWAII GREEN BONDS Type: Solar projects

Size: $150 million (about €135 million), two tranches

($50 million and $100 million)

Location: Hawaii state, USA

Timeline: Issued in November 2014

Financial structure: Green Asset Back Securities (ABS)

with $50 million tranche (8-year tenor, yield of 1.467%)

and $100 million tranche (17-year tenor, yield of 3.242%)

Total investment: N/A

Developers: Hawaii state, USA

INTRODUCTION WHAT IS INNOVATIVE? WHAT ARE OUR POLICY RECOMMENDATIONS?

Crowdfunding

FURTHER CONTACT

PROJECT INFORMATION

Honolulu Solar Roof

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Hellegatsplein consists of four turbines of 3

MW each, expected to generate electricity for

more than 10,000 households. The project will

be owned by individual (retail) investors who

can buy shares in the project and become the

owners of energy generation assets. Taking

energy from the project is optional for inves-

tors.

With the ownership of wind energy generation,

the investors can reduce the energy bill and

rely on green utility Qurrent for backup or ad-

ditional green energy supply.

Qurrent is building this wind farm in coopera-

tion on with the municipality of Goeree-Over

akkee. It is expected to be operational in Q1

2016.

Asset-light business model: Access to generation

assets used to be only for large energy companies

with big balance sheet, so there was a tremendous

barrier to enter for new competitors.

However, this ‘asset-light’ business model proves

that the energy companies of tomorrow don’t need

to own the energy generation assets. They can be-

come asset managers/power off-takers rather than

owners. And the owners of them will be a crowd of

flexible financiers.

By enabling Qurrent to use the balance sheet of the

crowd, this new - 100% renewable energy company

- can compete head to head with the energy incum-

bents.

The key innovation is that the energy company is

comfortable letting ‘their’ wind project being

owned by a large group of relatively smaller retail

investors.

Municipality support: The project received sup-

port from the municipality of Goeree-Overflakkee,

which was involved in the project from the begin-

ning.

Stable regime: This solution works within the cur-

rent energy and financial legislation in the Nether-

lands (and many other countries), so further roll-

out of this model is not dependent on new, special

government support which is a great benefit.

DuurzaamInvesteren

: Singel 146, 1015 AG, Amsterdam, Netherlands

: www.duurzaaminvesteren.nl

: Enrique Aparicio - CEO

: +31 646 738 506

: [email protected]

HELLEGATSPLEIN Type: Wind park

Size: 12MW

Location: Netherlands

Timeline: Completed in 2015

Financial structure: 85% bank debt; 15% acquisition

funding provided to the equity holder

Total investment: €20 million

Developer: Qurrent is the owner of the project

INTRODUCTION WHAT IS INNOVATIVE? WHAT ARE OUR POLICY RECOMMENDATIONS?

Crowdfunding

FURTHER CONTACT

PROJECT INFORMATION

For illustration only

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Oakapple Berwickshire has been set up to own and ma-

nage a set of roof-mounted solar PV systems to be in-

stalled on around 400 social homes owned by Ber-

wickshire Housing Association.

Abundance, the online investment platform, provided

the opportunity for customers to invest in these sys-

tems. It allows anyone in the local community, wider UK

public and Europe to invest in low risk RE projects that

benefit the local community from just £5.

Investors are issued debentures and receive a regular

income with an effective rate of return of 7.5% before

tax and after fees over just under 20 years. Income from

debentures is received biannually and consists of a capi-

tal repayment and an interest payment. The project

therefore gives people the opportunity to invest in so-

mething tangible and green without compromising on

their returns. It also helps to increase positive public

engagement with renewables and give people more

control over their money.

The Feed-in tariff scheme has successfully helped

support the solar industry and drive down costs of

solar PV in the UK. While the eligible rates under

the Feed-in Tariff have been reduced, costs have

also fallen to keep returns to developers, installers

and investors roughly constant. This has helped

lower the risk to solar projects and bring solar ener-

gy closer to grid parity in the UK.

Scale up solar projects because of good impacts:

The solar panels help the community see the finan-

cial, social and environmental benefits of renewa-

ble energy, thus making them positive advocates of

the technology and educates the public on the im-

portance of a low carbon future.

Reduce electricity bill and freely install solar PV:

Solar panels are installed and maintained for free

on the roofs of social housing tenants whilst also

allowing residents to use as much of the solar po-

wer produced as they can for free. On average,

social housing tenants often spend a far greater

proportion of their weekly housing income on ener-

gy and this project could reduce electricity bills by

up to 30%. This helps some of the most vulnerable

in our society to move out of fuel poverty and thus

ease the strain of affording other necessities.

Match the inflow and outflow: Renewable energy

projects, particularly those supported through go-

vernment initiatives like the Feed-in Tariff in the

UK, have high capital costs upfront, but long-term

stable revenue streams. Using the debenture struc-

ture, they were able to raise competitive finance

that matched the long-term income nature of rene-

wable energy projects.

Abundance

: Threshold House, 65-69 Shepherd's Bush Green,

London W12 8TX , United Kingdom

: www.abundanceinvestment.com

: Tom Harwood - Operations manager

: +44 20 3475 8666

: [email protected]

OAKAPPLE BERKWICKSHIRE Type: Roof-mounted solar PV systems

Size: 1.44 MW

Location: United Kingdom

Timeline: Completed in 2015

Financial structure: Income-growth debenture

Total investment: £1.7 million (around €2.3 million)

Developers: Oakapple Renewable Energy and Edison

Energy

INTRODUCTION WHAT IS INNOVATIVE? WHAT ARE OUR POLICY RECOMMENDATIONS?

Oakapple Berkwickshire project

Crowdfunding

FURTHER CONTACT

PROJECT INFORMATION

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The Windcentrale, a Dutch company, enables both

households and companies to co-own a wind turbine in

order to produce their own sustainable electricity. The

electricity produced is divided over all the wind-shares

and subtracted from the individual energy bills of the

participants.

The windshares of Windcentrale are very popular. In

the past 3 years over 15,000 households bought

“Winddelen”. The participants have acquired in total 9

wind turbines for a total amount of over 15 million eu-

ros.

In September 2013 the Windcentrale crowd funded 1.3

million euros for a single wind turbine within 13 hours,

establishing a world crowdfunding record.

This innovative model does not exactly fit in the tradi-

tional regulations, especially with regard to the tax au-

thorities as well as the financial monitoring authority.

The Windcentrale is challenging this status quo, since it

is clear that regulations need to change in order to ac-

commodate new and innovative financing models for

sustainable energy.

We have two recommendations for the policy makers:

Level playing field: It is important to create a level

playing field for producing energy. Once fossil

fueled powering stations have to pay fines for the

polluting emissions (>40 euro’s per MWh), there is

no need for subsidies anymore.

Inform the public: It is important task for the gov-

ernment to both inform the public about dangers

of climate change and the importance of actions

against it.

Low risk: One key benefit of the Windcentrale

model is the very low risk for the participants. Be-

cause thousands of participants own the wind tur-

bine, the financial risks per participant is very low.

But the main success factor behind the overwhelm-

ing demand for “Winddelen”, is the simple and ac-

cessible way they provide for people to produce

their own green energy.

Cut out some players in the chain: For each wind

turbine, the Windcentrale sets up a new coopera-

tive organisation, with the end users of the energy

as the only shareholders.

Through this, a number of players are cut out of the

chain, such as project developers and energy com-

panies. The Windcentrale model creates about 2.5

times as much value in the exploitation of a wind

turbine compared to traditional exploitation.

Windcentrale

: Lauriergracht 116 R, 1016 RR Amsterdam, Netherlands

: www.windcentrale.nl

: Harm Reitsma

: +31 20 40 40 160

: [email protected]

WINDCENTRALE Type: Wind energy

Size: 14 MW / 9 wind turbines

Location: Netherlands

Timeline: Established in 2012

Financial structure: Wind shares (“winddelen” in Dutch)

in a cooperative

Total investment: Various projects - €15 million

Developer: Windcentrale

INTRODUCTION WHAT IS INNOVATIVE? WHAT ARE OUR POLICY RECOMMENDATIONS?

Crowdfunding

FURTHER CONTACT

PROJECT INFORMATION

Wind turbines in a Windcentrale’s project

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Zelfstroom is a micro-lease company offering turn-key,

home solar lease options to home owners funded by

the issuance of crowdfunding bonds. In return, custom-

ers pay a fixed lease fee for the lease period of 10 years

which is then used to pay back the interest and notional

amount of bond, issued by Zelfstroom.

Setting up the micro lease company offers both great

value to customers interested in using a home solar

installation (lease vs buy) and offers investors looking

for a truly sustainable investment opportunity in fund-

ing the lease company.

Zelfstroom’s business model combines two new innova-

tions in renewable energy: leasing of home solar instal-

lations to retail customers and funding of the micro

lease companies, raised through crowdfunding.

Flexible financing: This business model enables

home solar providers to offer a much better value

to customers (i.e. lease projects rather than buy

them, avoiding the high upfront costs) by using

flexible financing from private investors interested

in participating in this new economic model.

Compete the larger incumbent energy companies:

Using the “crowd’s balance sheet” allows smaller,

innovative companies (without their own big bal-

ance sheet) to effectively challenge the larger in-

cumbent energy companies and accelerate the

transition to a more sustainable energy supply.

This is just the beginning of what renewable energy and

crowdfunding can do. There is a tremendous need for

further (financial) innovation supporting the transition

to renewable energy. However, the traditional financing

options are proving to be bottlenecks (e.g. project fi-

nancing is not available below €1 million), we recom-

mend the following:

Stimulate crowdfunding: Crowdfunding we see as

a very promising alternative but in order for this

type of financing to grow as a mainstream channel,

parties seeking funding through crowdfunding need

to keep in mind that individual (retail) investors are

different than banks but still need to be offered

proper returns for their investment.

ZELFSTROOM Type: Solar PV

Size: 70 home solar installations (Zelfstroom 2&3)

Location: Netherlands

Timeline: Completed in 2015

Financial structure: 75% senior debt (10 year, 5% inter-

est) from private investors; 25% equity from company

offering lease options to retail clients

Total investment: €1,000,000

Developer: Zelfstroom

INTRODUCTION WHAT IS INNOVATIVE?

DuurzaamInvesteren

: Singel 146, 1015 AG, Amsterdam, Netherlands

: www.duurzaaminvesteren.nl

: Enrique Aparicio - CEO

: +31 646 738 506

: [email protected]

WHAT ARE OUR POLICY RECOMMENDATIONS?

Crowdfunding

FURTHER CONTACT

PROJECT INFORMATION

For illustration only Solar panels - ©Ecofys

Page 13: Showcases Of Successful Renewable Energy Financing

12

The project is the largest geothermal power complex in

Turkey and involves the license acquisition, develop-

ment and construction of the 123MW Efeler Geother-

mal power project and the refinancing of the existing

47MW Germencik geothermal plant.

It is by far the largest geothermal financing of any type

in the Turkish market to date. $720 million in senior

debt financing is equal to a 72/28 - Debt/Equity ratio.

This high leverage ratio was supported through the con-

tribution of an operating asset to the project company

(the 47 MW Germencik plant). This helped demonstrate

the resource and capability of the sponsor and provided

an existing set of stable cash flows to underpin the debt

service requirements of the project.

It shows excellent collaboration between multilateral

financial institutions led by EBRD and commercial banks

in support of a large-scale, complex geothermal power

plant and uses an arms' length, commercial structure

that will be replicated in subsequent financings.

A stable and predictable regulatory framework with an

independent regulator and clear market rules is critical

in providing investors with the certainty required to

extend this type of limited recourse project financing.

Centralized mechanism: One idea could be to set

up a centralized mechanism to monitor geothermal

reservoir capacity and warrant the sustainable

management of geothermal resources to avoid

medium term depletion due to excessive use (avoid

the experience in the Geisers field).

Mechanism for geothermal resources: The govern-

ment could devise mechanisms to address the Non-

condensable Gas (NCG) content in geothermal re-

sources and avoid the long-term CO2 emissions

coming from geothermal plants.

Long tenor & merchant risk: This is the longest

maturity loan for any geothermal deal in Turkey

having a 15-year tenor including a 5-year merchant

tail. This was achieved through modelling of the

wholesale electricity market combined with a cash

sweep mechanism to partially reduce the duration

of the merchant tail.

Size & critical mass: This is the largest renewable

energy financing in the Turkish market and is also

the largest geothermal power complex in Turkey.

The project establishes a critical mass of project-

financed geothermal projects in Turkey and esta-

blishes a bankable template for future deals.

Technical complexity: The project relies on a com-

plex geothermal reservoir and employs two very

different geothermal technologies (dual flash and

flash binary). These risks were mitigated by ap-

pointment of a highly experienced Lenders’ Engi-

neer which carried out an independent recalcula-

tion of the geothermal resource and thorough ana-

lysis of the existing Germencik plant.

European Bank for Reconstruction and Development

: Büyükdere Caddesi, 185, Kanyon Ofis Binasi, Kat:2,

Levent, 34394 Istanbul, Turkey

: www.ebrd.com

: Andi Aranitasi - Senior banker

: +90 212 386 1100

: [email protected]

: Mehmet Erdem Yasar - Principal banker

: [email protected]

: Robert Kesterton - Principal banker

: + 44 20 7338 7239

: [email protected]

EFELER GEOTHERMAL POWER PROJECT Type: Geothermal power

Size: 170 MW

Location: Turkey

Timeline: Completed in 2015

Financial structure: Project finance. $720 million senior

secured limited recourse loan to a special purpose vehi-

cle, Gurmat ELektrik Uretim A.S., provided on a parallel

basis by EBRD ($200 million), Turkiye Is Bankasi AS ($325

million), Turkiye Sinai Kalkinma Bankasi AS ($130 million)

and Black Sea Trade and Development Bank ($65 million)

Total investment: $970 million (around €880 million)

Developer: Gurmat Elektrik Uretim AS, a 100% subsidiary

of a leading Turkish renewable energy company Güris

Holding

INTRODUCTION WHAT IS INNOVATIVE? WHAT ARE OUR POLICY RECOMMENDATIONS?

Private funding

FURTHER CONTACT

PROJECT INFORMATION

Efeler Project

Page 14: Showcases Of Successful Renewable Energy Financing

13

Gemini is a 600 MW offshore wind farm located

85 kilometres off the Dutch coast of Groningen in the

North Sea. The project reached financial close in

May 2014 and is the largest project to date in the world

for renewable energy in terms of financing.

The Gemini project was brought successfully to financial

close and construction by a very small team, with limi-

ted financial resources, that was able to raise close to

€3 billion in debt and equity thanks to a clear strategy

(focused on raising non-recourse debt from the start), a

disciplined approach and flawless delivery, which con-

vinced 4 investors and 17 lenders to support the pro-

ject.

The project was supported by the financial community

as it benefited from the solid Dutch SDE+ price regime,

and has a solid contractual structure with Siemens

(turbine supply and maintenance) and Van Oord

(overall project construction).

Cooperation: The liquidity offered by the multila-

terals, the European Investment Bank (EIB) as well

as several export credit agencies, has been essenti-

al as well as the cooperative role of the Dutch go-

vernment.

Good scheme: Although the SDE+ scheme can be

complex, it has very favourable features that pro-

tect the project from short term variations in wind

levels.

Stable policy: Having a consistent government

with a stable and transparent policy is essential to

raise funding and lower the cost of energy.

To reach the record amount of funding needed, it had

to tap a large proportion of the available lending capaci-

ty at the time (i.e. convince most banks already active in

offshore wind to support the project, and bring in a few

more).

Simple strategy: To do so, it followed a simple

strategy to build a structure based on existing pre-

cedents, with delivery focused on identifying and

mitigating all risks upfront, and proposing fair solu-

tions to all parties while maintaining momentum

throughout.

The project benefited from improving liquidity con-

ditions in the lending markets and created a virtu-

ous circle as parties both wanted to close the deal

and worked hard to make it happen, because they

believed it actually could.

Green Giraffe B.V.

: Maliebaan 83a, 3581CG Utrecht, Netherlands

: www.green-giraffe.eu

: Jérôme Guillet

: +331 7577 3466

: [email protected]

GEMINI Type: Offshore wind farm

Size: 600 MW

Location: Netherlands

Timeline: Financial close 2014, completion due in 2016

Financial structure: Project finance

Total investment: €2.8 billion

Developer: The project was originally developed by Ty-

phoon and sold pre-financial close to Northland Power

Inc. (60%), Siemens Financial Services (SFS - 20%), Van

Oord Dredging and Marine Contractors B.V (Van Oord -

10%) and N.V. HVC (HVC - 10%)

INTRODUCTION WHAT IS INNOVATIVE? WHAT ARE OUR POLICY RECOMMENDATIONS?

Private funding

FURTHER CONTACT

PROJECT INFORMATION

Gemini’s construction work

Page 15: Showcases Of Successful Renewable Energy Financing

14

Gode Wind One farm consists of 55 turbines from Sie-

mens, which will supply clean energy for approximately

340,000 German households in completion.

The project follows a structure, whereby DONG Energy -

the Danish power producer owns a majority stake of

50%. The remaining 50% was purchased by Global Infra-

structure Partners (GIP) in a €780 million transaction.

GIP, an infrastructure investment fund, supported the

transaction through fundraising in the capital markets,

with a project bond structured by the German based

insurer Talanx. A group of institutional investors, with

Talanx as cornerstone lender subscribed to the project

bond, which also carries the label “green”.

Good scheme: Gode Wind One benefits from the

accelerated German model of support scheme for

renewables, with an elevated tariff for the first

eight years and decreasing tariff thereafter for the

remaining years of operation.

Offshore wind projects tapping the liquidity in the

capital markets is further proof that the sector has

matured and turned into an attractive asset class

even for risk averse investors.

Project bond issuance: This project presents an

innovative way of financing offshore wind projects,

beyond the corporate bonds or the conventional

debt from financial institutions. It marks the issu-

ance of the first non-recourse, investment grade,

certified green bond dedicated to part finance an

offshore wind farm asset under construction. The

experience gained with Gode Wind One serves to

open the road for other projects to come.

The reputation of the sponsors is a major factor in

the rating of a project bond. In that context, both

DONG Energy and Global Infrastructure Partners

brought credibility to the project. DONG Energy has

an excellent track record in developing offshore

wind projects, whereas Global Infrastructure Part-

ners has extensive experience in large scale infra-

structure and energy investments.

EWEA - The European Wind Energy Association ASBL/VZW

: Rue d'Arlon 80, B-1040 Brussels, Belgium

: http://www.ewea.org

: Ariola Mbistrova - Public Affairs analyst - Finance

: +32 2 213 18 22

: [email protected]

GODE WIND ONE OFFSHORE Type: Offshore wind farm

Size: 330 MW

Location: Germany

Timeline: Completed in 2016

Financial structure: Corporate finance, public finance

Total investment: €2.2 billion (Gode Wind 1 & 2)

Developer: DONG Energy

INTRODUCTION WHAT IS INNOVATIVE?

Gode Wind 1 project - www.siemens.com/press

WHAT ARE OUR POLICY RECOMMENDATIONS?

Private funding

FURTHER CONTACT

PROJECT INFORMATION

Page 16: Showcases Of Successful Renewable Energy Financing

15

The EBRD has engaged with AS Graanul Invest in ex-

tending 3 loans in 2011, 2013, and 2015 (phase I, II, and

III respectively). Phase I received from EMEA finance the

award of Best Sustainable Deal in CEE in 2012.

Graanul is becoming an integrated energy supplier of

green electricity and heat to medium-size industrial

clients building on their experience in developing, ow-

ing and operating medium-size biomass Combined-Heat

-and-Power (CHP) units.

The transactions involved financing part of the con-

struction cost of six different biomass CHP plants in Es-

tonia and Latvia. One of the key characteristics of the

transactions was the need for long term financing as

compared to what is available in the Baltics market. The

CHPs capital intensive nature and long payback periods

required a relatively longer term financing. The EBRD

was able to extend 10 years door-to-door maturity for

phase II and III after a detailed analysis and modelling of

the future electricity and pellet prices in the Baltics dur-

ing the life of the loans.

The transactions i) supported export-oriented compa-

nies and innovative producers of high added-value

goods, ii) increased the share of privately-owned elec-

tricity generation, and iii) helped Estonia and Latvia in

generating zero-carbon renewable electricity.

Stable and predictable framework: What is recom-

mended is a stable and predictable regulatory

framework without retroactive changes to the sup-

port given to renewables.

Create synergies: AS Graanul Invest operates pri-

marily in the wood pellet sector, and secondarily in

the generation of electricity and heat through its

CHP plants. The EBRD’s financed transactions were

structured on the premise that there are synergies

between the CHP operations and Graanul’s wood

pellet production. Specifically, the wood pellet

plants consume a large part of the electricity pro-

duced by the CHPs, and also the heat produced by

the CHPs allows Graanul to produce higher quality

pellets.

Investments phasing: In structuring the EBRD

loans with Graanul Invest, one of the key challeng-

es was how to support Graanul during its growth

period and at the same time ensure borrowings

were taken in line with the company’s debt capaci-

ty. Therefore, the EBRD has collaborated with the

company on phasing the renewables pipeline over

4 years so that debt capacity which has grown sig-

nificantly over time following the successful imple-

mentation of each project is addressed at all times.

European Bank for Reconstruction and Development

: 1 Exchange Square, London, United Kingdom

: http://www.ebrd.com

: Julien Mauduit - Senior banker

: +44 20 7338 7568

: [email protected]

: Ahmad El Mokadem - Associate banker

: + 44 20 7338 6452

: [email protected]

GRAANUL INVEST BIOMASS PROJECTS Type: Biomass combined-heat-and-power plants

Size: 40 MW electricity & 108.8 MW heat for three

transactions

Location: Estonia & Latvia

Timeline: Phase I completed in 2012, phase II completed

in 2014 and phase III financial close in 2015

Financial structure: Three senior secured corporate

loans to AS Graanul Invest of €34.4 million (phase I), €24

million (phase II), and €42 million (phase III)

Total investment: Total project cost for the three trans-

actions was €130.4 million

Developer: AS Graanul Invest

INTRODUCTION WHAT IS INNOVATIVE? WHAT ARE OUR POLICY RECOMMENDATIONS?

Private funding

FURTHER CONTACT

PROJECT INFORMATION

Graanul Invest’s project

Page 17: Showcases Of Successful Renewable Energy Financing

16

The Ivanpah project, which is the largest solar thermal

tower power plant to date in the world, utilised the

project financing model for the project. In the project

financing model, the goal is to balance risks and re-

wards between project participants and to allocate risks

consistent with capability, risk appetite, and credit ca-

pacity of the stakeholders.

BrightSource first applied for a loan guarantee in 2006

and achieved financial close of the loan in April 2011.

Confirming the US Department Of Energy’s (DOE) judg-

ment, NRG and Google independently decided to invest

a total of $468 million to purchase a majority ownership

interest in the project, also based on the same merits.

Ivanpah was completely consistent with the US Con-

gress’ intention when it established the loan guarantee

programme – to support the commercialisation of tech-

nically innovative projects.

Increase attention: As the penetration of renewable

energy increases globally, policymakers and utilities

have shown growing interest in technologies that

can ensure long-term reliability without increasing

emissions. Regulators, utilities and grid operators

are increasingly applying a “net system cost” meth-

odology when considering future energy portfolios

and procurement decisions; this approach considers

factors such as system integration costs and reliabil-

ity impacts under different scenarios.

Scale up the technology: Concentrating Solar Power

(CSP) with thermal energy storage is one example of

a flexible resource to help address the supply varia-

bility introduced by rapidly expanding wind and PV

production. Recent studies show the technology can

play an important role in achieving global clean en-

ergy and climate goals by providing dispatchable

power when it is needed most, improving reliability

and reducing costs.

Attract large capital by loans guarantees: The

DOE’s loan guarantee programme was instrumen-

tal in attracting the capital necessary to finance

this innovative project at commercial scale.

Set up special purpose vehicle: The borrower un-

der the project’s $1.6 billion loan guarantee is the

special purpose project company (SPV) itself,

which is owned by NRG Energy, Google, and

BrightSource. The SPV holds the long-term, fixed

price power purchase agreement meaning that for

a 20 or 25 year period it has purchasers for all of

the energy it produces at a fixed price.

The SPV also owns the infrastructure that produces

the energy. The underlying loan is fully secured by

all of the SPV’s physical assets and contracts. This

is analogous to building a new hotel and having its

mortgage backed not only by the property, but by

the income that will result from guaranteed, 100%

occupancy for 20 or more years.

BrightSource Energy

: 1999 Harrison Street, Suite 2150, Oakland, CA

94612, United States

: http://www.brightsourceenergy.com

: Jennifer Rigney

: +1 510 250 8162

: [email protected]

IVANPAH SOLAR ELECTRIC GENERATING SYSTEM Type: Solar thermal power tower

Size: 377 MW net solar complex

Location: Mojave desert, United States

Timeline: Completed in 2013

Financial structure: Project finance

Total investment: $2.2 billion (around €1.97 billion)

Developers: Developed by BrightSource Energy, con-

structed by Bechtel and operated by NRG Energy, the

largest project equity stakeholder. Additional equity own-

ers include Google and BrightSource

INTRODUCTION WHAT IS INNOVATIVE? WHAT ARE OUR POLICY RECOMMENDATIONS?

Ivanpah project

Private funding

FURTHER CONTACT

PROJECT INFORMATION

Page 18: Showcases Of Successful Renewable Energy Financing

17

Nordsee One is a 332 MW offshore wind farm located

40 km of the coast of Germany. The project reached

financial close in March 2015; all of the equity and all

debt required fully committed by the lenders.

The €903 million of funding needed for the Nordsee

One project was financed by ten commercial banks,

without the requirement from any support from public

funding institutions.

The transaction was also completed in record time, with

less than 6 months from the acquisition of 85% of the

project by Northland Power Inc. to financial close.

Stable policy: The transaction benefitted from

Germany’s clearly defined and stable long-term

regulatory framework for offshore wind, including a

long enough fixed price for power, guaranteed ac-

cess to the grid and a very predictable regulatory

and permitting process. This allows to raise capital

over longer periods and at a lower price, ensuring a

lower LCOE (levelised cost of energy).

Nordsee One benefits from the accelerated Ger-

man model of support scheme for renewables, with

an elevated tariff for the first eight years and de-

creasing tariff thereafter for the remaining years of

operation.

Capital light structure: The Nordsee One project

was a demonstration of RWE’s “capital light” struc-

ture whereby the utility was able to attract external

capital, both on the equity and on the debt sides,

on attractive terms.

Non-recourse finance for utility: Nordsee One is

one of the first offshore wind projects developed

by a utility with non-recourse finance in mind and it

showed that this could be done in a disciplined and

rapid manner.

NORDSEE ONE Type: Offshore wind farm

Size: 332 MW

Location: Germany

Timeline: Financial close 2015, completion in 2017

Financial structure: Project finance

Total investment: €1.2 billion

Developer: The project was originally developed

by ENOVA and then, from 2008, by RWE. Northland Pow-

er Inc. took an 85% stake in September 2014, with RWE

Innogy GmbH retaining 15%

INTRODUCTION WHAT IS INNOVATIVE?

Green Giraffe B.V.

: Maliebaan 83a, 3581CG Utrecht, Netherlands

: www.green-giraffe.eu

: Jérôme Guillet

: +331 7577 3466

: [email protected]

WHAT ARE OUR POLICY RECOMMENDATIONS?

Private funding

FURTHER CONTACT

PROJECT INFORMATION

For illustration only ©stylefoto24/Fotolia

Page 19: Showcases Of Successful Renewable Energy Financing

18

Tiburcio Vasquez Health Center is a 200 kW combina-

tion rooftop / carport distributed generation installation

that is the first to benefit from an innovative PACE

Lease® financing structure. The project is located in San

Leandro, Alameda County, California (USA). It was de-

veloped by Demeter Power Group and financed by Con-

ergy AG and Kawa Capital Partners.

The financial structure is the first to combine a tradi-

tional power purchase agreement (PPA) with property-

assessed clean energy (PACE) into a new form of ser-

vices contract called a PACE Lease®. The structure most

efficiently internalises tax-incentives and passes them

through as a fixed, 20-year payment for energy services.

Although privately funded, the payment is collected as a

line-item on the property tax bill by the local govern-

ment and secured by a senior property lien. The pay-

ment is, thus, very secure and enabled the customer to

obtain financing on terms traditionally offered only to

highest-credit quality off-takers.

Low cost of capital by reducing risks: The PACE

Lease® financing structure is optimal for mitigating

off-taker credit risk by securing repayment with a

senior, property-based lien. Cost of capital was very

low due to the low likelihood of payment default.

Low cost for customers: The ultimate cost to the

customer as a fixed services fee was further low-

ered by internalizing tax-incentives not typically

available or capable of being efficiently monetized

by small and medium business or non-profit cus-

tomers. In this way the PACE Lease® structure effi-

ciently combines capital from “tax-equity” investors

as well as long-term debt from bond investors.

As PACE has scaled to more than 30 U.S. states, plus the

District of Columbia, the PACE Lease® structure has the

potential to similarly scale domestically and to other

countries that support solar and other renewable ener-

gy or energy-efficiency technologies utilizing a similar

property-tax or voluntary government-sponsored lien

program.

Scaling up this program: Smart government poli-

cies that enabled the PACE Lease® structure includ-

ed: (i) investment tax-credit incentives for renewa-

ble energy; (ii) “PACE” or ‘property-assessed clean

energy’; and (iii) government cooperative agree-

ments to fund development of the structure. We

would encourage government funding of pro-

gramme design and that such programme design

facilitate localised programmes that benefit from

government-sponsorship and that allow for volun-

tary participation.

Demeter Power Group, Inc.

: 224 Datura street, West Palm Beach, FL United States

: www.demeterpower.com

: Michael Wallander - President

: +1 855 336 8700

: [email protected]

TIBURCIO VASQUEZ HEALTH CENTER Type: solar photovoltaic (solar PV)

Size: 197.2 kW (DC)

Location: United States

Timeline: Financial close in May 2015, construction com-

pleted in September 2015

Financial structure: PACE Lease®

Total investment: $876,000 (around €785,439)

Developer: Demeter Power Group, Inc.

INTRODUCTION WHAT IS INNOVATIVE? WHAT ARE OUR POLICY RECOMMENDATIONS?

Tiburcio Vasquez Health center

Private funding

FURTHER CONTACT

PROJECT INFORMATION

Page 20: Showcases Of Successful Renewable Energy Financing

19

Veja Mate is a 402 MW offshore wind farm located in

Germany’s North Sea. It was acquired in September

2014 by a relative unknown party (Highland) without an

in-house team, from a bankrupt developer (Bard). It

required re-permitting, re-engineering, re-contracting

and execution of a full financing (equity and debt) pro-

cess within 10 months in order not to lose the right to

connect to the grid.

A substantial part of the development work was carried

out by an advisory group acting in consortium with day-

to-day autonomy. Green Giraffe provided commercial/

financial input, CMS provided legal and tax input and K2

provided technical input and package management.

Funding included tranches from KfW (under the offsho-

re wind programme) and guaranteed by EKF, the Danish

export credit agency. Both provided substantial volu-

mes of risk taking on optimised commercial terms (i.e.

low funding costs), allowing the transaction to close

faster and at an overall cost of power compatible with

the prevailing price regimes for offshore wind.

Stable policy: The project was able to secure fun-

ding thanks to the clearly defined and stable long-

term regulatory framework in Germany. Although

the strict certification and permitting process pro-

ved to be challenging in the context of the very

limited timelines, the well-defined and stable fra-

mework for the permitting process and the know-

ledgeable counterparties at the authorities allowed

the project to succeed. Based on our experience,

we would recommend long-term stable policies

and competent staffing of regulatory bodies.

Export credit agency and multilateral support:

Financial support to the sector via export credit

agencies and public funding bodies brings cheaper

funding costs, lower cost of energy and thus less

support being required.

Fastest development and financing trajectory by

unknown sponsor under significant time pressure:

To tackle the large amount of challenges faced by the

project:

The project development required quick decision

making, taking calculated risks, and keeping a

strong focus on the deadlines.

The equity launch was aimed at a small group of

investors who would each bring a clear role (and

offshore wind experience) to the project. Further-

more, the project entered into a small number of

EPC construction contracts, which placed a majority

of the risk with experienced contractors.

A conservative financial structure was developed,

which included a relatively low gearing of 67% and

additional liquidity brought by the participation of

the KfW-Fordergruppe. This helped during the com-

mercial bank process, where the deal was oversub-

scribed six times on an “as is” basis, allowing to

close the transaction rapidly.

VEJA MATE Type: Offshore wind farm

Size: 402 MW

Location: Germany

Timeline: Financial close 2015, completion in 2018

Financial structure: Project finance

Total investment: €1.9 billion

Developer: The project has been developed by Highland

Group Holdings Ltd and partly sold at financial close to

Copenhagen Infrastructure II - a fund managed by Copen-

hagen Infrastructure Partners, and Siemens Financial Ser-

vices

INTRODUCTION WHAT IS INNOVATIVE?

Green Giraffe B.V.

: Maliebaan 83a, 3581CG Utrecht, Netherlands

: www.green-giraffe.eu

: Jérôme Guillet

: +331 7577 3466

: [email protected]

Veja Mate project - www.siemens.com/press

WHAT ARE OUR POLICY RECOMMENDATIONS?

Private funding

FURTHER CONTACT

PROJECT INFORMATION

Page 21: Showcases Of Successful Renewable Energy Financing

20

The European Energy Efficiency Fund (EEEF) is an inno-

vative public-private partnership dedicated to mitigating

climate change in the member states of the European

Union.

The EEEF can provide eligible projects with a fast and

flexible financing. The Fund offers both debt and equity

instruments, and is flexible with respect to maturities,

although the maturity of the financing cannot be longer

than the asset life. Equity can be adapted to the needs

of the project, debt can be provided for maturities up to

18 years.

Beneficiaries of the Fund are municipal, local and regio-

nal authorities as well as public and private entities ac-

ting on behalf of those authorities. Hence, there is a

direct or indirect municipal link in the project. This can

be achieved either by a direct involvement of a munici-

pality or by the long-term contract between the munici-

pality and a third party.

EEEF is a layered-risk fund, allowing the issuance of

different tranches of capital in the form of shares and

notes to offer investors different risk-return profiles.

First-loss piece: The capital structure of such an

investment vehicle typically rests on the provision

of a first-loss piece (termed Junior - C Shares) by

selected investors. This risk cushion allows the Eu-

ropean Investment Bank (EIB) and other public fi-

nanciers to invest in more senior A or B tranches,

bringing the benefits of the EIB’s financial strength

as an AAA rated bank to achieve economic sustai-

nability and stimulate investment from other sour-

ces.

Once the asset side of the fund develops, this struc-

ture allows the possibility of issuing notes to priva-

te investors who remain most senior in the cash

waterfall of the fund.

Make use of EC TA Facility: A technical assistance

facility provided by the European Commission (“EC

TA Facility”) was available until March 2014. Over

€14 million in funds have been committed by the

EC TA Facility to 16 public authorities in 8 different

EU member states in order to assist in the financing

of their project development activities.

The EC TA Facility proved to be a strong support to

encourage public authorities to develop their ener-

gy efficiency project ideas, thereby realising im-

portant emission reductions to support the EU

20/20/20 targets and also generating positive im-

pact on their budget by cutting down energy ex-

penses.

Deutsche Bank AG

: Taunusanlage 12, 60325 Frankfurt AM Main, Germany

: www.db.com

: Lada Strelnikova - Alternatives & Real Assets

: +49 69 910 46444

: [email protected]

: Matthias Benz - Alternatives & Real Assets

: +49 69 910 46449

: [email protected]

EUROPEAN ENERGY EFFICIENCY FUND Type: All renewable energy and energy efficiency projects

Size: €265 million

Location: EU member states

Timeline: Established in 2011

Financial structure: Layered-risk fund

Total investment: €114 million (as per 09/2015)

Developer: Initiated by the European Commission, the

European Investment Bank and Cassa Depositi e Prestiti,

Deutsche Bank acts as the Investment manager of the fund

INTRODUCTION WHAT IS INNOVATIVE? WHAT ARE OUR POLICY RECOMMENDATIONS?

City of Rennes in France

Public-private cooperation

FURTHER CONTACT

PROJECT INFORMATION

In collaboration

with the

Page 22: Showcases Of Successful Renewable Energy Financing

21

The MeyGen project is the largest planned tidal devel-

opment project in the world at 398 MW of total in-

stalled capacity when fully constructed.

In August 2014, Atlantis Resources, majority owner of

Meygen announced that it had agreed terms for a fund-

ing package to finance the construction of the phase 1A

of its ground breaking tidal array. The funding package

is worth £51.3 million.

The funding syndicate: the Department of Energy &

Climate Change, Scottish Enterprise via the Renewable

Energy Investment Fund (delivered by the Scottish In-

vestment Bank), Highland & Islands Enterprise, the

Crown Estate, and Atlantis.

At a time when the climate for investment in renewa-

bles is relatively cautious, this sustained activity demon-

strates how Atlantis has retained creditability within the

market and pioneered a unique business model which

attracts much needed investment in the sector.

The success of the company’s approach is also demon-

strated by the huge vote of confidence from its partners

and shareholders, who have continued to support the

flagship Meygen project.

Commercialisation of tidal technology: The broker-

ing of this deal by Atlantis represented an im-

portant step towards commercialisation of tidal

technology, historically a niche and nascent sector,

focused on solving niche technical problems rather

than entering the market as viable solution. More

importantly, the deal was a crucial endorsement of

Atlantis’ vision to harness this power at scale.

Tidal power is a reliable, predictable and sustaina-

ble source of energy. The location of the Meygen

project in the Pentland Firth means we can harness

some of the world’s most powerful tides and con-

vert them into power for thousands of homes.

Atlantis Resources Ltd.

: 90A George Street Edinburgh, EH2 3DF, Scotland

: www.atlantisresourcesltd.com

: +44 203 727 1898

: [email protected]

MEYGEN TIDAL PROJECT Type: Tidal energy project

Size: 398 MW

Location: Scotland

Timeline: First power delivered in 2016

Financial structure: Combination of grants, loan and

equity

Total investment: £51.3 million (around €69.6 million)

for phase 1A

Developer: Atlantis Resources

Phases:

Phase 1A: the first 6MW (4 turbines) approximately

3000 Scottish homes

Phase 1: the first 86MW (61 turbines) approximately

42,000 Scottish homes

The complete 398 MW (269 turbines) approximately

175,000 Scottish homes

INTRODUCTION WHAT IS INNOVATIVE?

Photo by Mike Goldwater, Blue Cube Productions

WHAT ARE OUR POLICY RECOMMENDATIONS?

Public-private cooperation

FURTHER CONTACT

PROJECT INFORMATION

For illustration only

Page 23: Showcases Of Successful Renewable Energy Financing

22

The National Energy Savings Fund (NEF fund) has been

raised firstly to achieve the national target of 14% for

renewable energy generation by 2020 and secondly to

implement the measures as agreed early 2013 amongst

the political parties to give a stimulus to the ailing hous-

ing market (“woonakkoord”).

The fund is to provide loans to owner/occupants and

Owners Association (“VVe”) to insulate and improve the

energy efficiency of houses, flats and buildings.

The funding of BZK is used first to fund the loans to

home owners and VVe’s. The commitment of the banks

will be drawn when the funding of the government has

been used. The funding will be used to provide loans

between €2,500 and €25,000 to owner/occupants for

terms of 5, 7, or 15 years and between Owners Associa-

tions (“VVe”) with at least ten units between €25,000

and €5 million (with a limit of 25,000 per unit) for terms

of 10 or 15 years depending on the measure taken at

attractive rates.

The government needed to act to achieve the 2020 re-

newable energy target through energy savings and to

stimulate the housing market amongst others to create

jobs decided to start this fund on an ad hoc basis. We

recommend the following:

Structural and sustained long-term approach: A

more structural and sustained long-term approach

by the government to support the development of

renewable energy and energy savings projects is

needed to structurally attract the increasing de-

mand for finance also looking beyond 2020 and the

increasing targets for 2030 and 2050.

Cooperation between BZK and private financiers:

This is a cooperation between BZK and private fi-

nanciers in the form of a fund to provide low-priced

loans to improve the energy efficiency of existing

homes. This is the first in the Netherlands.

Since this was a first, it was quite challenging to

structure in a way that both the ministry and the

banks could agree on the risk/reward and on how

to word the documentation since BZK has their own

style of documentation. They were not used to Loan

Market Association (LMA) documentation, which is

popular in the primary as well as the secondary

loan market in Europe.

The fund had a slow start but volume of applica-

tions has increased substantially in 2015 due to

adding the VVe’s, the pick up in the housing market

in the Netherlands and the increasing awareness of

the fund due to campaigns by all parties involved.

ASN Bank

: Bezuidenhoutseweg 153, 2594 AG Den Haag, the

Netherlands

: www.asnbank.nl or www.ikinvesteerslim.nl

: Leo Hellinga

: +31 70 356 92 88

: [email protected]

NATIONAL ENERGY SAVINGS FUND Type: All renewable energy and energy efficiency

Size: €300 million

Location: The Netherlands

Timeline: Completed in January 2014

Financial structure: Fund in the form of a foundation

(“Stichting”). The funds have been committed for €75

million by the Ministry of the Interior and Kingdom rela-

tions (“BZK”), for €50 million by ASN bank and for €175

million by Rabobank

Total investment: €300 million

Developer: n.a. The fund is managed by SVn

INTRODUCTION WHAT IS INNOVATIVE?

©Coloures-pic/Fotolia

WHAT ARE OUR POLICY RECOMMENDATIONS?

Public-private cooperation

FURTHER CONTACT

PROJECT INFORMATION

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23

Thüga Group is the largest municipal network of local

and regional energy suppliers in Germany with unique

partnership model: 560 cities and municipalities have

integrated their 100 communal energy and water sup-

ply companies with Thüga Group out of responsibility

for the living space of 10 million people.

The Thüga Erneuerbare Energien is a joint initiative of

municipal utilities that are part of the Thüga Group. The

company is an example of a mutual-benefit cooperation

with the aim of investing in renewable energy power

generation. Thereby, local utilities of the Thüga Group

can invest in renewable energy all over Germany; and

the Thüga Erneuerbare Energien can take advantage of

the local expertise and network of its shareholders.

In light of the upcoming regulatory changes towards a

competitive tendering system in 2016/17, structures

like the Thüga Erneuerbare Energien are one of the very

few opportunities for small and medium size municipal

utilities to reduce investment risks for renewable ener-

gy power generation to an acceptable level.

Currently, the rules that allow or forbid the construction

of wind farms are defined at the federal level and often

change depending on the political party in charge.

Level playing field: With regard to the new tender-

ing system that will be implemented in Germany

construction sites for wind farms with different

wind speeds should be able to compete on a level

playing field. Thereby, wind farms can be built in

different regions in Germany which reduces the

burden on the electricity grid and increases the

economic efficiency of the whole energy system.

Flexible regulation to invest in other European

countries: A future opportunity for growth could

be investments in other European countries. How-

ever, in many cases municipal utilities are not al-

lowed to invest abroad. While this rule makes

sense in many cases, investments through Thüga

Erneuerbare Energien should be exempted due to

the reduced investment risk.

Diversified risk: Many of the involved municipal

utilities directly invest in renewable energy power

generation in order to offer renewable energy to

their electricity customers. However, their invest-

ments are typically limited to the municipalities

they cover. By founding the Thüga Erneuerbare

Energien, all involved municipal utilities participate

in profitable renewable energy projects all over

Germany. Thereby, the risk of individual projects is

diversified. Beyond the technology risk, the portfo-

lio of wind projects allows diversifying the risk that

is associated with the available wind speed at one

specific site or the barrier of suitable construction

sites.

Lower cost: By bundling the knowledge and pro-

fessional experience of the due diligence process

and of maintenance services, lower costs for all

participating municipal utilities are realized.

Thüga Erneuerbare Energien GmbH & Co. KG

: Großer Burstah 42, 20457 Hamburg, Germany

: http://ee.thuega.de

: Thomas Walther

: +49 40 790 2390

: [email protected]

Thüga AG

: Nymphenburger str.39, 80335 München, Germany

: http://thuega.de

: Dr. Christian Friebe - Referent Grundsatzfragen

: +49 89 381 970

: [email protected]

THÜGA ENEUERBARE ENERGIEN Type: Wind energy

Size: 207 MW (as per Sep/2015)

Location: Germany

Timeline: Established in 2010

Financial structure: Shareholders include 46 municipal

utilities of the Thüga Group

Total investment: Aim to invest €1 billion in renewable

energy generation by 2020

Developer: Thüga Erneuerbare Energien

INTRODUCTION WHAT IS INNOVATIVE? WHAT ARE OUR POLICY RECOMMENDATIONS?

Windparkanlage - source: Schulte

Public-private cooperation

FURTHER CONTACT

PROJECT INFORMATION

Page 25: Showcases Of Successful Renewable Energy Financing

24

Vicuña Solar consists of two solar power plants, “SOL”

and “LUNA”, located close to the city of Vicuña, in the

Elqui Valley, considered one of the richest in this area of

the country in terms of solar irradiation.

The construction of the “Vicuña Solar” is financed

through equity investments by ECOSolar (51%), a solar

company active in Latin America with in depth

knowledge and experience of the solar sector and the

region, and the Danish Climate Investment Fund (DCIF)

(49%), a Danish public-private partnership (PPP) offer-

ing equity funding for climate related projects in devel-

oping countries.

The cooperation between DCIF and Ecosolar creates the

synergy for the project development: Ecosolar has

depth knowledge and experiences of the solar sector /

the regions; and through investing in projects, DCIF can

promote the Danish technology/know-how transfer and

increase investments in renewable energy projects in

developing countries.

Clear tax structure: Institutional investors – like

the ones who have invested in DCIF – prefers a sim-

ple and easy understandable tax structure enabling

them to predict the return post-tax without the risk

of being subject to double taxation because of un-

clear tax rules. The tax law should be clear on how

a foreign tax transparent entity like standard lim-

ited partnerships should be taxed under local tax

law and in respect of double taxation agreements.

PPA in foreign currency: National power authori-

ties can make investments in renewable power

production more attractive to foreign investors by

issuing PPA’s (Power Purchase Agreement) in for-

eign currency (like USD or EUR).

Public-private cooperation across borders: This is

the first of hopefully many investments imple-

mented jointly by Ecosolar which is based in Pana-

ma and IFU / DCIF with a base in Denmark. A large

part of the capital injected by the Danish investor

DCIF is raised by the fund manager IFU for the re-

newable energy fund DCIF. DCIF is capitalised by

IFU, the Danish State and a number of Danish insti-

tutional investors.

Huge leverage factor: DCIF is an innovative PPP to

mobilise capital and involve private sectors for re-

newable energy projects. The Danish state will only

contribute up to 7% of the money, which, however,

creates the confidence and encourages the invest-

ments from institutional investors (pension funds in

Vicuña). But investors are also granted for a pre-

ferred profit return.

IFU - Investment Fund for Developing Countries

: Fredericiagade 27, 1310 Copenhagen K, Denmark

: www.ifu.dk

: Henrik Jepsen - Investment Director

: +45 33 63 75 10

: [email protected]

VICUÑA SOLAR PV Type: Solar PV

Size: 6.8 MW

Location: Chile

Timeline: Completed in 2015

Financial structure: 100% risk capital provided by two

investors

Total investment: $12.7 million (around €11.39 million)

Developer: IM2

INTRODUCTION WHAT IS INNOVATIVE? WHAT ARE OUR POLICY RECOMMENDATIONS?

Vicuña solar project

Public-private cooperation

FURTHER CONTACT

PROJECT INFORMATION

Page 26: Showcases Of Successful Renewable Energy Financing

25

AAA rating: The highest possible rating assigned to the

bonds of an issuer by rating agencies.

ABS - Asset-Backed Security: Is a security whose value

are derived from a specified pool of underlying assets.

Asset-light structure: Is a strategy aiming for reducing

the fixed costs, for example, outsourcing other parties,

renting assets, sharing the costs with many other own-

ers, franchising, etc.

Bond: Is a debt instrument in which an investor lends

money to an entity for a defined period of time at an

interest rate.

Capital-light structure: Is a strategy reducing the capital

requirements to produce a good or service, which helps

companies free up capital to do other investment or

development.

Cash sweep mechanism: Is a mechanism in which if it

reaches a certain level amount of money, the excess

cash will be transferred to another account or be used

to pay a portion of debt or for users’ purposes.

CIC - Community interest company: Is a special type of

limited company which aims to benefit the community

rather than private shareholders.

Community funding: Is a type of crowdfunding which

typically raises monetary contributions from a large

number of people in a certain community.

Contract for difference: Is a contract between an elec-

tricity generator and a government-owned company.

The generator is paid the difference between their price

and market price.

Cost of capital: Is the cost of debt and equity in a com-

pany, which is often used to evaluate new projects of a

company.

Crowd funding: Is the way of funding a project or ven-

ture by raising monetary contributions from a large

number of people.

Debenture: A type of debt instrument that is not se-

cured by physical assets or collateral. It is backed only

by the general creditworthiness and reputation of the

issuer.

manages the building in terms of maintenance, cleaning,

safety, etc. One apartment in VVe can be called one unit.

PACE - Property-Assessed Clean Energy program: In an

area with PACE legislation, the municipal government

issues a special bond to investors and then lends money

to consumers or businesses. The money will be repaid

through the property tax bill in a certain term, i.e. 20

years. The loan is attached to the property rather than

the individuals.

PPA - Power Purchase Agreement: Is a contract be-

tween two parties, one who generates electricity (the

seller) and one who purchases electricity (the buyer).

Project Finance: Is the long-term financing of projects

based on the projected cash flows of the project rather

than the balance sheets of its sponsors.

Risk-averse investor: An investor who, when faced with

two investments with a similar expected return (but

different risks), will prefer the one with the lower risk.

SDE+ programme: Is a subsidy programme in the Neth-

erlands. Producers receive a subsidy for the production

of renewable energy. The SDE+ compensates for the

difference between the cost price of grey energy and

that of renewable energy, over a period of 5, 12 or 15

years, depending on the relevant technology.

Senior loan: A debt financing obligation that holds legal

claim to the borrower’s assets above all other debt obli-

gations. It means that in the event of bankruptcy, the

senior bank loan is the first to be paid, before all other

interested parties receive repayment.

Social enterprise: Is an organisation that applies com-

mercial strategies to maximize improvements in human

and environmental well-being - This may include maxim-

izing social impact rather than profits for external share-

holders.

Tax equity investor: Is an investor who receives a re-

turn based not only on cash flow from the asset or pro-

ject but also on federal and state income tax benefits

(tax deductions and tax credits).

20/20/20 targets: Reduce greenhouse gas emissions by

20%, increase the use of renewable energy by 20% and

reduce energy consumption through energy efficiency

measures by 20% until 2020.

EPC contract - Engineering, Procurement and Construc-

tion contract: Is a contract, in which a contractor gener-

ally provides the obligation to build and deliver the pro-

ject facilities on a turnkey basis.

Equity: The value of an ownership interest in property,

including shareholders’ equity in a business. Equity or

shareholders’ equity is part of the total capital of a busi-

ness.

FIT - Feed In Tariff: Is an economic policy, in which the

producers will receive an allowance per renewable en-

ergy unit they produce.

Green bond: Is a bond which was created to fund pro-

jects that have positive environmental and/or climate

benefits.

IPS - Industrial & Provident Society: Is an organisation

conducting an industry, business or trade, either as a

cooperative or for the benefit of the community.

ITC - Investment Tax Credit: An amount that business

are allowed by law to deduct from their taxes, and is

based on the amount of investment in property.

LCOE - Levelised Cost Of Energy: Is the net present val-

ue of the unit-cost of electricity over the lifetime of a

generating asset. It is often taken as a proxy for the

break-even price.

Mezzanine loans/debt: It refers to the layer of financing

between a company’s senior debt and equity. It is sub-

ordinate in priority of payment to senior debt, but sen-

ior in rank to common stock or equity.

Municipal bond: A debt security issued by a state, mu-

nicipality or county to finance its capital expenditures.

NGO - Non-Governmental Organisation: Is an organisa-

tion that is neither a part of government nor a conven-

tional for-profit business. NGOs may be funded by gov-

ernments, foundations, businesses, or private persons.

Non-recourse finance: A loan where the lending bank is

only entitled to repayment from the profits of the pro-

ject it is funding, not from other assets of the borrower.

Owners Association (VVe): Is an association whose

members own an apartment in the same building. It

GLOSSARY

Page 27: Showcases Of Successful Renewable Energy Financing

26

A C K N O W L E D G E M E N T S

The Editors would like to thank the contributors for their support throughout the book’s process, as well as the supporting

colleagues.

Contributors

E D I T O R S

Lead Editor

Mai Thi Tuyet Nguyen

Contributing Editors

David de Jager, Sascha van Rooijen, Coraline Bucquet, Rolf de Vos

Abundance NRG Ltd. United Kingdom

ASN Bank Netherlands

Atlantis Resources United Kingdom

Bettervest GmbH Germany

BrightSource Energy United States

Cassa Depositi e Prestiti Italy

Climate Bonds Initiative United Kingdom

Demeter Power Group, Inc USA

Department of Business, Economic Development & Tourism Hawaii State, USA

Deutsche Bank AG Germany

DuurzaamInvesteren Netherlands

European Bank for Reconstruction and Development Turkey & United Kingdom

European Commission Belgium

European Investment Bank Luxembourg

EWEA - The European Wind Energy Association ASBL/VZW Belgium

Gemini Amsterdam Netherlands

Green Giraffe B.V Netherlands

Investment Fund for Developing Countries (IFU) Denmark

Low Carbon Hub United Kingdom

Oxfutures United Kingdom

Siemens AG Germany

Thüga AG Germany

Thüga Erneuerbare Energien GmbH & Co. KG Germany

Ventolines B.V Netherlands

Windcentrale Netherlands

D I S C L A I M E R

The IEA-RETD, formally known as the Implementing Agreement for Renewable Energy Technology Deployment, func-

tions within a Framework created by the International Energy Agency (IEA). Views, findings and publications of IEA-RETD

do not necessarily represent the views, investment recommendations or policies of the IEA Secretariat or of its individu-

al Member Countries.

Photos in the book reproduced with the permission of Fotolia (page 1, 3, 6, 17, 22); Ecofys (icons in page 3, page 11);

Low Carbon Hub (page 4); Ventolines (page 5); DBEDT (page 7); Windcentrale (page 10); Gemini Amsterdam (page 13);

Creative commons license (page 8, icons in ‘further contact’ part from page 4 to 24); Abundance NRG Ltd. (page 9);

EBRD (page 12, 15); Siemens (page 14, 19); BrightSource Energy (page 16); Demeter Power Group, Inc. (page 18);

Deutsche Bank (page 20); Mike Goldwater, Blue Cube Productions (page 21); Thüga Group (page 23) and IFU (page 24).

The definition in glossary was re-interpreted by the editors, based on our own knowledge and sources from internet.

A B O U T I E A - R E T D

The International Energy Agency’s Implementing Agreement for Renewable Energy Technology Deployment (IEA-RETD)

provides a platform for enhancing international cooperation on policies, measures and market instruments to acceler-

ate the global deployment of renewable energy technologies.

IEA-RETD aims to empower policy makers and energy market actors to make informed decisions by: (1) providing inno-

vative policy options; (2) disseminating best practices related to policy measures and market instruments to increase

deployment of renewable energy, and (3) increasing awareness of the short, medium and long-term impacts of renewa-

ble energy action and inaction.

For further information please visit: http://iea-retd.org or contact [email protected].

Twitter: @IEA_RETD

IEA-RETD is part of the IEA Energy Technology Network.