Distributed Energy Generation for Cooperatives (DGC)
CONTEXT
Brazil aims to have nearly a quarter of its energy mix sourced from non-hydro renewables by 2030. Small scale renewable energy systems will be a key component of this effort as they provide cost-saving opportunities for energy consumers while allowing developers and funders to gain experience at lower risk than with large projects.
However, small scale renewable energy is still heavily constrained in Brazil due to high upfront costs and limited funding opportunities. Many financing facilities cater to large scale renewable projects, but very few target small systems, and virtually none match the specific cash flow characteristics for small systems.
APPROACH
he Distributed Generation for Cooperatives Fund aims to scale up distributed renewable energy by partnering with cooperatives.
The Distributed Generation for Cooperatives Fund aims to scale up distributed renewable energy (up to 5 MW) by partnering with cooperatives. There are nearly 7000 cooperatives in Brazil that together have 372,000 employees and 13,000,000 members. Cooperatives in agriculture, and other industries like transport, are good candidates for distributed generation because of favorable regulation through Brazil’s “shared generation” regulatory framework (ANEEL/RN 482) and because of relatively high and steady energy usage.
The instrument will combine a “Pay-per-use contract” with a “Two-part performance structure” – two elements that are absent in distributred energy financing in Brazil.
The “Pay-per-use contract” will enable projects through a discounting arrangement whose payments match the energy savings provided by the distributed generation systems (after discounts to clients). This will allow cooperatives to reap the benefits of distributed generation systems at no upfront costs and with no additional monthly expenses. In fact, it will provide 10-20% monthly savings on the cooperative’s energy bills from the start.
The “Two-part performance structure” will link generation performance to payments without overstepping Brazilian regulatory restrictions. Energy generation contracts with cooperatives are split between a fixed portion (based on the expected output of the system) and a variable portion (based on the performance of the system above that output). This shifts the generation risk from the cooperative to the fund..
Path Forward
The pilot instrument will mobilize USD 62 million in investments, reducing carbon emissions by 470 thousand ton CO2e and providing cost savings of nearly USD 26 million to cooperatives along its lifetime.
CONTEXT
Brazil aims to have nearly a quarter of its energy mix sourced from non-hydro renewables by 2030. Small scale renewable energy systems will be a key component of this effort as they provide cost-saving opportunities for energy consumers while allowing developers and funders to gain experience at lower risk than with large projects.
However, small scale renewable energy is still heavily constrained in Brazil due to high upfront costs and limited funding opportunities. Many financing facilities cater to large scale renewable projects, but very few target small systems, and virtually none match the specific cash flow characteristics for small systems.https://www.youtube.com/embed/ubAGZb5T7nM
APPROACH
The Distributed Generation for Cooperatives Fund aims to scale up distributed renewable energy by partnering with cooperatives.
The Distributed Generation for Cooperatives Fund aims to scale up distributed renewable energy (up to 5 MW) by partnering with cooperatives. There are nearly 7000 cooperatives in Brazil that together have 372,000 employees and 13,000,000 members. Cooperatives in agriculture, and other industries like transport, are good candidates for distributed generation because of favorable regulation through Brazil’s “shared generation” regulatory framework (ANEEL/RN 482) and because of relatively high and steady energy usage.
The instrument will combine a “Pay-per-use contract” with a “Two-part performance structure” – two elements that are absent in distributred energy financing in Brazil.
The “Pay-per-use contract” will enable projects through a discounting arrangement whose payments match the energy savings provided by the distributed generation systems (after discounts to clients). This will allow cooperatives to reap the benefits of distributed generation systems at no upfront costs and with no additional monthly expenses. In fact, it will provide 10-20% monthly savings on the cooperative’s energy bills from the start.
The “Two-part performance structure” will link generation performance to payments without overstepping Brazilian regulatory restrictions. Energy generation contracts with cooperatives are split between a fixed portion (based on the expected output of the system) and a variable portion (based on the performance of the system above that output). This shifts the generation risk from the cooperative to the fund..
PATH FORWARD
The pilot instrument will mobilize USD 62 million in investments, reducing carbon emissions by 470 thousand ton CO2e and providing cost savings of nearly USD 26 million to cooperatives along its lifetime.
A pilot instrument is being developed in the state of Rio Grande do Sul in the south of Brazil, mobilizing USD 62 million and providing 23 MW of wind generation for 9 cooperatives. Project development will be handled by Renobrax (the proponent of the idea), guarantees will be provided by a local finance partner and promising fund managers, and implementation partners have already been identified. To implement the pilot, proponents seek USD 9 million of concessional capital, as well as start-up and due diligence funding. The pilot, which is expected to be operational by mid-2018, will provide 10-20% savings for cooperatives compared with existing energy bills, and a 12% real return for commercial investors while reducing 470 thousand tons of CO2e.
Overall, the instrument can change the dynamics of financing and investment of distributed systems at a comparatively low cost for donors and has significant scale-up potential.
CONTEXTO
O Brasil tem como objetivo transformar aproximadamente um quarto de sua matriz energética em fontes renováveis (exceto hidrelétrica) até o ano de 2030. Sistemas de pequena escala irão cumprir um papel importante nesta busca, uma vez que apresentam oportunidades de economias de custo para consumidores ao mesmo tempo que permitem que investidores e desenvolvedores acumulem experiência com menos risco do que em projetos maiores.
Contudo, a adoção de energia renovável de pequena escala ainda é limitada no Brasil devido aos altos custos iniciais e escassez de fontes de financiamento. Existem muitas linhas de financiamento que atendem a projetos de grande escala, mas poucas para projetos menores e praticamente nenhuma que se adeque ao perfil de investimento de geração distribuída em pequena escala.
ESTRATÉGIA
O DGC busca estimular a adoção de sistemas distribuídos de geração de energia renovável através de parcerias com cooperativas
O Distributed Generation for Cooperatives (DGC) busca estimular a adoção de sistemas distribuídos de geração de energia renovável (até 5 MW) através de parcerias com cooperativas. Existem aproximadamente 7.000 cooperativas no Brasil que juntas possuem 372.000 colaboradores e 13 milhões de membros. Cooperativas nos setores de agricultura e transporte são bons candidatos para geração distribuída pois se enquadram na categoria regulatória de “geração compartilhada” (ANEEL/RN 482) e possuem consumo de energia alto e relativamente estável.
O instrumento irá combinar um contrato de “Pagamento por utilização” com uma “Estrutura dupla de performance” – dois elementos até agora ausentes para a geração distribuída no Brasil.
O contrato de “Pagamento por utilização” irá viabilizar projetos através de uma estrutura de financiamento cujos pagamentos se adequam à economia de energia produzida pelos sistemas de geração distribuída (após os descontos aferidos pelas cooperativas). Isto permitirá que as cooperativas obtenham os benefícios da geração distribuída sem incorrer em custos iniciais ou despesas mensais adicionais. O DGC irá produzir economias na ordem de 10-20% nas faturas de energia das cooperativas.
A “estrutura dupla de performance” irá associar a geração de energia aos pagamentos feitos pelas cooperativas, dentro dos limites da legislação brasileira. Os contratos de geração de energia com as cooperativas serão separados entre uma parcela fixa, definida com base na produção esperada do sistema, e uma variável, definida com base na produção acima do nível esperado. Isto faz com que o risco de geração seja transferido da cooperativa para o fundo.
PRÓXIMOS PASSOS
O piloto irá mobilizar U$ 62 milhões em investimentos, mitigando 470 mil ton CO2e e viabilizar economias da ordem de U$ 26 milhões para as cooperativas
Um piloto do instrumento está sendo desenvolvido no estado do Rio Grande do Sul, mobilizando U$ 62 milhões e produzindo 23 MW de energia eólica para 9 cooperativas. O desenvolvimento do projeto será feito pela Renobrax, proponente da ideia no Brasil Lab, e os principais prestadores de serviço já foram identificados. Para implementar este piloto, os proponentes buscam U$ 9 milhões em recursos a taxas subsidiadas. O piloto, cuja expectativa de implantação é de meados de 2018, irá produzir economias da ordem de 10-20% para as cooperativas e um retorno real de 8-12% para investidores comerciais.
O DGC possui a capacidade de alterar a dinâmica de financiamento em geração distribuída no Brasil a um custo relativamente baixo para doadores.
Cover image courtesy of Renobrax.
