The Netherlands, albeit with a delay, is taking steps in the energy transition. Wind, both onshore and offshore, is a large driver in the transition and many gigawatts of it will be needed. Especially onshore, social acceptance is vital in ensuring that these megawatts will be realised. So vital that local participation has been included as a requirement in the Regional Energy Strategies.
Stephanie Platschorre, Leon Pulles and Noortje van Heijst
Wind Energy Magazine spoke to Leon Pulles, managing partner of Energy Investment Management BV who advises sustainable energy developers in setting up participation strategies for their projects. Pulles: “The Netherlands has waited for a long time before starting the energy transition. People were in general not really engaged in energy matters.”
As the pressure grew from the European Union, something had to be done. That’s when the government introduced the SDE subsidy scheme. Things started speeding up and the number of wind and solar farms were rising. Not long after, the energy transition became a more frequent topic on the news and people were actually starting to look at their energy bills. People started to have an opinion on the subject, not always positive. In addition to the ‘Not in my backyard’ sentiment, there was also another sentiment growing, that our country was too small to make a difference. Is it worth spending that much money on the energy transition?, he explains.
Topic at birthday parties
“We all benefitted from the industrial revolution, we should now not walk away from our responsibilities in the energy transition”, Pulles says. Getting people involved could create broad support for the energy transition. He mentions Stephanie Platschorre from the Erasmus University who performed a research on what motivates people to financially participate in renewable energy projects through crowdfunding. [1] Her research showed that few
people are really consciously involved.
It is therefore advisable for developers to engage the community in their project as soon as possible, especially when the project is planned in a challenging surrounding, he says, “go talk to the local people, explain them your plans and talk them through the different phases of the project. When possible, take them to a comparable project. Let them, within certain set boundaries, have a saying and ask them how they would like to participate.”
Getting citizens involved in an energy project is not entirely new. He provides an example of a critical project that was handled adequately in his opinion. He refers to the case of waste disposal company HVC in the eighties. In the province of Noord Holland dioxin was encountered in the milk. The root was traced back to the waste disposal company of HVC. This was very much a major issue in those days. In the end, HVC wanted to build a new factory that would comply to the new regulations imposed. They went into a dialogue with the people in the neighbouring area in order for them to gain trust in the new factory. Small testing grounds were created for free to monitor and measure the dioxin level. These became the ambassadors for the project.
Pulles also provides an example of a wind energy project in Harderwijk in which he is currently involved. This project is being developed by the municipality itself. Here the municipality asked high school youngsters to share their thoughts on setting up a fund. In this so-called ‘Wind challenge’, three teams of each five youngsters created interesting concepts. Pulles: “They took their task very seriously and came up with some good ideas. During the development of the wind energy project some people actually stood up and became involved, including influential people in the community. These people should be involved in the entire process, as ambassadors!”
Informing and involving people will provide a clearer picture of a project. In the most positive case, people will get involved or otherwise become neutral. “Find ambassadors who will share the message”, he says, “it should become the topic during birthday parties!” Of course, you will always have people who remain negative, he adds.
Poster for the sustainability fund in Hardewijk
Participation options
Having the local community involved is not only advisable, since the introduction of the Regional Energy Strategies (RES) as part of the 2019 Climate Agreement, it is now also a requirement. The RES dictates that all new renewable projects require 50% local participation.
There are several options for developers to execute this, directly by offering shares or loans, or indirectly by setting up a sustainability fund whereby part of the revenue from the wind farm is reserved for green initiatives that improve the local community, or providing other local benefits. People participate for different reasons. Pulles refers again to the study by Platschorre. Her research identifies several motivations for people to participate, one of them being financial return, of at least a 6, 7 % on the investment. Another motivation is to witness the social or sustainable impact of their financial participation. In addition, it is also often seen as a way to learn new things. “Therefore, with each project you will need to identify what type of participation is most suitable. Is the project going to be located in a densely or sparsely populated area? What is the financial capacity of the local population? How strong is the sense of community identity?” he explains.
In the Harderwijk case, the community was initially provided four participation options; shares, loans, sustainability fund or discount on the energy bill. Here, the collective was given priority over individual benefits and the choice was made for green initiatives via the sustainability fund.
In the case of the onshore Krammer Wind Farm, in the province of Zeeland, participation took place through crowdfunding. This was a logical step as the initiators of the wind farm were citizen cooperatives. They already had a large support base through their members. Within a short period of time ten million Euro was raised.
Pulles was also involved in the Westermeerwind project. Here, the community participated for a total of more than nine million Euro in equity and loans. “We were expecting, based on questionnaires earlier on in the project, that there was much more interest in shares than loans. This demonstrates that people only really decide when the
moment is there.”
Financial participation
With regards to financial participation, Pulles thinks the wind energy industry had to get used to this becoming part of the business case. “It seems like players in the solar energy industry are more entrepreneurial in this field. Perhaps it is because wind has been there for much longer. In solar, most players are relatively new and are used to this concept from day one.”
“In onshore wind energy development the main theme is social acceptance. That is already an important driver to make participation part of your project. Financial participation is a good way to do so. Of course you need to look at each individual project but in seventy percent of the cases, it works. The question then rises; what do you want, as a developer, to share from your business case point of view?”, he explains.
Announcement for financial participation in Westermeerwind Wind Farm
Participation generally takes place when financial close is reached, shortly before the construction starts. That is when the definite financial budget is determined and estimations can be made on the returns in participation. From a project developer point of view you would like it to be the sooner the better as the project development, the period up to financial close, could easily take between six to ten years for wind energy projects, says Pulles. “In
the case of the Westermeerwind project, the initiators of the project wanted to have local participation to be introduced sooner in the project, however the banks involved required the project to become operational first. “This created a tension field”, he adds.
Participation in an early phase is possible, according to Pulles.However, it is not possible to determine an interest rate because there is no definite budget available yet. There is also the risk factor. “People get their returns when the wind farm is operational, at an early stage you cannot set that moment in stone. It is however the right time to already start talking to the locals because financial participation should not be a stand-alone act”, he says. There is also the discussion on the height of participation. Especially from the point of view of an Alderman of the municipality he would ideally wish for people that are less financially capable to be able to participate also. In that case, a sustainability fund in addition to financial participation via equity and loans would be the best option.
Future outlook
Pulles is convinced that financial participation will occur more often, especially with the RES, and developers will be smart enough to do so. People will also get more used in participating in wind energy projects. Solar
energy projects are less complex than their wind counter parts and are developed quicker. People tend to understand solar energy better and are more likely to accept and participate in these projects, he says. “However, they do not always understand that, for example, a four megawatt solar project is not the same as a
four megawatt wind project.”
“I also don’t think they quite realise how many solar fields will be realised in the next few years. The last SDE+ rounds showed more solar applications than wind applications, I wonder how they will feel about solar energy when all these projects are realised”, he explains. We also have to wait and see how the SDE++ will develop and how the energy transition will take shape, he thinks. “With the SDE+ scheme, we were able to look ahead twelve to fifteen years. In this scheme, banks are generally involved one or two years less than the SDE period. It is hard to say how this will be with the SDE++, and possible other future arrangements”, he explains.
And there is the human element, what will happen if people have been participating for a long period of time. What kind of returns will they expect? It is very important that the renewable energy sector tries to involve as many as possible citizens to create understanding and support for the Dutch energy transition.
- Research was based on interviews and questionnaires among Oneplanetcrowd.com en Crowdfundmarkt.nl crowdfunding platforms.
This article appeared in Wind Energy Magazine, edition 2020 01. Text: Sabine Lankhorst
