logo WELFI - Wind Energy Local Financing  

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Comparative summary


About the project

Project partners

Project results

European conference


Key data

Compared analysis

With 2 900 MW of wind capacity for a population of roughly 6 millions inhabitants (i.e. 0.15 kW per inhabitant), Denmark is by far the most wind-powered country in the world and this single source provides more than 20 % of the total electricity consumption. When the first wind turbines came to be connected to the grid in the mid 70’s, the biggest machines were in the range of 50 to 100 kW, so a single farmer was in position to be the only owner. In addition the generators could be harmlessly connected to the low voltage domestic grid designed for distribution of electricity.

Sensitive issues for the continuation of wind development such as visual intrusion, spatial planning and connection to the grid slightly appeared as the size and the number of wind turbines was slightly increasing, so they could be addressed on time and at a local scale.

Of course, the basic factor for this success story was undoubtedly a clear and sustained political commitment to support wind energy, concretely expressed by a guarantee feed-in tariff. Moreover, when the newly elected right-wing government went to replace in 2001 the feed-in tariff system by a less secured one, claimed to “favour the market”, the result was a drastic fall of the yearly installed wind capacity from several hundreds to few dozens MW.

It is clearly established however that even a fair and adapted feed-in tariff system is a necessary but not sufficient pre-requisite as can be easily demonstrate by a comparison between France and Germany. A quite similar feed-in system is in force in both countries, with similar rates that were established at national level in Germany only one year before France. Even so the taking-off of wind energy is still in abeyance in the later country.

The lack of previous experience can certainly explain this gap which is revealed by two main aspects. One is the complicated and unsuited administrative procedure as detailed in the part on recommandations, while the other is the poor awareness on benefits and harms of wind energy among concerned population in rural areas.

However, an additional complexity comes from the current large size of turbines that are technically and commercially viable. It is obviously more difficult to introduce a machine whose the end of blades sweeps the air higher than 100 meters, especially in a hilly or mountain area where the landscape is seen as a basic and irreplaceable cultural heritage and an economic resource for tourism.

While the high level of growth of wind energy seems to demonstrate that difficulties with local acceptance are overcome in Spain, appearance of active networks of local opponents in France is a matter of concern for a significant part of on-going wind projects. A kind of “culture of secrecy” acquired by the few wind developers who had previously competed in bids within the Eole 2005 program makes them reluctant to publicly communicate on their projects, including with local community.

A similar phenomenon can be however observed in Catalonia, where the lack of commitment of the regional government combined with the marks of conflicts between micro-hydro power developers and local population in previous decades makes wind development much slower than elsewhere in Spain, in spite of fair tariffs. As opposed to this Navarra, where the local Government in engaged in a mid-term 100% renewable energy program with a strong support of the population who have been largely informed and associated to the program, shows the way to a sustained development for wind energy and other renewable energy sources.

One of the main evidence resulting from these comparisons is that renewable energy sources, particularly those based on immaterial flows like wind, are basically linked with the territory where they appear and thus with people living there. The local dimension must not be taken into account as a constraint to be overcome by any means, but as the social foundations of every renewable energy project, with the same importance as physical and economical foundations.

Even if this “integrated territorial approach” may not be an absolute pre-requisite for some wind projects to succeed, social concerns will inescapably become a major factor of success beside technical and economical ones if wind energy is to carry on its sustained development in the next future.

Prerequisites and suggestions

As opposed to a form of charity for inhabitants or to a way to “buy their silence”, local financing makes sense only when integrated in a comprehensive approach toward an harmonious integration of wind energy in the concerned physical and human territories, by allowing local Communities to draw upon their heritage for their own benefit without compromising their future.
Local financing however cannot be implemented alone if not associated with appropriate arrangements forming a coherent support framework.
These prerequisites can be summarised as follows :

1. for wind energy to successfully develop:
- political support
- feed-in tariffs
- fair access to the grid
- simplified administrative procedures
- spatial planning
- comprehensive communication plan

2. for local financing to be properly mobilised:
- a fair regulation for funds raising
- well-fitted financial tools and legal status
- promotion campaigns among concerned stakeholders
- involvement of banks

In less advanced countries like France or Catalonia, local financing should be considered as an appropriate mean to accelerate the growth of wind energy through a direct involvement of local population; changes in regulation concerning both wind energy and local financing should therefore be introduced at the appropriate level.
Local financing should also become a matter of interest at European level and should therefore be introduced in a future amendment to the RES-E directive for example through the possibility given to member-States to explicitly take appropriate measures in its favour.
So as to summarise the conclusion of the compared analysis among involved countries plus few others, a list of suggestions and recommendations for offering an appropriate framework for wind energy local financing is given hereafter.

1. To establish a legal framework giving more responsibilities and political power to local decision makers in the field of wind energy planning and development ;

2. To streamline and facilitate regulation applying to public calls for financing in view to favour local and/or small investors direct or indirect participation (through personal equities or through dedicated mutual Funds) ;

3. To allow local Authorities putting an obligation to have a certain minimum percentage of investments to be made by local investors for getting approval of a wind project

4. To consider financial/insurance mechanisms at regional or national level for mutually sharing the investment risks among numerous small private investors, while maintaining local ownership and local responsibility for projects ;

5. To limit the tax benefits for wind-power investors to projects involving a minimum share of local investments of not less than 30% ;

6. To guarantee the Feed-in tariffs for a sufficient period of time, e.g. 15 years.

Recommendations to wind-power investors and developers:
- The earlier the consultation process starts, the best chances the project has to be successful and to be well accepted by the local population
- A share of local investors actively contributes to increase acceptance among the directly concerned population
- All persons living in the neighbourhood of a wind project should be invited to be investor and owner in the project.
- A coherent approach to local investment should be dealt and negotiated with locally based commercial or savings banks.
- A fair distribution of the land lease among the different owners whose lands are included in the whole impacted area, independently to the individual parcels of land on which the wind turbines are actually erected, will help preventing envy and competition.
- Wind projects involve larger investments than most local activities and require more careful preparations than most other investments.