PV4residents – Innovative Finance Service and Business Model for PV Power Plants of Multiple Dwellings with On-site Use of Electricity
Starting point / motivation
In the current regulatory framework in Austria residents of multiple dwellings are not able use the electricity generated by photovoltaic (PV) plants on their dwelling for their own electricity needs on apartment level. Many open questions and an insufficient regulatory basis so far prevented a large-scale use of the available roofs for PV plants. Those PV plants which are currently installed are mostly only used for common electricity and for feed-in to the public grid, without an involvement of the residents. Open questions included legal, administrative, user-specific and economic aspects. Answering these questions allows developing a concrete business model which can be offered to the owners and residents of multiple dwellings. Overcoming existing barriers would free up a large portion of the untapped potential on roofs and to involve a larger share of the population. A focus on direct use of the produced electricity is increasingly important due to falling feed-in tariffs and unburdens the public grid. Supplying surplus electricity to, e.g. adjacent municipal infrastructure, may further increase the local use.
Contents and objectives
The objective of the exploration was to compile the existing knowledge – including from other countries - to close scientific gaps, to find solutions for existing barriers, to discuss issues with involved stakeholders and to develop a corresponding financing, service, and business model. The core of this exploration consisted in answering legal and administrative questions and in finding answers to existing barriers. The legal form of an energy cooperative has been evaluated. The task of this cooperative would be to operate a collective plant and to deliver the produced electricity to its members among the residents of multiple dwellings. Further members of the cooperative can be housing associations, the municipality, and possibly the local utility and other semi-public organizations.
In step 1 all existing knowledge on this topic has been collected by literature research, interviews and the participation in relevant conferences and workshops. Step 2 comprised a detailed analysis of technical, legal, administrative, user-specific and economic aspects. In step 3 these results have been evaluated, summarized and used for the definition of a financing, service and business model. Possible future users of cooperative PV plants have been involved by a survey in order to get first indications about their interest to participate in such a plant and to include their preferences. On the basis of two concrete multiple dwellings of large housing companies in Graz and Salzburg, a technical (design and dimension) and economic (net present value and amortization of investments) evaluation of such a cooperative PV plant has been carried out and the feasibility of such a business model has been evaluated.
The involved stakeholders that contributed their knowledge included the housing companies, interested residents, the municipalities of Graz and Salzburg, a utility and network operator, as well as the energy departments of the Austrian State of Salzburg and of the Austrian State of Styria were. The exchange with these stakeholders helped to develop the models and to undertake a reality check regarding their feasibility.
The results have shown that the cooperative is a suitable form of organisation for the management of a collective PV plant. A range of interested parties can become members and participate in the model. Besides the residents and the housing companies this may include public administrations and institutions, and possibly an electricity utility. The cost for the development and administration of the model are of critical importance. Some housing administrations however do not consider becoming active in the management of a cooperative as organisational form. In these cases the administration would have to be covered by an external organisation or, alternatively, the PV installations would be managed by the housing companies without a participative approach. The publication of a draft amendment of the Austrian law on the electricity market (ElWOG) supports self-consumption of PV electricity in multiple dwellings and thereby importantly facilitates the implementation of the developed models. Still, several details are not yet clear that would impact the economic viability of the assessed models, such as measurement costs charged by distribution system operators (DSOs).
Surveys in two model dwellings in Graz and Salzburg revealed an interest of the residents in a collective PV plant. Results can, however, not be generalized due to the small sample size and limited response.
The economic viability of the potential collective PV plants is given, depending on the context. For the first time, detailed cost assumptions for the development and administration of such a model were included in the economic analysis and flew in the calculation of standard investment analysis parameters such as the net present value and amortisation period.
The project didn't yet consider household storage, but the unused electricity can be used for a range of appliances in the community such as electric mobility. The models the project assessed represent an important opportunity for citizens to participate in the energy transition without the need for additional space for PV plants. A minimum project size is needed in order to cover these costs.
The following financing and business models were developed and evaluated:
- Model 1 – Energy cooperative for renters (1a) and owners (1b) of apartments
- Model 2 – Energy cooperative with an integrated, single electricity tariff
- Model 3 – Direct marketing model for housing companies (no joint investment)
Model 1 is the "standard model" as originally foreseen in the project and allows for the financial participation in the establishment of the PV plant. The remaining electricity demand is covered by a utility chosen by each resident. Model 2 corresponds to a model as already implemented in Germany where the cooperative delivers the entire electricity as a combination of PV and grid electricity. This model has been drafted but a number of questions still need to be answered which could not be covered during this project. In model 3, the housing company takes care of the installation of the PV plant and does necessarily involve the residents in the investment. The specific legal situation for renters and apartment owners was evaluated. The right of the different parties to take a decision on the establishment of a (collective) PV plant depends on the applicable law (rent or ownership). In principle, the developed models can be applied to new PV plants as well as to an operational shift of an existing plant from an important feed-in to the grid to the direct use of the produced electricity by the residents.
The results of the study provide a step towards an increased use of the available PV potential on multiple dwellings. Residents can directly benefit from economic advantages of locally produced electricity while participating in the transition towards a renewable energy system. For housing companies, the developed models provide an opportunity to increase the attractiveness of their buildings for different customer groups. The use of relatively cheap electricity, the participation in joint investments or the ecological aspects are of importance in this context.
Prospects / Suggestions for future research
Future research should focus on administrative aspects. This includes the question of which party takes over the lead of the cooperative. Housing companies are not always willing or able to cover this task on their own. Therefore, the involvement of additional parties needs to be considered. This may include existing cooperatives or energy model regions and their managers. To our knowledge, this report considers for the first time detailed administrative costs in the economic assessment of (collective) PV plants. This includes "full cost LCOE" as an indicator of total electricity costs in the cooperative as well as full cost net present value and amortisation periods. Due to the importance of administrative costs, we recommend to include this type of exercise in future research as well. Decreasing storage prices may allow implementation with even higher direct consumption which was at the time of this study not yet cost-efficient.
It would be importance to gain a broader understanding of the interest of housing companies in this topic in order to be able to better estimate the potential for implementing the developed models. Therefore, the project team will seek an additional exchange.
The survey carried out in Graz and Salzburg provides a first, descriptive impression on the interest of residents. Broader surveys would be required to gain a better impression of the scalability of the developed models.
Mag. Susanne Woess-Gallasch, JOANNEUM RESEARCH Forschungsgesellschaft mbH
Project or cooperation partners
- Dr. Walter Aichinger, Ebner Aichinger Guggenberger Rechtsanwälte GmbH
- DI Gerhard Korpitsch, KW Solartechnik-Planungs-Entwicklungs-Produktions- und Vertriebs Ges.m.b.H.
- Mag. (FH) Heidi Rest-Hinterseer, AEE-Arbeitsgemeinschaft Erneuerbare Energie – Salzburg