StromBIZ - demonstration projects: business models for decentralized electricity generation and distribution

Status

completed

Summary

Starting point/motivation

Feasible business models to better utilize locally generated renewable energy are expected to constitute a tipping point for the “Energiewende” in Austria. Until now, generated electricity may only be used by the property owner directly or be fed into the public grid. To make better use of decentralized energy generation, it is necessary to find strategies that do not exist until now. Such models would enable the sale of electricity to tenants, shared owners or commercial renters on the same or neighboring real estate sites by means of micro-grids. It was the principal aim of the StromBIZ project to assess several possible strategies according to their legal, commercial and technical feasibility. 

Contents and Objectives

The study at hand, “StromBIZ – demonstration projects: business models for decentralized electricity generation and distribution” aimes at establishing feasible business strategies for the profitable, technically sound and energy-efficient exploitation of locally generated, environmentally sustainable electricity. In total, seven such strategies were tested and documented:

• Wien-Süd: Porsche-Viertel, Wiener Neustadt
• Neubau Grünes Wohnen
• Pauschaler Nutzungsvertrag
• Wohnungseigentümer-Gemeinschaft als Selbstnutzer
• PV-Genossenschaft
• Kaufmännisch-bilanzielle Weitergabe der PV-Erträge an Haushalte
• Supermarkt in Investorenobjekt (Gewerbeobjekt).

The study also includes other elements that will encourage the discussion about new electricity solutions:

1. an analysis of the context given by federal energy and housing policy,
2. an in-depth analysis of the legal framework applied to local energy generation and use,
3. a comparison of the Austrian legal framework to Germany,
4. an international assessment of the legal situation in cooperation with a global network of experts,
5. an assessment of the context of Austrian housing subsidies,
6. a documentation of ongoing practical examples,
7. an energy use analysis for an exemplary housing project,
8. an assessment of the general economic viability of photovoltaic units and, finally,
9. a set of recommendations for housing and energy policy reforms to enable the most viable business strategies identified in the study.

The output of the study is in line with the requirements of the program “Stadt der Zukunft” (“City of the Future”). 

Methods

All parameters of the developed business models were scrutinized concerning legal and economic aspects, in order to provide possible solutions for any barriers. The research output was produced by a large combination of methods: a screening of existing literature, survey data collection, own measuring, legal analyses, economic feasibility tests. The “StromBIZ” project is special because of its inclusion of a large group of expert knowledge from different fields: Four real estate developers active in new developments of housing, commercial real estate and halls of residence; a law firm and two research institutions provided legal expertise, also the energy sector was included. To efficiently spread the projects’ output to a large audience, a dissemination process was implemented by conducting workshops, presentations and publishing statements to the media, articles in specialized journals, and direct personal contacts. 

Results and conclusions

Already today, locally generated electricity can be put to use in common parts of multi-apartment buildings. Nevertheless, the local electricity usage and the basic load are so low that only small units can be implemented economically. To increase local energy usage, it is prerequisite to cater to individual apartment owners and tenants directly. For all business strategies assessed in the project it was a main issue to concurrently reach economic, legal and technical practicability and at the same time fulfill certain aspects of consumer protection and housing legislation. Comparatively few issues arise from the technical feasibility of the proposed strategies as innovations are paramount. Economic feasibility improves as the in-stalled components show continuous cost degression. There are several viable options that enable profitable amortization even without subsidized feed-in tariffs. Large photovoltaic units are economically more efficient than small-scale, dwelling-related units. There are potentials especially in the area of base load coverage. With a share of 20 to 40% of annual electricity consumption, it is possible to reach high internal consumption, which is essential for short amortization periods. For multi-apartment housing construction, this dimension of PV-units is recommendable also because of the available roof surfaces.

On the other hand, major obstacles to the implementation of most strategies can be found likewise in the legal regulations on electricity and housing. Large PV-units in most constella-tions will leave real estate developers overburdened with their role as electricity producers and providers. There are also other legal obstacles to the implementation of strategies (e.g. free choice of providers, obligatory individual meter points). In the sphere of housing law, shared-ownership regulations insufficiently clarify many practical aspects concerning the im-plementation of common PV facilities. Several strategies are viable in light of the current leg-islation but have limited economic feasibility, e.g. the strategy of dwelling-related, small-scale units leased by the user (Modell “Neubau Grünes Wohnen”). But there are remaining issues concerning consumer protection legislation. A different strategy within the sphere of retail real estate (Modell “Supermarkt in Investorenobjekt”) shows economic feasibility, but demand from supermarkets and other commerce is still low. All-in usage contracts, as wide-spread in homes for students or the elderly, encourage the efficient use of common PV facilities. Yet, this is only a small sector of multi-apartment housing. The strategy „Kaufmännisch-bilanzielle Weitergabe der PV-Erträge an Haushalte” (“financial balancing of shifting of PV gains”) is connected to the current discussion about reforming the Electricity Act of 2010 (ElWOG 2010) and presents a cost efficient solution. Within a costumer facility, the grid operator attributes gains out of a common PV facility to individual households, making use of several possible allocation formulas. This strategy could be implemented with only minor changes to electricity legislation, but, concerning housing law, there are still several unresolved issues involved. The proposed changes connected to this strategy are considered a prerequisite for any substantial widening of locally produced photovoltaic electricity in Austria. Such changes in energy legislation are also highly important for subsidized housing construction. Adaptations of subsidy stipulations are being discussed that would incentivize the implementation of PV facilities and their financing within building costs (the reorientation of energy indicators within subsidized housing from “heating energy consumption” to “overall energy efficiency”). This is particularly reasonable if households producing electricity through common PV facilities are able to reduce their own electricity costs clearly. 

Prospects / suggestions for future research

The study provides evidence that even in a scenario of phasing out subsidized feed-in tariffs and prevailing low electricity prices in Austria, locally produced photovoltaic electricity is eco-nomically feasible if the framework is adapted accordingly. Reforms are particularly necessary concerning the Electricity Act in order to realize the large potentials of decentralized photovoltaic electricity generation and distribution. Current adaptations clearly point in the right direction. At the same time, especially in the area of housing legislation, there remain issues that need resolving and are not yet addressed in the discussions. In a larger context, it is still uncertain how electricity grids can cope with production peeks out of sustainable electricity production. 

It seems counter-intuitive, and is hard to communicate to a wider audience, that a reorientation towards renewable energy sources in electricity production, in a first step, requires a massive upgrading of existing grids. This could be addressed if research, and possibly subsidization, provided incentives for strategies that prevent renewable energy sources to excessively burden existing grids during peak production intervals. The international comparison has an interesting result: Even in the light of globally similar challenges, differences in the details of regulations enable implementations of strategies in some countries, while they remain unfeasible in others. This leads to the question if country specific solutions should be widened or whether collective solutions in an international framework should be aspired. 

Project management

IIBW - Institut für Immobilien, Bauen und Wohnen GmbH

Project or cooperation partners

• Hasberger_Seitz & Partner Rechtsanwälte GmbH
• Energieinstitut an der Johannes Kepler Universität Linz
• Gemeinnützige Bau- u. Wohnungsgenossenschaft "Wien-Süd" eGenmbH
• EVN AG

Institut für Immobilien, Bauen und Wohnen GmbH
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