Financial feasibility of a CooPPA
In Belgium, there are currently 39 citizen cooperatives for renewable energy who want to harvest part of the ambient energy for their own use. They joined one of the federations RESCoop Flanders or RESCoop Wallonia to have their interests represented. The tender process in the Princess Elisabeth zone, which is also the subject of this assignment, is seen as an opportunity for these cooperative energy suppliers in Belgium to have them participate as suppliers in wind farm development on a large scale. To this end, these energy cooperatives united under an umbrella cooperative investment vehicle called Seacoop, which intends to apply to participate in the tendering process.
Econopolis was designated as financial and economic advisor to Seacoop to:
- To investigate the extent to which the “Cooperative PPA” can provide sufficient guarantee to a financial institution providing loans for the offshore investment to the SPV. Existing (corporate) PPAs have a certain value based on the sector, financial strength and business plans of the company consuming the energy in the long term. Citizens have a different profile in this, but the long-term need for affordable renewable energy is the same.
- Study the financial impact and attractiveness of: a two-sided Contract for Difference system, the impact of carve-out and the existence of a possible fallback option for the SPV. This involved linking different scenarios of price evolution in the energy markets to financial implications for Seacoop. Those scenarios were additionally used to estimate a realistic price range for the strike price of the CfD mechanism. Using those scenarios, the financial implications of the carve-out for the SPV were examined (more specifically the expectation for the balance sheet totals and annual results), allowing Econopolis Strategy to make recommendations on the financial feasibility of this business model under the carve-out.
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