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Financing Community Energy

It’s never too early to start thinking about how you will pay for your renewable energy project. Finance options can be broken down into 4 key types: grants, debt, equity and financial incentives. The most appropriate finance option will depend on the type of project you are tackling and where you are in the project lifecycle. Many groups use all four sources to successfully conceive of and bring a project to completion.

This resource is intended to highlight some of the key funding sources which are currently available to community groups but for a more detailed discussion of project planning and financing check out Local Energy Scotland’s CARES toolkit and Community Energy England's Community Renewables Finance Model.

 

The 4 Key Types of Financing

 
 

Grant Funding

Grants are awarded for a specific purpose and do not have to be repaid. They are often used to facilitate the planning and development phases of a project. State grants are not generally used to fully fund capital phases of a project because state aid rules limit the amounts that are available if the project also intends to benefit from additional public financial incentives at a later stage.

The following grants offer financial support towards a range of activities including feasibility studies, community consultations and other planning costs as well as supporting development of innovative pilot or demonstrator projects:

 

Equity Finance

Equity financing is the process of raising capital through the sale of shares and can be used at any stage of a project's lifecycle. There are no interest charges or fixed repayments to be made but you will have to give investors a percentage of the profits and consult with them about decisions affecting the project.

The following links provide more information about raising capital via equity investments and share offers:

Financial Incentives & Subsidies

These are generally available to operational renewable energy projects and can provide a guaranteed revenue stream over a set period.

 
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