In many ways, the installation of solar PV is already commercially mature and thus capable of being developed and funded by community members. However, large (MW scale) single ground-mounted arrays, or large arrays in single ownership spread across a number of roofs or other locations, may introduce sufficient complexity to make alternative commercial arrangements more attractive. Many of these are based on some form of partnership with the community.
There are a variety of development models that involve CARES clients to a greater or lesser degree and generally, as the level of involvement and control increases, so too do the risks and rewards. The range of involvement extends from taking on the full development of a project, to simply receiving benefit payments from another developer.
Allowing a solar PV developer to lead the project and drive it through to completion offers the CARES client less risk, no cost and little work, however, the financial reward is relatively low compared to the same project being led by the CARES client.
As the benefits of engaging and sharing with the local community have been shown to create more successful projects, commercial developers are also creating different development models. Many of these are based on some form of partnership with the community, possibly in a Shared Ownership or Joint Venture arrangement.
The Shared ownership portal is designed to allow organisations and community groups across Scotland to collaboratively progress renewable energy projects and is a useful place to start for those wishing to invest. The shared ownership module provides guidance on investing in projects being developed by a commercial developer.
The information below sets out the five main options open to a CARES client wishing to be involved in a solar PV project. It identifies the role of parties involved, where the main risks lie, and the potential benefits.
Model 1 – CARES client leads and owns the project throughout
Description: The CARES client identifies, develops and operates the project.
CARES Client role: As full developer.
Third party role: None.
CARES client risks: The CARES client bears all of the technical, commercial and financial risks
CARES client benefits: The CARES client gains all income from the project and remains in total control of the process and outcome.
Comments: For the CARES client to retain all financial and other benefits, it must act as developer and take responsibility for all project risks. The CARES client may also become responsible for making community benefit payments to others.
Model 2 – CARES client in partnership with another party (Shared ownership joint venture)
Description: The CARES client identifies the project but shares further costs and risks.
CARES client role: To undertake agreed tasks within the project development process.
Third party role: To undertake agreed tasks within the project development process
CARES client risks: Risks are shared between partners and are usually limited to project costs.
CARES client benefits: The CARES client gains a share of income and control, which remain in the proportions agreed with the other party.
Comments: Depending on the detail and legal options taken, this can give the CARES client control of the project and can make the process of development easier. The transfer of benefits from the project will be agreed as part of the Joint Venture partnership agreement.
Model 3 – CARES client initiatives then hands over to a developer
Description: The CARES client identifies the project, gains rights to the site and seeks a developer to take the project forward.
CARES client role: Site selection and initial viability, then support for the project to make it a success.
Third party role: To confirm viability and take the project forward to operation.
CARES client risks: The work to identify an appropriate site usually involves more time than money, minimising risk .
CARES client benefits: With rights to use the site, the CARES client can negotiate more favourable outcomes in terms of ownership of the project.
Comments: The CARES client controlling the development site should generate higher benefits than those without control, however the bulk of income will reside with the developer.
Model 4 – Developer leads and offers sale to CARES client (shared ownership shared revenue)
Description: A solar PV developer leads the project and sells a percentage or the entire project to the CARES client.
CARES client role: Initial support for the project to make it a success then raises funds for purchase.
Third party role: Provides development skills and sources initial project finance.
CARES client risks: Reduced risk as CARES Client would take ownership of an asset or project shown to be viable.
CARES client benefits: Low risk route to long term asset ownership of a project.
Comments: A potentially attractive option where the project has been initiated by a developer. Purchasing generally increases the capital cost and may also impact on the income period. CARES clients considering this option should focus on obtaining legal and financial support.
Model 5 – Developer leads and owns the project throughout
Description: A solar PV developer leads the project and offers the CARES client an annual payment.
CARES client role: Initial support for the project to make it a success.
Third party role: As full developer.
CARES client risks: None.
CARES client benefits: Community Benefit payments vary between projects but will be small for solar PV projects.
Comments: Community Benefit payments to CARES clients will generally be a fraction of the income available from a project.