How to stabilize the cost of living by sharing energy and food

It’s time to take a beyond-silo approach to add value from rooftop photovoltaic (PV) installations. This analysis suggests a new model of solidarity enabling citizens, local retailers and farmers to benefit from solar energy. – reports Guillaume Joly.

The aim of the European Union (EU) is to accelerate the implementation of installations using renewable energy. In addition to achieving climate goals, this will help strengthen the continent’s resilience. To achieve this, regulation of energy markets must increase electricity production from photovoltaics (PV). We can see that beyond the low-hanging fruit of the largest commercial roofs, there is still a disconnect between the stakeholders who can invest and the stakeholders who can deliver solar-friendly roofs. Investors need support and guidance to find viable projects and available roof space. At the same time, as the costs of producing photovoltaic energy decreased, feed-in tariffs became less important. This creates uncertainty among investors.

Innovative business models are needed to bridge the gap between investors and owners of roofs suitable for photovoltaic installations. To cover the risks of solar investors, new types of regulations are needed to ensure the security of investments through shared financial systems.

However, remaining in a silo paradigm and only financially supporting the introduction of solar panels would be a missed opportunity to engage citizens in the energy transition. To engage all of society in systemic change and ensure that renewable energy sources act as the lever they should and can be, we need to go a step further and integrate their technical implementation into profitable business models.

One way is to use a monetary tool to leverage the wealth created by photovoltaic energy and distribute it to other sectors of the economy. Thanks to this tool, photovoltaics can be less directly profitable for investors and, in this sense, less capitalistically “efficient”. However, the economy as a whole would benefit more and there would be long-term payoffs for investors, making the distribution of wealth based on the value of solar PV more economically efficient. The risks we need to consider are actually much broader.

Crossed challenges

Many households do not have a roof on which they can invest to reap the benefits of photovoltaics. Tenants from the private rental housing sector are a good example. At the same time, large retailers across the EU own tens of square kilometers of rooftops, some of which still remain undeveloped. Just opening the roof to external investors with a direct revenue stream from the sale of photovoltaic energy leaves several open questions:

• How to honestly approach the issue of roof rent?
• Should electricity generated during peak production be used directly, stored or fed into the grid – and who decides on the benefits?
• How do you define a fair way to offset solar losses (when wholesale electricity price revenues are low) with excess solar revenues? Could other sectors of the economy or parts of society also benefit?

Among other challenges, low-income households also face a cost of living crisis that affects food prices. Millions of European households have had to reduce their caloric intake and the number of daily meals in some way due to inflation and higher costs. The overall climate crisis only highlights this the state of food insecurity that tens of millions of European households and hundreds of thousands of farmers currently live with.

How can a cross-cutting, cross-silo business model ensure security for all stakeholders? And how could it do this while ensuring that a thriving renewable energy economy is used to support the development of other struggling sectors, such as sustainable and affordable agriculture?

Suggested solution – monetization of added value

One solution is to cooperate with large basic goods retailers and medium-sized and cooperative chains. For simplicity’s sake, let’s call them “supermarkets”. They can help embed the wealth created by solar on their roofs into a new local economic loop. This can be done through indirect dividends from the investment, through its monetization.

This may take the form of dedicated currency or vouchers. Where would the money come from? Supermarkets would also agree to pay for solar energy at a higher cost than direct investment and self-consumption, but still at a guaranteed level lower than normal market prices for electricity. The difference will affect a mutual reserve fund to compensate for the value of the vouchers.

Supermarkets would invest in both the energy efficiency of their buildings and a new pool of deep freezers. Supermarkets would not receive any rent for installing solar panels on the roof and would bear maintenance costs. Supermarkets would have to time their freezers’ energy use to match peak production times to over-freeze staples around midday, at -36°C instead of -18°C.

Then, during peak consumption hours in the evening, the freezers were turned off for two hours. The provision of this service would be formalized in the form of a dynamic pricing contract to enable supermarkets to double the dividend. To do this, they would sign a tripartite agreement with an energy supplier and investors who would invest in a photovoltaic installation on the supermarket’s roof, either directly or through a common intermediary (or “aggregator”).

Such In order to empower stakeholders, dynamic pricing contracts should continue to be enabled in designing and implementing new business models to optimize the use of solar PV energy. The income obtained will be regularly credited and capitalized in the investment reserve fund. The fund would compensate supermarkets for issuing quarterly vouchers.

The investor aggregator may be a consumer protection organization, a municipality, an energy community, a charity, agricultural cooperatives and so on. The aggregator would play a key role in managing both the installation and the entire economic scheme. The aggregator would provide low-income households with steps to enter the program by: doubling the investment through subsidies, spreading the investment over several years with low monthly payments, providing advanced, trusted payments that households repay over time and thus NA. Several financial programs make this possible. Moreover, the role of the aggregator becomes more meaningful once a critical mass of projects is achieved, as it helps reduce administrative costs by making them common.

Linking energy and food supplies to create strong local ties

Supermarkets would receive indirect and distributed income from the organized purchase of photovoltaic energy. Through the mutual reserve fund, they would transfer most of its value into bills for investors.

The vouchers will be used to purchase local organic food products from accredited farmers who have implemented sustainable practices and environmental services. Investors would then benefit from a buffer against rising food prices and protect their purchasing power of high-quality food over the life of the solar panels. This would ensure loyalty not only to investors as supermarket customers, but also to farmers whose produce would be purchased at a fairer price and the money would also come from the reserve fund. This could take the form of quarterly compensation from a reserve fund for planting and maintaining hedgerows, ponds and other water- and biodiversity-friendly features. Supermarkets would have some freedom in terms of volumes and the use of the reserve fund to assess the margins achieved. Supermarkets wouldn’t lose money; they would recycle it decisively and fairly.

If the aggregator was an agricultural cooperative, then you could also invest in the roofs of your farm buildings. And purchasing their products would be easier thanks to vouchers. Only the aggregator could pay remuneration directly in euros rather than in vouchers to compensate for its services.

To illustrate the comparison, these vouchers would act as the original model of local utilities (e.g. Germany’s Stadtwerke), where the benefits from municipal power plants were used to co-finance another key infrastructure – electric public transport.

Revitalizing the local economy

Going forward

• Supermarkets could organize investments in parking lots that produce shade and photovoltaic energy, which is currently mandatory in France. The vouchers could be used to pay for investors’ access to electric vehicle (EV) carpooling offerings. A pool of electric vehicles would provide another opportunity to buffer solar production with batteries. Lunchtime shoppers can get a 50% discount if they eat at a restaurant that accepts vouchers, ensuring your electric vehicle stays plugged in when the sun is at its brightest.

• Distribution system operators (DSOs) are now included in the scope of energy efficiency obligation schemes (EEOS) in the latest version of the EU Energy Efficiency Directive (EED). One energy efficiency scheme could be to offer supermarkets tax breaks on energy bills if they implement a solar voucher scheme. Taxes are a good and solid incentive to act.

The views and opinions contained in this article do not necessarily reflect those of the European Union Heinrich-Böll-Stiftung.