Public Support Scheme to finance RE
About this good practice
The objective of the Regional Ministry for Economy and Infrastructures (Regional Government of Extremadura) when launching this public support scheme was to boost the use of renewable energy in the region. This is the reason why since 2015 (and until 2019) several decrees have been published in order to provide funding for renewable energy projects.
Through the Decree 115/2015 and later with the Decree 110/2018, the Regional Government of Extremadura has committed more than 10 million euros in grants for renewable energy installations.
These grants, co-financed with ERDF funds, cover up to 40% of the total investment cost for citizens and private companies, and up to 80% in the case of municipalities in the region.
The scope of the grants included actions in renewable energy for different targets: individual homeowners, communities of owners of multifamily dwellings and registered non-profit associations. Likewise, the municipalities and local entities, private companies, their associations, as well as energy service providers, can take advantage of these subsidies.
Expert opinion
Grants are a very common tool for increasing uptake of new technologies, reducing costs for investors and helping to overcome perceived risks by reducing time to returned of investment. Many countries and regions have set up grants for renewables using either own funds or European Regional Development Funds. This is a strong example of such a system using the ERDF, and the differentiated support – 40-80% depending on type of investor – is a replicable aspect, recognising differing financial needs and differing contributions to reaching policy goals. The challenge in setting up such schemes lies in ensuring that the right technologies (size, efficiency) are funded and that the grants are tackling a true market failure (inaccurate perceived risk for both individuals and also financial institutions that may otherwise issue loans for such investments). As renewables become more mature regions should focus on more innovative financial instruments, but that depends on local conditions, and there can be no doubt about the effectiveness of this practice and the additional private funds that grants have leveraged to support the energy transition.
Resources needed
In the period of 2015-2018, more than 2 million euros have been granted (co-financed by ERDF). From the public administration, it also requires an efficient management of the applications received and the resolution of the proceedings.
Evidence of success
Thanks to these grants, nearly 190 renewable energy installations for self-consumption have been implemented. The success is reflected in the recent call for proposals launched in November 2020, which has increased both the funds available (8,75 M€) and the percentage covered (from 40 to 55%).
The success also lies in the use of different renewable technologies (mainly solar and biomass) that have been proven beneficial from an economic and environmental point of view.
Potential for learning or transfer
This good practice could be easily transferred to other European regions and countries; allowing the establishment of a specific public support scheme based on grants for renewable energy and self-consumption, and separating it from grant schemes for energy efficiency improvements. This will enable the allocation of budget for each specific purpose.
Further information
Website
Good practice owner
You can contact the good practice owner below for more detailed information.
Regional Government of Extremadura