Community Research and Development Information Service - CORDIS

H2020

RESFARM Report Summary

Project ID: 649717
Funded under: H2020-EU.3.3.7.

Periodic Reporting for period 1 - RESFARM (Developing and implementing financial instruments for the mobilisation of investments in renewable energy in the agrarian sector)

Reporting period: 2015-03-01 to 2016-02-29

Summary of the context and overall objectives of the project

The development of the technology of electrical production by means of renewable energies and cost reduction of such installations, has converted them into a technical alternative and economically interesting in satisfying the energetic needs in homes and SMBs.
However, the high initial investment that these installations require complicates or impedes a great use of the diverse technologies which allow the production of electricity of a renewable origin. This situation has considerably become worse due to the omission of public funding and the difficulty in obtaining financial support from banks, which is therefore causing the nearly complete standstill of new installations in many EU countries.
On the other hand, the technological and regulatory innovations are allowing the introduction of alternative project financing models based on the philosophy of disintermediation from banks and the specialisation, which improve the efficiency and financial costs, allowing the use of resources to projects and users which would not be considered for a traditional bank loan. These financing tools, correctly designed and applied, are destined to become the most correct option so that small investors who are interested in the renewable electrical production can have access to the necessary resources with some financing conditions which are safe and interesting.
The adaptation of these types of alternative financing models for the investment in renewable energy installations in the context of the European farming sector is conditioned by the creation of a precise institutional and cultural environment. In this regard, the offer of these products (services companies, leasing…) is still insufficient and in many cases not quite adapted to reality. Also, the extent of knowledge by the potential users is either little or non-existent.Not only among the farmers, but also among the administrations and collectives. The improvement of the adaptation of financing alternatives and the regulations to these, the spreading of this among potential users, facilitate the access and especially the possibility of managing and financing together a large group of individual projects, but of similar characteristics are essential elements to increase the investments. In particular, it is necessary to determine the economic potential of the installation of these types of plants in the farming sector, the methodology to determine the risk of these projects, the type of contracts that will join the farmers and investors and the way to inform and manage the resulting financial solution.
In order to undertake this project, the participating entities in this action will integrate their corresponding needs and abilities so that a global and precise image will be generated of the farming potential to produce energy whose value can be associated to a financial product which can be used to attract the necessary investments and an additional income to farmers.
At the same time, some important points will come to light which will have to be addressed in order to facilitate the effective use of these alternatives, identifying the actions and the adequate social agents in each case. The partnership will include institutions which represent the different areas both public and private relevant at the time of identifying, adapting and implementing financing alternatives, guaranteeing the viability of the projects without having to resort to the scarce economic resources of the farmers, and that the final user has and knows these possibilities. As the participation is directly in the project, the representative institutions of the farmers can let these know all the relevant information so that it reaches them from a close and trustworthy source.An aspect which is critical for the development of the market. Additionally, a protocol will be created to identify and register those farming activities which are susceptible to employ the financing solution so that at the end of the project it is possible to make immediate use of it.
In short, it is about providing a context for new financing models for investors of installations of renewable energy in the area of farming and once this context has been done, develop a market of users by means of actions of diffusion and support to these users. For this, we have turned to the programme Horizon 2020 so that the necessary resources are available for the correct development of such a new and ambitious approach.
The strategic objectives which are expected to be reached are the following:
- Increase the installation of RES production plants in farming.
- Diversify the sources of income of the farmers and in general the population in rural areas.
- Create a mechanism to manage in an effective way the demands by the RES farming producers to the responsible politicians.
To reach these objectives,the specific objectives of the action are the following:
- Create a consortium of experts and key players to gather, analyse and share all the necessary elements which are necessary for the release of a derivative based on the cash flow obtained from the installations of renewable energy production in farms.
- Create a bank of projects for the RES in the fields with the necessary characteristics to be planned, financed and managed in a collective way and being the object of the securitisation.
To reach the objectives, the project partners who form the partnership, will execute the necessary actions as described in the following section.
1. Compile, analyse and share all the existing financing alternatives susceptible of being used for investment projectsin the installation of renewable energy production in farming.
2. Carry out the necessary studies to determine the production potential and the specific requirements in farming(surveys, seminars…) and its context with the existing financing alternatives.
3. Determine the most adequate alternatives, the precise adaptations and the strategy of implementation, especially related to collective schemes to improve the efficiency and the financing usage costs. This includes the definition of a methodology of risk valuation, the elaboration of standardised contracts which link the farmers with the investors and the legal and financial details of the financial product.
4. Diffusion to the users of the adequate alternatives and support to its use.
5. Creation of a register with a sufficient number of potential users of the financing who fulfil the requirements to be managed together and employ the financing solution.
6. Any other initiative considered appropriate to carry out the project.
This way it is expected to reach the final objective of the project: provide the farmer and stockbreeder a new business opportunity, compatible with the one used at present without having to turn to their own resources or going into debt.

Work performed from the beginning of the project to the end of the period covered by the report and main results achieved so far

"The RESFARM project began on 1st March 2015. Herein are the details of the taskscarried out from the above said date until the 29th February 2016, together withthe main results obtained.
The two main objectives during this first phase were the implementation of a consortium for the project’s proper development and to draw a comprehensive picture of the situation.
There had to be a series of tasks and actions undertaken in order to enable the project’s proper implementation and monitoring before any gathering of information for later analysis.
A document was drawn up, Grant Agreement, for the proper management, project coordination of the consortium. The document states the rights, the obligations of each of the partners and the project’s regulations. This said document is aimedat enhancing efficient co-working, meeting stringent deadlines and giving a rapid response to any unforeseen events. To this end a work panel has been created and includes the general director, the management board and the national coordinators. This panel covers the responsibilities (administrative and financial), the tasks to be performed by each partner and completion times.
Ongoing communication is maintained among all members and other stakeholders during the RESFARMproject’s period of implementation. Communication among the parties is carried out through emails, phone calls, video conferences and / or meetings. This avoids any delays or bottlenecks that may affect the project.
On the 21st and 22nd April 2015 a kick-off meeting, held in Santiago de Compostela, was organized by the UU.AA-UPA. The meeting was attended by representatives from all the partners fromthe RESFARM project and a representative from EASME. There was an explanation of the work package being carried out, along with the derived tasks and actions and the objectives to be achieved during project’s implementation. The meeting’s second day made the most of all members being present to calla press conference and present the RESFARM project and its objectives to the mass media, to both the Spanish audiovisual and written press.
At the project’s commencement an exclusive web page was created and regularly updated under the following address: http://resfarmproject.eu/en/. The site is available in English, Spanish, Italian and Greek. This allows for fluent communication between users and stakeholders and allconsortium members. Thus, everyone is updated on all the project’s progress and is familiar with the most relevant information.

The website includes the following details: a presentation of the project and its objectives, tasks to be undertaken to achieve the objectives, the expected results, a brief presentation of the consortium’s partners, project recipients (farmers and investors) and contact. There is also a specific information section where news and public documentation generated during the project ishung.
During the project’s first phase there is a collection of data related to RES in the agricultural sector in the three destination countries (Greece, Italy and Spain), and later analysis. This information will lead to a subsequent basis for dialogue among stakeholders and shall define the investment instrument.
In order to achieve a complete picture of the situation there is a closed-ended questionnaire for farmers and an open-ended interview format for four large groups or sectors: engineers-technicians, operational farms, public administration and the finance sector. These two formats allow for the most relevant quantitative and qualitative information on RES on farms to be gathered.
The closed-ended questionnaires are for farmers and allow for information to be gathered on technical and economic performance of existing farms and the will ingress/preference of farmers to have RES installed on theirfarms. Information is gained on the different means of finance, contributions and views on RESFARM’s approach and any barriers to be avoided. It also provides view points on sectoral legislation, public policy, on the pros and cons of RESFARM, and on the approach and willingness to take action.

Initial versions of the questionnaires were tested on a small number of farmers in each region in order to improve and gather the necessary information in a more efficient and accurate way. Once the closed-ended questionnaire’s final version was completed the questionnaires were given the go-ahead in the three regions involved in the project.
Personal data was gathered in both the interviews and questionnaires so, in order to comply with current legislation on data protection in the three target countries, protocols and procedures were required to ensure the proper collection and management of personal data.
A web platform was created for the questionnaire’s centralization and this was adapted to the three participating countries. The filled in questionnaires were recorded and the data could then be accessed for subsequent statistical study.

At the same as the format of a closed-ended questionnaire was being created, the format of an open-ended interview was also created and addressed to key actors in the financial sector and other sectors involved in RESFARM. There are four large groups/sectors for which the open-ended interview format was defined: engineers-technicians, farms in operation, public administration and financial sector. An open-ended interview format was designed for each of these abovementioned. During the interviews either format was used according to the group / agent to be interviewed.
On the 23rd and 24th November 2015, in Rome (Italy), AeVAss organized RESFARM’s second meeting. In this meeting there was a tracking of the work carried out in each country so far and the goals achieved. This largely avoids delays and bottlenecks that may affect the project. The questionnaires and interviews conducted thus far were analyzed and the doubts that had been generated until then were raised. The procedure required to record the data on to the created database was also explained.

On the second day a press conference was called for the Italian media.
Once the data from interviews and questionnaires were available on the completed database, analysis and processing of appropriate statistical procedures commenced. The database containing the questionnaires’ results is subjected to continuous quality controls in order to ensure the accuracy of the collected data. Therefore,the database is revised and checked to ensure that there is no incorrect data. Verification through random callsisalso carried out.
Depending on the results from the questionnaires and interviews, the business models for RES on farms and the most appropriate financial instruments for the target countries are identified. There is also a study of the legal and administrative framework in the three target countries in order to identify and propose a legal framework, contract models and administrative procedures for the business models.
The preliminary results have been presented to experts and representatives from the sectors connected to RESFARM issues.
All this collected information allows for the achievement of the project’s first milestone the preparation of "Baseline documentation". The "Baseline documentation" is composed of a series of reports that summarize the work of gathering information and will enable the development of the project’s next phase:
- The development of an investment instrument for RES in the agricultural sector through dialogue with stakeholders
- The formation a RES on farms project bank, with the required characteristics to be planned, funded and managed collectively and bethe object of securitization."

Progress beyond the state of the art and expected potential impact (including the socio-economic impact and the wider societal implications of the project so far)

In order to develop a sustainable energy model for the farmers of Europe it is necessary not only to disposal of adequate and competitive technologies but to develop suitable business and financing schemes to allow large scale introduction. These business models must be integrated in the value chain of the agrarian sector as well as sufficiently standardized, addable and predictable as to attract capital market investors. The determination of this common ground for farmers and institutional investors has been the key task developed so far by Resfarm and some important new insights has arisen. These is a genuinely new contribution to the state of the art of financial and agricultural economics, because, as far as we know, until now there were no valid statistics and analysis on how the willingness of farmers to adopt capital market suitable business models to introduce new technologies on their farms. This is an important issue, not only for designing efficient business models for renewables, but the new evidences will be also useful to consider and analyses how to channel low-yield, long-term investments from the, by far, bigger source (capital market investors) to modernize European farms. Thus we expect that these results will not only help us to design an attractive scheme both for farmers and investors in order to promote on-farm RES, but for those agents that are interested in promoting new investment in the European farms and that can take advantage of the benefits of capital market funding.

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