3FOOD

Third Industrial Revolution Consulting Group
Public and Private Sector Financing Models
One of the most common options for accelerating investments in DG is the use of Feed-in
Tariffs (FiTs), which typically subsidize the initial cost of installing renewable energy systems at
the consumer level. FiTs have been in operation in Luxembourg for the past decade, 46 cover a
wide range of DG and renewable energy technologies, and have recently been expanded to
support the development of community-scale, renewable energy projects. 47 A system of
premium FiTs has been shown to be an effective instrument to promote the generation of
renewable electricity; notably, to ensure a low-level market adoption of wind and solar power
at the national level. In the longer term, however, such a system is hard to sustain due to its
distortive pricing impacts and, ultimately, incompatibility with the creation of a single,
liberalized electricity market in Europe. Taking this and the current technology maturity levels
for wind and solar PV into account, FiTs for these types of renewable energy systems are not
likely to be a key part of Luxembourg’s future smart energy system design.
Additional business models and financial schemes are emerging in Luxembourg to support the
development of energy cooperatives. Following success in other European markets, notably
Germany, Denmark, and Italy, 48 energy cooperatives can take several forms. These forms range
from development of small-scale renewable energy assets to serve a part of a community’s
energy needs, to full-scale, municipality-owned and operated generation and distribution
facilities. Other initiatives are experimenting with crowdfunding platforms (Citizenergy) 49 and
performance contracting and third-party financing models (CITYnvest). 50
We note that Luxembourg has a few relevant projects underway, namely Enercoop TM 51 and
EquiEnerCoop, 52 which aim to promote, support, and provide advice on establishing
cooperative energy systems. More cooperative models are emerging and should continue to be
encouraged through public/private partnerships.
46 International Energy Agency (IEA). “Energy Policies of IEA Countries – Luxembourg 2014 Review” 2014. Available
at: http://www.iea.org/publications/freepublications/publication/energy-policies-of-iea-countries---luxembourg-
2014-review.html
47 See announcement at https://www.wort.lu/en/business/from-january-1-2016-new-solar-feed-in-tariffs-inluxembourg-55bf68590c88b46a8ce5dc45
48 European Commission. “RESCOOP European Projects”. May 2016. Available at: https://rescoop.eu/participationrescoops
eu-projects
49 See https://citizenergy.eu/
50 See http://www.citynvest.eu/
51 ECI Transition Minett. “La Transition Energetique”. 2016. Available at: https://www.transitionminett.lu/groupes/tmenercoop
52 EquiEnerCoop. “EquiEnerCoop – Société Coopérative”. 2016. Available at:
http://www.equienercoop.lu/statuten/
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