Renewable energy installations as collateral for community energy projects

Energy communities develop mostly small-scale renewable energy projects, frequently on the land or roofs of other people. In financing these projects, the energy communities need inexpensive legal means to retain ownership of the renewable energy installation and to create a real security right in the installation for their lender. Relying upon solar panels on roofs of other people as a case study, this contribution comparatively examines the legal obstacles and costs involved for energy communities to achieve these goals in Germany, Italy, the Netherlands, and South Africa. This contribution shows that Dutch and Italian law generally bind the building and the solar panels together under the doctrine of accession. These legal systems require the creation of a right of superficies, which gives rise to costs for a legal professional, the civil-law notary, but tends to lower the interest rate for the community’s loan. By contrast, German law will allow the energy community to deactivate the accession of solar panels by agreement, leading to lower costs for legal professionals but also potentially higher interest rates. South African law remains in a state of flux. This contribution argues that while small-scale energy projects will generally be at an economic disadvantage vis-à-vis large-scale projects, the route towards lower transaction costs for energy communities is not straightforward because it depends on the individual case whether lower costs for legal professionals will outweigh higher interest rates.