DESH – Distributed Energy for Social Housing
Solar investment with high returns and social impact
Endless has analyzed several financial models for distributed solar projects in Brazil, and concluded that the residential segment is the most attractive target client group to this kind of project, due to the high tariffs paid. Despite the economic appeal, residential clients lack financial options, especially those with limited access to credit.
To be able to work with this client group we evaluated different alternatives and reached our proposed solution of a cooperative set-up, bundling many clients into a single entity developed and managed by the DESH proponents.
Organizational Design and Structure
The Distributed Energy for Social Housing Fund (DESH) is a third-party ownership and rental model for distributed solar systems in low-income condominiums that will pose no upfront costs to the tenants. Tenants will only pay a monthly rental fee that is 10-20% lower than their standard utility rate and will bear no risk related to procurement, operations & maintenance costs. It provides potentially attractive investment opportunities for the implementation of these systems and through that is able to fund 100% of the distributed generation and terms that match the lifetime of the projects.
First Phase and Impact
For the first phase of the project we chose the city of Belo Horizonte for several reasons: it has a good level of solar irradiation, there is good political will and support, the energy tariffs for our target clients are high, the state of Minas Gerais has the most beneficial legislation for distributed solar energy and it is a large municipality that can serve as benchmark to other cities in Brazil.
First phase impact (15 MWp)
Primary SDG 7
7.1 Renewable energy produced 23,652 MWh p.a.
7.2 Avoided greenhouse gas emissions 8,728 tCO2eq p.a.
7.3 Number of people with access to affordable, reliable and modern energy services 80,396 people.
Secondary SDG 1
1.1 Revenue from products serving low income groups 676,920 EUR p.a.
Scalability of Investments
One of the main motivations behind DESH is the size of the target market and the lack of equivalent alternatives for solar financing in the target market. An initial project of 5 MW will serve as proof of concept and as test bed for project replication. Currently our target market is made up of over 73 million people. Our aim is to be able to attend 2% of this until 2030, that would require the building of 300 MW in solar assets.