Half of the investors financing the Balearic Islands' macro solar farms are residents

PalmaNearly 50% of investors in photovoltaic megaprojects in the Balearic Islands are islanders. These projects, which often generate debate due to their impact on the land, are usually financed by contributions from individuals and investment funds. In the Balearic Islands, local participation is particularly high, and more and more residents are allocating a portion of their savings to them, seeking economic returns. For these investors, it represents a new business opportunity that has emerged, while a significant part of society, such as environmental groups, agricultural organizations, and even the Administration, have expressed concern about the territorial destruction they promote.

The financing process for individual investors in the Balearic Islands for the Cap Blanc photovoltaic megaproject (Llucmajor) is currently open. In this case, the project, coordinated by the investment platform Fundeen, offers a participation structured as a loan with a fixed annual interest rate of 7% for five years, with an estimated cumulative return of 36.67%. These conditions have sparked the interest of numerous residents, who see renewable energies as an investment opportunity and a new business niche that, once again, turns rural land into a speculative asset. At the same time, the projects continue to generate controversy among groups that question the occupation of rural land for energy production and the impact these megaprojects have on an archipelago already heavily impacted by construction.

The co-founder and Chief Operations Officer of Fundeen, Adrián Bautista, highlights that the Balearic Islands are one of the territories in Spain with a higher participation of residents in this type of projects. In his opinion, the economic participation of neighbors in the financing of projects can help change the perception of these facilities. "If a neighbor sees the macro-park and it bothers them, but then they think that the sun hitting the panels is generating money for them, they feel the grievance is less," says Bautista. Nevertheless, the debate on the balance between the energy transition, landscape preservation, and economic benefits remains open in the Islands.

It should be noted that it was the Climate Change Law of the Balearic Islands that opened this path of economic exploitation for the islanders, as it determines that in certain renewable installations of a certain power (greater than 5 MW), a part of the investment must be reserved so that local investors can participate before opening it to the general market. In other words, if there are investors who are to profit from the exploitation of urban land, the law protects that a percentage of these will be a resident of the Balearic Islands.

In the case of the Cap Blanc macro-park, before this investment period opens for islanders, almost 200 residents of the Archipelago have already reserved their place in this project. Specifically, the co-founder and Director of Operations at Fundeen has explained that shares of this fixed-interest loan have already been reserved for over 1.7 million euros.

While it is true that Fundeen points out that many investors believe in the project and see it as an opportunity to contribute their bit towards sustainability and energy autonomy, they also acknowledge that many others do so purely for economic reasons. Fundeen assures that their intention is to seek the best possible deal for investors, as those who truly make the project happen are not them but an investment fund. In fact, normally in Spain the minimum amount for this type of project is 100,000 euros and Fundeen has lowered this quota to 500 euros to reach more people. That is why they emphasize that "it is a safe investment" and that they have a guarantee in case something goes wrong. Nevertheless, they assure that "it is practically impossible".

In this regard, they have explained that it works exactly as if the person investing were a bank making a loan to a user. In this case, they make a loan and therefore finance a solar project. At the time of investment, the person is detailed and informed of the financing conditions. In the case of Cap Blanc, once the company owning the macro-park (Mirova Energy Transition 6) sells the energy generated by the panels, the person will receive the agreed-upon interest.

The big question is what happens if the park doesn't work or there's a problem? According to Bautista, the investor is perfectly informed and covered. In this case, Mirova has provided a guarantee of 1.2 billion to cover possible losses and pay investors. Therefore, as they explain, it is "like putting money in a bank for a fixed term, but knowing that you are investing in renewable energies and sustainability".

However, the reality is that the financing system for some solar parks has helped to increase the speed at which development companies obtain resources. In addition, they save themselves at least partially from having to go to banks to get the money that makes investment possible. In other words, it is the islanders who, in part, make the parks that a large part of society criticizes possible. It is a new model of economically exploiting the land without even getting directly involved. Financing projects of large solar parks on rural land in exchange for economic compensation.