How capital is structured
Autonomous trust, per-project SPVs, 8-level contractual waterfall, and 30% community economic rights — plus the explicit reconciliation of the two IRR figures circulating in this project.
The two IRR bases
Two figures called "IRR" circulate in this project. They measure different things on different bases. Comparing them directly leads to a false conclusion
| Project IRR | Institutional investor IRR | |
|---|---|---|
| Where it appears | Solar simulator and archetype simulator on this site | Investment thesis, equity tranche term sheet, performance fee hurdle |
| What it measures | The return on energy savings: the kWh the community no longer buys from the grid or from diesel. That avoided expenditure is the entire cash flow. | The return on capital contributed to the autonomous trust, distributed through level 7 of the payment waterfall. |
| Investment basis | costo_efectivo = gross investment - FENOGE co-financing - Ley 1715 (Law 1715) tax package (36.5%) |
Committed equity capital (USD $1.5M of the USD $10M Phase 1) |
| Cash flow | Annual savings with 2%/year degradation, minus O&M of 2% of gross CAPEX, over 25 years | Project distributions after debt service, fees, and the 30% community share, over 7-10 years |
| Range | Varies by archetype. For ZNI (non-interconnected zone) off-grid, the research itself reports >100% "due to the magnitude of diesel savings" — a three-digit return there is documented, not a model artifact. | 8-12%, scaling to 14-18% with 50-60% FENOGE co-financing |
The institutional investor IRR (8-12%) comes from Investment_Pillar_Expanded.md (lines 71, 642, and 1027). The project IRR is an output of this site's model. One is not derived from the other and neither constitutes an offer.
Why the simulator says "with FENOGE" and "without FENOGE," and never "without co-financing"
The simulator returns two project IRRs: one with whatever FENOGE co-financing the user selects and another with that same co-financing set to zero. Both are calculated after the Ley 1715 tax incentives, and the only difference between them is FENOGE. That is why the second is labeled without FENOGE.
The investment materials also report a "with/without co-financing" pair (28-40% / 8-12%), but they calculate it on a different basis. Reconstructing their own worked example (CAPEX COP $720M, savings COP $112.92M, OPEX COP $14.4M) reproduces their figures and reveals the basis:
- their "with co-financing" is the IRR on the net investment, without applying the tax package → reconstructs to 34-45%, which frames their 28-40%;
- their "without co-financing" is the IRR on the gross investment, with nothing applied → reconstructs to 13.0%, which frames their 8-12%.
Our figure at FENOGE = 0 is around 31.4% — not 8-12% — because theirs does not include incentives and ours does. Labeling our number as "without co-financing" would be simply false, and a financier comparing it with the 8-12% from the investment materials would be misinformed. They are the same word on two different bases; here they are kept separate.
What the simulator's cash flow does not include
Inverter replacement, insurance, and cost of financing are excluded. Not because they are immaterial, but because no source in this project states a figure for them, and the rule is not to invent one. Their absence makes these returns optimistic: it is a known, deliberate, and documented gap, not an oversight.
The 30% community share lives in the waterfall
The 30% community economic rights per project are held as Community Participation Certificates within the autonomous trust, and level 6 of the payment waterfall allocates them automatically and contractually. They require no discretionary approval — that is why they are a right and not a promise.
Three tiers, deployable in 60-90 days
The original 4-tier cooperative-SPV architecture was reviewed by an advisory board that unanimously recommended "do not proceed as designed." This is the version that addresses every criticism
Phase 1 architecture. The diagram is a visual representation; the detail of each tier is in the three cards below.
Autonomous trust
The standard Colombian infrastructure finance vehicle: every major concession (4G highways, airports, ports) uses it. FMO, KfW, and IFU have already invested through autonomous trusts in Colombia.
Project SPVs (SAS)
One SAS per project within a ring-fenced sub-trust: project-level bankruptcy isolation without the costs of establishing and maintaining separate entities.
Community interface
Lightweight associations, not cooperatives. Registration in 2-4 weeks versus 6-9 months for Supersolidaria (Colombia's cooperative regulator) approval — which is thus removed from Phase 1's critical path.
What changed after the advisory board review
The v1.0 column is the architecture the board rejected. It is preserved because the contrast is the argument
| Component | v1.0 (original, rejected) | v2.0 · Phase 1 | v2.0 · Phase 2 |
|---|---|---|---|
| International holding | Cooperatie U.A. (Netherlands), from day 1 | None | Cooperatie U.A. (Netherlands), month 30+ |
| National vehicle | Second-tier cooperative | Autonomous trust | Autonomous trust + second-tier cooperative |
| Project vehicles | SAS per project | SAS per project (via sub-trust) | SAS per project |
| Community ownership | Cooperative Class A shares (30%) | CPCs in trust (30% economic rights) | Cooperative shares (30%) |
| Community entity | Local Ley 79 cooperatives | Community associations + CREG registration | Ley 79 cooperatives (upgraded) |
| Regulatory approval | Supersolidaria (6-9 months) | Association registration (2-4 weeks) | Supersolidaria (with track record) |
| Tax structure | Cooperative (20% on surpluses) | Standard corporate + Ley 1715 incentives | Hybrid (to be optimized with data) |
| Time to deployment | 9-12 months | 60-90 days | Incremental from Phase 1 |
Source: VB_Corporate_Structure_Energy_Coop.md §3 (Tier Comparison) and Investment_Pillar_Expanded.md §4. Only the first column is sortable: the others are descriptive text, not comparable values.
Phase 2 is not a date, it is a threshold
It activates when Phase 1 demonstrates: a minimum of 3 projects with 6+ months of operational data, actual P50 generation within 10% of estimated P50, PPA collection rate above 95% for 6+ consecutive months, and community governance functioning. Phase 2 target capital: USD $30-50M between months 30 and 60.
Eight levels, contractual and automatic
The waterfall defines distribution priority within each sub-trust. It requires no discretionary approval for each distribution — that is why the 30% community share is a right and not a promise
Worked example: 300 kWp peri-urban community solar, year 3 (stabilized project)
Figures in millions of COP. Example assumptions: CAPEX COP $1,400M (~USD $310K); generation 467,000 kWh/year; community PPA tariff COP $600/kWh; surplus 107,000 kWh/year at COP $300/kWh. Gross revenues of COP $268.0M comprise self-consumption via PPA (COP $216.0M), grid surplus (COP $32.1M), carbon credits (~190 tCO2e x COP $80,000 = COP $15.2M) and I-RECs (467 MWh x COP $10,000 = COP $4.7M). Level 8 appears as a zero-height bar because its value in the source is COP $0.0: in year 3 the first seven levels consume exactly the gross revenues. This is not a rendering error.
| Priority | Allocation | Recipient | Calculation basis | Year 3 example (COP M) |
|---|---|---|---|---|
| 1 | O&M reserve (6 months) | Operational expenses account | 2% of annual CAPEX | 28.0 |
| 2 | Senior debt service | Bancoldex / Findeter | Per amortization schedule | 118.0 |
| 3 | Concessional debt service | KfW / FMO | Per amortization schedule | 25.0 |
| 4 | Trust company fees | Trust company | 0.15-0.35% of annual AUM | 3.5 |
| 5 | VB fees | CleantechHUB | 1.5-2.0% of annual AUM | 21.0 |
| 6 | Community participation (30%) | CPC holders, via community association | 30% of remaining net flow | 21.8 |
| 7 | Institutional return (70%) | DFI / impact investors | 70% of remaining net flow | 50.7 |
| 8 | Reserve fund | Trust reserve account | Residual | 0.0 |
Return metrics for the example (year 3): CPC holders COP $21.8M on COP $70M invested = 31.1% annual distribution — which includes a repayment component, it is not an IRR; institutional capital COP $50.7M on COP $210M = 24.1% annual distribution, with the same caveat; senior debt DSCR 1.53x (acceptable for Colombian banking). Distributions fall in lower-generation years and rise as debt amortizes. These annual distributions are not the investor IRR (8-12% over 7-10 years): they are a single-year snapshot.
Why this waterfall does not have a revenue slider
The original design included a control to adjust gross revenue and recalculate the waterfall. It was not implemented because the eight levels do not scale proportionally: debt service follows an amortization schedule, fees are calculated on AUM rather than revenue, and only levels 6 and 7 are percentages of the remainder. Scaling all eight linearly would produce a waterfall with the appearance of a model and no backing. The source provides one worked year; that is what is shown.
COP $1,000,000 to become a co-owner
Each Community Participation Certificate costs COP $1,000,000 (~USD $235), with a 6-month installment plan and in-kind contributions up to 50%. The Phase 1 target is ~2,100 holders and USD $500K in community capital across 3-5 projects, with an expected annual distribution of 5-8% of face value.
How a household becomes a co-owner
COP $1,000,000 per certificate. Contractual rights within the trust — they are not securities, and that distinction is what makes the instrument viable
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Months 6-18
A community member subscribes between 1 and 10 CPCs (COP $1,000,000 each, ~USD $235; maximum COP $10M per member). Three documented payment methods:
- Lump sum: COP $1,000,000 at subscription.
- 6-month installment plan: 6 monthly payments of COP $175,000 (includes a minimal financing cost).
- In-kind contribution: valuation of community labor for construction, up to a maximum of 50% of the CPC's value.
The ticket's accessibility is the explicit mitigation of the insufficient CPC subscription risk (medium probability, medium impact), together with the fact that CPCs represent only 5% of total Phase 1 capital.
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30 days
CPCs are issued to members through their local association and held within the autonomous trust. Issuance time: 30 days after the trust is established — versus 6-9 months for cooperative formation.
They are not securities. They are structured as contractual participation rights under the autonomous trust agreement, not as securities under Ley 964 de 2005. This avoids registration with the SFC as a securities issuer and, with it, the capital-markets regulatory burden — significantly reducing issuance costs and implementation time.
Voting rights: none at the project level; one member, one vote at the community association level. Transferable only to other members within the same association; they are not freely tradable.
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Annual, from year 2
Level 6 of the waterfall allocates 30% of the remaining net flow to CPC holders, automatically and contractually. The expected annual distribution is 5-8% of the CPC's face value, after project stabilization (year 2+).
Redemption: at NAV after a 5-year lock-up, subject to the liquidity reserve. CPC NAV is calculated semi-annually.
Phase 1 target: USD $500K in community capital (COP ~$2,100M), with ~2,100 holders across 3-5 projects — an average of 1.0 CPC per member and 420-700 members per project.
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Phase 2 · month 30+
When the association transitions to a Ley 79 cooperative in Phase 2, CPCs convert to cooperative shares at face value. Holders become members with full governance (one member, one vote), the cooperative assumes the 30% position in the SPV via Class A shares, and mandatory funds are established: 20% education, 10% solidarity.
The conversion is designed to be imperceptible from the member's perspective: economic rights are preserved, governance rights are expanded.
| Feature | CPC (Phase 1) | Cooperative share (Phase 2) |
|---|---|---|
| Economic rights | 30% of project revenue (proportional) | 30% of project revenue (proportional) |
| Governance rights | At association level (one member, one vote) | At cooperative level (one member, one vote) |
| Legal framework | Trust agreement (contractual) | Ley 79 de 1988 (statutory) |
| Regulatory approval | None required | Registration with Supersolidaria |
| Transferability | Within the community only | Per cooperative bylaws |
| Tax treatment | Standard income tax on distributions | 20% on cooperative surpluses (if eligible) |
| Issuance time | 30 days (after trust formation) | 6-9 months (cooperative formation) |
Source: Investment_Pillar_Expanded.md §7.
The Ley 1715 / Ley 2099 package
Applies to all renewable energy projects regardless of corporate vehicle — which is why it is compatible with the Phase 1 autonomous trust structure
| Incentive | Savings (COP M) | % of CAPEX |
|---|---|---|
| 50% income deduction (NPV) | 245 | 17.5% |
| VAT exclusion | 228 | 16.3% |
| Customs duty exemption | 88 | 6.3% |
| Accelerated depreciation (NPV differential) | 279 | 19.9% |
Example from the research for a 300 kWp project (CAPEX COP $1,400M). The source summarizes the combined effect as "~40% effective cost reduction." That figure is not the arithmetic sum of the column (which would give ~60%): the four incentives are calculated on different bases — VAT exclusion on 85% of eligible CAPEX, customs exemption on the 60% imported share — and accelerated depreciation is an NPV differential. The figures are reproduced as they appear; the reconciliation between them is not documented in the source.
| Scenario | Project IRR |
|---|---|
| Without tax incentives | 8-10% |
| With Ley 1715/2099 incentives | 14-18% |
| With incentives + 50% FENOGE co-financing | 25-35% |
| With incentives + ZOMAC (eligible municipality) | 18-22% |
All four figures are project IRRs, not the institutional investor IRR (8-12%), and are calculated on the research basis, not this site's simulator basis — see the reconciliation. The 14-18% in the second row and the 14-18% of the investor IRR with 50-60% FENOGE coincide numerically by chance: they measure different things.
ZOMAC — an independent tax shield
Ley 1819 de 2016 grants additional benefits in 344 municipalities most affected by the armed conflict: between 2022 and 2027, micro and small enterprises pay 25% of the standard rate, medium enterprises 50%, and large enterprises 75%. Many priority territories for community energy overlap with ZOMAC municipalities, compounding advantages with Ley 1715/2099. ZOMAC benefits are available to project SASs and do not require a cooperative structure — and serve as a mitigation for the risk that Ley 1715 incentives are modified.
The three candidates
The trust company manages the trust, executes the waterfall, and reports to the SFC. The risk of underperformance is cataloged as low probability and medium impact, mitigated by selecting among the top three in the country and including replacement clauses in the contract
| Criterion | Fiduciaria Bancolombia | Fiduciaria Davivienda | Corficolombiana |
|---|---|---|---|
| AUM (COP trillions) | ~80 | ~45 | ~55 |
| Infrastructure trust experience | Extensive (4G highways, airports) | Moderate | Extensive (infrastructure, energy) |
| DFI relationships | FMO — existing client | IFC — existing client | IDB — existing client |
| Regional presence | Nationwide | Nationwide | Nationwide |
| Renewable energy trust precedent | Emerging | Emerging | Yes (Celsia-related) |
| Minimum trust AUM | COP $5,000M (~USD $1.2M) | COP $3,000M (~USD $700K) | COP $10,000M (~USD $2.3M) |
| Annual trust company fee | 0.15-0.30% of AUM | 0.15-0.25% of AUM | 0.20-0.35% of AUM |
Source: Investment_Pillar_Expanded.md §5. No project source declares a selected trust company: all three remain candidates, and preliminary engagement with a trust company is one of the five "go" criteria of the USD $50K pre-investment. AUM figures are in Colombian trillions (10¹²) and are approximate in the source.
How Phase 1 is composed
Capital mobilization starts with Colombian institutions, not international DFIs — that order deliberately reverses the common mistake of seeking foreign capital first
Phase 1 capital composition (USD millions)
The five tranches of the USD $10M Phase 1, in millions of dollars — the same data from the table below, graphed. Debt (senior + concessional) is 65% of the stack; equity with an 8-12% target IRR is 15%, and community participation via CPCs is 5%. The chart does not reorder risk priority: for that, see the "Terms" and "Risk position" columns in the table. Source: Investment_Pillar_Expanded.md §8.
| Tranche | Amount (USD M) | % | Sources | Terms | Risk position |
|---|---|---|---|---|---|
| First loss / catalytic | 1.5 | 15% | FENOGE co-financing, IDB Lab, DGRV TA grant | Grant + returnable grant, 0% interest | First loss, subordinated |
| Concessional debt | 3.0 | 30% | KfW, FMO Access to Energy Fund | 2-4% interest, 7-10 year term, 2-year grace period | Mezzanine |
| Senior debt | 3.5 | 35% | Bancoldex Sustainable Line, Findeter green facilities | 6-8% interest (subsidized), 5-7 year term | Senior secured |
| Equity capital | 1.5 | 15% | Impact investors, direct to autonomous trust | Target IRR 8-12%, 7-10 year horizon | Equity |
| Community participation | 0.5 | 5% | CPCs, average COP $1M (~USD $235)/member, ~2,100 members | Profit participation, 5-year lock-up | Subordinated equity |
| Total | 10.0 | 100% | — | — | — |
Source: Investment_Pillar_Expanded.md §8. This is the row where the institutional investor IRR lives: the equity capital tranche, USD $1.5M of the USD $10M, with an 8-12% target over 7-10 years. The "Total" row is an aggregate from the source and will appear out of order if you sort the table by amount.
Continue with
due diligence
55 items in 6 categories, the complete risk matrix, and the ESG framework — all published, including the projects that failed.