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BY KATIE - MYGREENPOD, 25 March '16
£2 million raised to bring 8.6MWp of solar into community ownership
Two community energy companies (bencoms) have raised over £2 million since the government closed its Enterprise Investment Scheme (EIS) tax relief for community energy projects (see pages 4-5).
The community energy bonds, from Bristol Energy Cooperative (BEC) and Bath and West Community Energy (BWCE), were launched to bring two large-scale solar arrays into community ownership: a 4.59MWp array at Puriton, Somerset – near the proposed Hinkley C nuclear plant site – and a 4MWp array in Portworthy, Devon – 5 miles from Plymouth. They’re among the first bonds launched in the UK to finance community energy projects.
‘Now the government has removed EIS tax relief for community energy investment, we believe that more bencoms will launch bonds or similarly high-yielding products that offer savers a better interest rate than the average high street bank.’
Jan-Willem Bode, CEO of Mongoose Energy
BWCE’s bond launched in the run-up to Christmas and closed early after hitting its investment target of £1.682 million. The new site – Portworthy array – will take BWCE’s community-owned capacity to nearly 7.5MWp, which is enough to supply electricity to around 2,000 typical UK homes.
BWCE’s bonds offer expected fixed-rate returns of 5.5% per annum (6% to shareholder members of BWCE and local partners), and any extra profits from the solar array will be reinvested into local communities.
From its existing projects, BWCE has already distributed £65,000 through its independent community fund and paid its members the target interest rate for the last four years.
‘BWCE continues to be a fantastic case study for the community energy sector, which delivered strong returns for investors in our cooperatives in 2015’, Jan-Willem told us. ‘The exceptional interest we’ve seen in the bonds highlights the strength of the sector and gives an extra incentive for people to back these local, renewable energy generation schemes that plough additional profits back into the community, financing projects that address issues like biodiversity and energy poverty.’
The Bristol bond
BEC was the second to launch a community energy bond. The money raised by BEC will be used to buy the already-built Puriton array, which would take BEC’s community-owned capacity to 4.7MWp. Generating the predicted 4,700MWh per year of clean energy would save more than 50,000 tonnes of CO2 over the array’s 25-year running life. BEC is also raising funds to buy and build an array on an additional site near Avonmouth, which would take its capacity to 9.3MWp.
BEC’s is a two-year bond with expected returns of 6% per annum, repaid after two years. After that, investors can cash in their bonds, extend them beyond two years at 5% per annum or convert them into shares. BEC has paid its members the target interest rate on their investment for the last three years.
Extra profits from the solar array will be reinvested into a community fund. BEC’s expecting to put £100,000 back into communities this year, and £4 million over the full course of its projects. Payments from existing schemes have helped fund free advice sessions on energy deals, bill management and maximising energy savings.