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Investing in the future

The UK’s first dedicated community energy crowdfunder is gearing up for a mammoth year, with £7m of investment opportunities in the pipeline
Katie Hill - Editor-in-Chief, My Green Pod
The UK’s largest community-owned solar energy project

This article first appeared in our spring ’18 issue of MyGreenPod Magazine, The Conscious Revolution, distributed with the Guardian on 04 May 2018. Click here to subscribe to our digital edition and get each issue delivered straight to your inbox

In June 2017, the UK got its first dedicated community energy crowdfunding platform. With it came a new opportunity for investors to support a booming community energy sector while pocketing the tax benefits offered by Individual Savings Accounts (ISAs).

Following the fundraising success of the investment opportunities launched on Mongoose Crowd last year, activity on the platform is being ramped up for 2018. This year, Mongoose Crowd will launch seven new bond and equity offers in its biggest wave of activity to date.

Together, these offers provide investment opportunities of almost £7m – money that will be reinvested in renewable energy projects that create additional environmental, social and financial benefits for local communities.

Reinventing community energy – the UK’s community energy sector is embracing new models to overcome barriers to development

£1m bond offer in Stratford-upon Avon

On 29 March, Mongoose Crowd launched a £1m bond offer with Heart of England Community Energy. The fundraiser is an opportunity to invest in the UK’s largest community-owned solar energy project, based just outside Stratford-upon Avon.

The 75-acre solar farm is roughly the size of 50 football pitches. It comprises 60,000 solar panels – that’s two for every person who lives in Stratford-upon-Avon – and generates enough energy to power 4,500 houses. £2,700,000 of the profits generated over the project’s lifetime will be shared with good causes in the community.

The bond offer was set up by Warwickshire locals and is being managed by Mongoose Energy. The annual target interest rates are 5% over four years, plus an extra 1% for those who sign up and invest before the first half of the target funds are raised.

All the funds raised will be used to generate renewable energy, and all surplus profits will be donated to community projects. As an example, an intended minimum of £30,000 per year over 25 years will be shared with causes that help to improve the health of elderly and vulnerable people living in cold and damp homes, helping them to reduce their energy bills and improve heating and insulation.

Invest in green Scottish power

Mongoose Crowd is also hosting bond and equity offers for Our Community Energy (OCE), a new community energy group co-founded by Mongoose Energy and Our Power, a UK not-for-profit energy supplier set up to tackle fuel poverty. The target is to raise £2,875,000 for two community-owned renewable energy projects based in Pogbie, East Lothian, and Brockholes, Berwickshire. £1.5m of the profits will be shared with Our Power to support its work to provide affordable energy for the fuel poor.

The inflation-linked target interest rates are currently 6.6% and 8.1% (respectively) over 20 years, plus an extra 1% interest for those who sign up before the first half of the target funds are raised.

The two projects, which will comprise nine wind turbines, will be able to generate over 7MW of energy. All the funds raised will be used to generate renewable energy, with surplus profits used to help those suffering from fuel poverty. An intended minimum of £25,000 per year over 20 years will be donated to the cause.

‘It is more important now than ever for investors to put their money into causes that work for the social good, not just their own.’

CEO of Mongoose Energy

‘Good’ investments

The Heart of England Community Energy and OCE offers also include an Innovative Finance ISA option. This means investors can take advantage of the higher rate of interest compared with cash ISAs.

As well as the financial benefits, investors get the bonus of knowing their money is being used solely to deliver positive change in the community – in areas ranging from tackling fuel poverty to improving the living conditions of the elderly and the vulnerable.

To coincide with the launch of the new bond offers, Mongoose Energy conducted research that points to a surge in the popularity of investing to ‘do good’, and a growing demand for transparency about how invested money is used.

The research reveals almost two-thirds (60%) of today’s consumers would prefer their investment to make a positive impact on others. This is a growing trend, with a fifth (21%) of respondents saying they are more likely to invest in this type of fund now than they were five years ago.

According to the research, renewable energy and ethical investments are two of the preferred options for achieving a positive impact; 22% say they’ll consider investing in each of these types of product over the next year.

Going mainstream

‘The findings of our research show an increasingly purpose-minded public of all ages seeking out alternative ways to invest their money’, says Mark Kenber, CEO of Mongoose Energy. ‘Their investment choices are no longer driven solely by high rates of return but also by a desire for tangible, positive impact on local communities.’

According to Mark, this shift has been fuelled by a growing awareness that making ethical choices doesn’t mean sacrificing returns. We’re becoming more aware of the impact of investment choices and we’re also broadly supportive of the UK’s climate change agenda.

‘With the public now demanding that their money is invested in ways beneficial to a broader group than just themselves’, he said, ‘2018 is showing all the signs of being the year that investing in community energy goes mainstream.’

Heart of England bond offer

Sector: Solar
Target interest rate: 5% paid annually (returns are not guaranteed)
Incentive: Additional 1% interest on first year’s return for those investing before offer reaches 50% of target
Funding target: £1,000,000
Term: Four years
Minimum investment: £500

Our Community Energy (OCE) bond offer

Sector: Wind
Target interest rate: 2.5% + RPI paid annually (returns are not guaranteed)
Incentive: Additional 1% interest on first year’s return for those investing before offer reaches 50% of target
Funding target: £1,845,000
Term: 20 years

Heart of England bond offer

Sector: Solar
Target interest rate: 5% paid annually (returns are not guaranteed)
Incentive: Additional 1% interest on first year’s return for those investing before offer reaches 50% of target
Funding target: £1,000,000
Term: Four years
Minimum investment: £500

Before deciding to invest, read the full risk warning.

Democratising energy

Mongoose Energy is majority-owned by Community Benefit Societies (BenComs), which are FCA-regulated companies set up to develop and run clean energy projects and support complementary initiatives in their local community.

BenComs, which are established by groups of local people, are legally required to trade for the benefit of the community; any surplus profits must be invested straight back into local charities and good causes. The BenComs that own Mongoose Energy are also its clients: Mongoose manages their assets, provides advice and support on governance and helps them with fundraising efforts.

As the UK’s largest manager of community-owned renewable energy assets, Mongoose Energy was set up for the express purpose of increasing community ownership and control of energy generation. As well as helping to democratise the energy sector, the company has been founded in a way that will improve the lives of people in the communities in which it operates. All this while offering projected returns that investors are unlikely to receive from traditional banking products.

Mongoose will be launching two further offers later this year, which are expected to come to a total of £3,750,000. This will bring the total amount of bond and equity opportunities released this year to almost £10 million. The best way to stay informed is to sign up to the mailing list on the website (see below).

What’s an IFISA?

On 06 April 2016, the government introduced the Innovative Finance ISA to recognise the growing role of peer-to-peer lending in bringing investors and borrowers together outside the mainstream baking sector.

The ‘IFISA’ allows individuals to use some (or all) of their annual ISA investment allowance to lend funds through the peer-to-peer lending market, while receiving tax-free interest and capital gains. There’s also the option to transfer cash from an existing ISA, meaning investors aren’t limited to their annual allowance.

The rates offered by Innovative Finance ISA providers are typically around double the rates offered by cash ISA providers, though the investments are more risky.

Mongoose Crowd offers eligible members the choice of opening an IFISA from within their account.

Click here to view all the offers available on the Mongoose Crowd website.

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