Positive Investing: How to Support a Community Energy Revolution
The community energy sector has experienced a roller-coaster of a year. It has seen an end to the pre-accreditation of tariffs for community energy schemes in October (now reinstated for schemes over 50kW); the removal of EIS tax relief on investments at the end of November; followed swiftly by the reduction of the Feed-in Tariff (FiT) rate for renewables at the start of the year.
A spring rush of offers
But, if you look at offers launched this month you would have thought that community energy was booming. Many of these are the tail end of organisations who pre-accredited schemes before the changes in legislation. Highlights include a scheme to raise finance for a community solar scheme in David Cameron’s constituency in west Oxfordshire; a solar farm in Plymouth; a hydro scheme in Oxfordshire; and installations on school roofs and businesses.
What does this mean for my positive investment options?
These organisations have all pre-accredited their schemes with Ofgem before raising finance for projects. This means that tariffs are then fixed for the lifetime of the project, are index-linked, and not affected by the changes to the FiT rates in January or, for that matter, by any further changes to the FiT rate. In future community energy projects wanting to raise finance before building renewable schemes can pre-accredit the Feed-in Tariff but it will be at the lower rate.
New business models emerging
But these constant changes in legislation have knocked confidence in certain parts of the sector but well-established groups are now starting to rethink business models in a post-subsidy world. Bath and West Community Energy bond raised over a million in a few weeks earlier this year. The Low Carbon Hub in Oxford has just launched a Community Energy Manifesto to set out their vision for the future of community energy in their region. [http://www.lowcarbonhub.org/manifesto]. And, Mongoose Energy, based in Bath, certainly sees a future in community energy with the announcement that it will launch an energy supply business opening to customers before the end of the year. The launch will see Mongoose become the UK’s first supply company that is majority-owned by community energy groups. The new company will source its electricity from renewable sources and will have competitive tariffs for its customers. The company currently has 34MW of capacity under its management services – that enough to power around 11,000 homes –– and a further 30MW in the pipeline. This will transform the nature of energy ownership in this country.
Community share offers currently listing on Ethex:
Plymouth Energy Community
The award-winning Plymouth Energy Community’s third offer has just launched. It gives investors the opportunity to own Plymouth’s biggest solar energy farm to date, the operational 4.1MWp Ernesettle Community Solar Array, commonly known as “Ernie” (see their video to find out more [www.plymouthenergycommunity.com/invest]. With surplus income for their renewable schemes, PEC runs energy and advice services targeted at fuel-poor households in the area and have supported 11,200 households and saved over £341,000. Forecast return of 6% per annum.
Bath & West Community Energy
Bath and West Community Energy (BWCE) has launched two new offers – their sixth share offer and a linked bond offer– to bring a 5MW solar array at Crewkerne into community ownership. This will increase their renewable energy capacity to 12MW, enough to supply the equivalent annual electricity demand of 3900 homes, making them the largest community enterprise in the UK. Forecast return of 7% per annum for the share offer, 5% for bonds.
Low Carbon Hub
The Low Carbon Hub continues to scale up community energy in Oxfordshire. Their latest share offers are to raise finance into their biggest project to date, a hydro scheme at Sandford, and a new wave of 18 rooftop solar PV schemes on schools and businesses across the county. Investors can choose between investing in hydro or solar, or even both! Forecast returns of IRR of 5%, RPI +3%, on both offers.
Southill Community Energy
Southill have now raised 70% of their £1.4 million target to develop a 4.5MW solar farm in Charlbury, right in the heart of David Cameron’s constituency in west Oxfordshire. Their offer is extended to the end of May to allow as many individuals and community members as possible to invest. Annual return forecasted at 5%. Help them reach target!
Linton Hydro Limited
Linton Hydro has launched a new bond offer on Ethex to help build a new 280kW hydro scheme at Linton Lock on the River Ouse in Yorkshire and acquire an operational 100kW hydro scheme.