Mongoose Energy has revealed that two of its affiliated community energy companies (bencoms) have raised over £2 million for solar developments since the Enterprise Investment Scheme (EIS) tax relief for community projects was closed in October last year.
The bonds were launched to bring two solar arrays into community ownership, with Bath and West Community Energy (BWCE) closing its bond offer for the 4MW Portworthy solar farm five days early after raising £1.682 million ahead of schedule. Interest will begin to be accrued on the two-year initial term offer from 1 February with investors expected to receive fixed-rate returns of 5.5% pa, or 6% to shareholder members of BWCE and its local partners.
Speaking to Solar Power Portal earlier today, Peter Andrews of BWCE said: “This has proved yet again that there is significant appetite in the British public to invest in clean energy. It is very satisfying to see that despite the government slashing support to clean energy generation we were able to build a credible business case that local people wanted invest in. Hopefully, working with our partners Mongoose Energy, we will acquire more projects to offer the public.”
Jan-Willem Bode of Mongoose Energy added: “BWCE continues to be a fantastic case study for the community energy sector, which delivered strong returns for investors in our cooperatives in 2015.”
The second project seeking funding is Bristol Energy Cooperative’s (BEC) 4.59MW array at Puriton, Somerset – near the proposed Hinkley C nuclear plant site. The three year bond offer of 6% has so far raised £416,600 towards its £2.662 million target but has until 31 March to attract the necessary investment.
“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,” Bode said.
“We believe this to be part of an emerging trend, now the government has removed EIS tax relief for community energy investment, that more bencoms will launch bonds or similarly high-yielding products that offer savers a better interest rate than the average high street bank.”
This success has followed a turbulent period for community energy after the government decided to limit tax relief for these projects. Despite the return of pre-accreditation as part of the government’s feed-in tariff consultation response, the new rates and deployment caps already imposed have also endangered future prospects.
Earlier this week Community Energy England shelved plans to seek a judicial review of HM Treasury's decision to make community energy projects exempt from tax relief schemes, claiming that it did not want to divert its resources away from its primary aim of promoting community energy.
A number of projects including those of BWCE and BED have continued to raise funds. Energy4All announced last month that it had raised over £5.5 million for its four recent community share offers.
BWCE's Peter Andrews said today that the removal of various subsides will result in the issue of more bond offers likely to be paid back over a longer period than before and claimed: “There is still the appetite to invest over the longer term albeit with a slightly reduced return.”
“What our investors are looking for is an ethical clean investment, secondly a rate of return that beats the rate of inflation and most of the ones we’re doing are well beating inflation,” he added.