Having received planning permission from Lewes District Council OVESCO will today begin raising money for what could be the very first community-owned power station in the UK. By launching a share offer, which gives local people the chance to invest in the solar project, the company hopes to raise 100% of the £307,000 required to install solar panels.
A non-profit IPS, OVESCO plans to install a total of 544 solar panels on the warehouse roof of one of the oldest breweries in the UK. Locally renowned Harveys, which has created a commemorative beer, ‘Sunshine Ale’ to celebrate, will benefit from 92,000 kilowatt hours of solar energy per annum in return for leasing its roof out for a period of 25 years. Any excess energy generated by the 98kW system will be fed back into the national grid.
While this all sounds like a fantastic idea, the project is in fact under a huge amount of pressure thanks to a Government policy u-turn. By threatening to cut the feed-in tariff incentive rate for systems above 50kW, the OVESCO project could be receiving a 42% chop to the amount of subsidy it receives per kWh of energy generated. Under the newly-proposed rates, the 98kW system could be getting just 19p/kWh, down from 32.9p/kWh. On top of this setback, Chancellor George Osborne has decided to remove EIS tax relief from feed-in tariff businesses.
If the feed-in tariff cuts go ahead as planned, the new rates will apply from August 1st. In a bid to beat this date, OVESCO plans to work as hard as possible to raise the financing and install the rooftop system by the beginning of July. The higher feed-in tariff rate will provide investors – both local and non-local – with a return of 3-4% per annum over 25 years. At the lower 19p rate, the project is practically unviable.
Caroline Lucas, Green party leader and MP for Brighton Pavilion said, “The Government's reckless plan to review solar feed-in tariffs has created uncertainty in one of the few industries to have generated thousands of new green jobs. Proposals to slash financial support to solar projects over 50kW have further laid bare the shocking lack of ambition on solar energy. The feed-in tariff scheme is crucial to helping projects like the Lewes community-owned power station get off the ground – but thanks to the uncertainty brought about by the review, it will be difficult for renewables companies or investors to trust the Government again.”
The self-financing model outlined by OVESCO is expected to be fairly popular in the UK, and if successful, other communities in the UK are likely to follow suit. However, if the tariff cuts go ahead, community projects are going to have to be considerably smaller than the Lewes brewery installation.
Howard Johns, OVESCO Founder, Chair of Solar Trade Association and MD of local solar installation company Southern Solar said, “The launch of the OVESCO share issue is a significant moment for community energy generation in the UK and the result of many years of hard work. We only hope that the feed-in tariff review doesn't prevent other communities from utilising the model that we have developed. Solar in the UK has the potential to become a major source of power generation and is the most accessible technology for community-owned energy solution companies.”
Huw Irranca-Davies, Shadow Energy Minister said, “I’d like to offer my congratulations to OVESCO and the whole of the Lewes community on this innovative scheme. This is the sort of community based scheme that we should be encouraging. Not only will there be reductions in carbon emissions, but there will be community benefit and the development of green jobs.
“The coalition Government should be encouraging more projects like this, but their knee-jerk feed-in-tariff proposals will effectively kill off projects over 50kW – the equivalent of only 15 to 20 homes. I will continue to press the government to think again, and if Greg Barker wants more evidence of why he is wrong, he need only visit Lewes.”
If the community fails to raise the investment required before the deadline set by the feed-in tariff review, OVESCO will split the planned installation into two or three smaller systems, which will still qualify for the feed-in tariff under new proposal rules but with a smaller rate of return.
An event to launch the Share Offer is being hosted in the local town hall from 7-9pm on April 19 2011. An Energy Question Time is being hosted by Shadow Energy Minister, Huw Irranca Davies, and a panel of experts, on the benefits and risks that the investment offers will also be held.
OVESCO’s long-term plan is to make Lewes District self-sufficient in renewable energy by 2030; in fact, Lewes Football Club has already expressed interest in hosting a PV array and its south-facing roof. This is likely to be OVESCO’s next site; while other sites are also being considered. Ovesco is affiliated with the Transition Towns Lewes group.