Community renewables finance manager, Empower Community has received a £10.1 million loan from a UK institutional pension investor.
The 20-year loan has been used to acquire solar arrays on 2,327 homes and six commercial buildings in Sunderland. The arrays will also be managed by Empower Community.
The 2,300 homes to be benefitting from the loan are part of social housing provider, Gentoo Group who provides community care, construction and solar installations.
Thousands of tenants will be able to use free solar generated electricity in their homes, reducing bills by up to 40%.
Investors are to receive an inflation linked annual return, and any profit will be reinvested in the Sunderland community – Gentoo hopes to pay for a further 3,000 solar installations with the lump sum payment.
The Cabinet Office provided an investment of £100,000 from its ‘Contract and Investment Readiness Fund’, allowing Empower Community to raise £10 million through a bond. “I look forward to seeing this model replicated across the country with housing associations, schools, hospitals all benefiting from access to free day time energy,” said Minister for civil society Nick Hurd.
Hurd said: “The benefits of this project are threefold; tenants get access to free daytime power, the housing association gets the finance to install solar panels in more social housing and the profits of the deal are reinvested back into the community.”
Empower Community said in a statement the loan is the first “balanced stakeholder” model to be used for financing solar energy in the UK.
Intermediary and advisor to Empower Community, Social Finance’s sales director, Martin Rich said: “Institutional investors can see the value of investing for social good whilst still achieving market rate returns.”
Peter Walls, chief executive of Gentoo Group highlighted how solar installations can combat fuel poverty, providing free energy for those most in need, or likely to face tough choices in energy bills: “Fuel poverty is a genuine concern with rising energy costs – ‘heat or eat’ is a reality that many vulnerable individuals in our society are now facing. This is a unique way to deliver more solar solutions to our customers, at no cost, with the additional benefits that the local community fund will bring.”
Empower Community Management’s managing partner Alex Grayson said: “The beauty of this deal is that everybody’s interests are aligned: the investor makes solid financial returns, with measurable social and environmental impact; tenants enjoy access to free daytime power, which helps them escape fuel poverty; Gentoo enjoys an ongoing return and financing to continue their exciting developments and the community receives funding for local initiatives from the profits.”