A unique ‘council solar bond’ has been launched by Swindon Borough Council in what is reportedly the first example of a local authority and residents investing together in a community solar project.
Since the 4.8MW Swindon Community Solar Farm was first reported, the project has been approved and will create a new model for the council to raise money for infrastructure projects as well as offer high returns on investment to local people.
Swindon Borough Council will put up £3 million for the project while a bond offer will seek to raise the remaining £1.8 million needed for the project from local people and other investors around the country. With a minimum stake of £5, all investors would stand to make a 6% rate of return paid in twice yearly instalments, with the council claiming the added benefit of a lower risk investment associated with investing alongside Swindon Borough Council.
An 'early bird' bonus of 0.5% for the first five years will boost returns for those investing within six weeks of today's launch.
The project will claim funds back through the feed-in tariff, as it has been pre-accredited for the higher rate of tariff available before the government cut subsidies at the start of the year. Construction is due for completion on 29 June in order to qualify for this rate of return.
Councillor Dale Heenan, cabinet member for transport and sustainability at Swindon Borough Council, said: "For years, companies have been trying to find ways to make investing more accessible and understandable. Swindon's Solar Bonds provide an opportunity for people to invest as little as £5 or more than £5,000, and enjoy better returns than their bank provides as they invest for their children's future, their own retirement or just a rainy day.
“Our approach is democratic finance in action, and the combination of personal benefit, environment issues and community involvement provides a topical way to catch imaginations, and help improve personal finance skills in a simple, easily understood way."
The bonds are provided in partnership with Abundance Investment, which has successfully raised £15 million for 16 different renewable energy projects in the past three years.
Bruce Davis, managing director of Abundance, said: "This first ever Council Solar Bond is exciting and important as it is further proof that 'win win investment' is not only possible, but can play a crucial role in providing the public with a better return, while creating innovative new ways for local community infrastructure to be improved without increasing costs to the taxpayer.
"This is great news for people struggling to live off their savings or wanting to invest for their future without stock market risks, and to Councils across the UK trying to maintain and improve local services."
The solar farm, located at Common Farm near Wroughton, will be managed by the Swindon Common Farm Solar CIC (a Community Interest Company) which is wholly owned by Swindon Borough Council.
It will help Swindon in its aim to install 200MW of renewable capacity by 2020, enough to meet the equivalent energy requirements of every home in the Borough. A total of 140MW is already in construction or in planning.
Despite several changes to government policy affecting community solar projects, including cuts to the FiT, early closure of the Renewables Obligation and exemption from tax reliefs, community solar remains a busy area for UK solar. While it is unclear if this will continue as avenues for financial returns are closed, millions of pounds have been raised in recent months for a number of projects.