Good Energy has completed the sale of a 5MW solar farm and agreed terms to sell another to community funded investors in two deals that will earn the green utility around £1.5 million before tax profit (BTP).
The Newton Downs Farm in Devon was completed earlier this year when an agreement was made in principle giving the local community benefit society Yealm Community Energy (YCE) the right to buy the completed solar farm.
The site has now been sold to YCE in partnership with CORE Aries, owned by Community Owned Renewable Energy (CORE), which is funded by community and social impact focussed investors Big Society Capital and PTC Renewable Energy.
The total consideration is £5.83 million, payable in cash, giving Good Energy an estimated profit before tax of circa £750,000. In return, the project is forecast to generate in excess of £1.4m income for local community organisations and projects over its lifetime.
Meanwhile, Good Energy’s board has also agreed terms for the sale of the existing 5MW solar project at Brynwhilach Farm, near Llangyfelach, north of Swansea. This is to be sold off to CORE Pisces, owned by CORE Home Nations and also funded by Big Society Capital, in partnership with local Welsh community energy company Gower Power Co-op.
Subject to satisfaction of conditions, Good Energy expects the transaction to complete in the first half of 2018 for a consideration of £5.6 million, payable in cash, netting the company another circa £0.75 million in estimated BTP.
The transaction includes a potential additional cash payment to Good Energy linked to the value of any development or sale of Brynwhilach Phase II, the amount of which is not yet quantifiable. This refers to the additional 7.7MW capacity included in the original planning permission granted to the site.
Good Energy did not clarify the intended use of this additional permitted grid capacity at the Brynwhilach site.
Juliet Davenport, chief executive of Good Energy, said: “The sale of the Newton Downs Farm and Brynwhilach Farm sites is an important milestone for Good Energy as we shift our focus away from development and towards new growth opportunities.
“In keeping with our purpose, I am delighted that we have been able to sell both sites to community organisations who will be able to leverage the opportunity of local renewable power generation. We look forward to working with CORE in the future.”
CORE Aries and Core Pisces will now work with YCE and Gower Power respectively to lift lifetime community benefit payments from each of the sites to in excess of £1 million. It has also been agreed that both sites will be transitioned into full community ownership over a period of time after completion of the sales.
The deals mark the beginning of a potential spending spree for CORE, which aims to acquire six to eight solar farms over the next 12 months, alongside local community energy groups, with a view to maximising the benefit for the community. The partnerships will give the community groups up to three years to raise the funding necessary to fully transfer the ownership into community hands.
Good Energy, which will continue to be the PPA off taker for both of the sites, will use the sale proceeds for general corporate purposes, including to fund investment initiatives supporting strategic growth, efficiency and profitability.