Almost £700,000 has been raised over the opening weekend of a new solar bond offer from Swindon Borough Council, which is utilising the UK’s first green energy ISA to attract investment for the construction of the council’s second locally funded solar farm.
The offer, which includes access to an Innovative Finance ISA (IFISA), was launched by Abundance Investment working alongside the local authority on 11 November and has attracted £685,179 in just a few days. Around two thirds of this (£450,000) is being held in the IFISA, which allows community members to invest directly into the 5MW solar farm, tax-free.
The IFISA has been made possible following a government announcement that from 1 November, the savings account can include peer-to-peer investments such as debentures, allowing individuals to invest directly into businesses and projects.
The community investment will fund a new solar farm on a council-owned former landfill site at Chapel Farm in Blunsdon, Swindon – the second by Swindon Borough Council to invite local residents to invest directly in a council project.
It will cost £5.4m to construct, with £3m coming from the council’s investment, and the remaining £2.4m from investors in the local community and across Britain, via Abundance
The bond will have an average annual rate of return of 6% for a period of 20 years with a minimum investment of just £5. It follows the launch earlier this year of the UK’s first council solar bond, which sold out a month early.
Following a prolonged period of rapidly reducing support for new projects, including the removal of EIS and SITR tax reliefs for community energy projects, new innovative funding models have emerged to support deployment of new projects.
The significance of Swindon Borough Council’s efforts to support new projects has been recognised by the secretary of state for communities and local government, Sajid Javid.
He said: “This is an excellent example of a local council working with the private sector to provide local people with a means of investing in their local community and its infrastructure. I wish it every success.”
The new solar farm is expected to make a contribution from profits towards community initiatives and will help Swindon move even closer to its goal to install 200MW of renewable capacity by 2020, enough to meet the equivalent electricity requirements of every home in the borough. Completion of Chapel Farm would take the total to 167MW – over 80% of the target.
Councillor Dale Heenan, cabinet member for transport and sustainability at the local authority, said: “I am proud that Swindon is the home of the UK's first green energy ISA, following our very successful solar bond earlier this year. With interest rates still at rock bottom levels, the Abundance IFISA is a great way for people to invest in renewable energy tax-free.
“This project marries the economic benefits of renewables with finding an innovative way for local residents to receive a healthy return on investing, it delivers a tangible financial benefit to local public services, and Swindon Council is even using part of its profits to build a much-needed sound barrier along the A419 dual carriageway! This is a hugely positive scheme.”
Swindon Borough Council has already been approached by other local authorities looking to replicate its innovative solar bond model for funding green infrastructure. Revenues will be raised from selling the electricity generated, as well as support from the Renewable Obligation scheme (RO).