5% inflation-linked bond will help create £3m in local community benefit over 23 years
Burnham and Weston Energy, a Somerset-based community interest company (CIC) that owns and operates one of the largest community solar farms in the UK, is raising £4m in investment funds through a bond issue launched today on www.triodoscrowdfunding.co.uk
The investment will allow the company to return around £3m in surplus profits to the local community over the remaining 23-year lifespan of the project. Half of the surplus will be used to support 'The Sunshine Fund', a new grant fund for local projects to be managed by the local charitable trust Somerset Community Foundation. The other half will be used help households struggling to pay their energy bills through a fuel poverty advice service managed by the Centre for Sustainable Energy (CSE).
The 9.3MW community solar farm, located at Wick Farm between Weston-super-Mare and Burnham-on-Sea, has been in operation for nearly two years and currently generates enough carbon-free electricity to power the equivalent of over 2,000 homes, and over £1 million per year in revenue. The solar farm is built on pasture land leased from a local farming family, who continue to graze sheep amongst the solar panels.
To develop the bond offer, Burnham and Weston Energy is working with Triodos Bank, Europe's leading sustainable bank. Triodos recently became the first registered UK bank to launch an investment crowdfunding platform. The bonds are open to anyone that registers on the Triodos platform and will pay an initial interest rate of 5 per cent a year, which will rise every year with inflation. The initial investment will be repaid in instalments over 18 years. As with all investments, interest payments are not guaranteed and capital is at risk. The bonds are eligible to be held in a Triodos Innovative Finance ISA which allows investors to earn interest tax-free.
Jake Burnyeat, director of Burnham and Weston Energy CIC, said: "The shift from a centralised fossil fuel-based energy system to one based on distributed low carbon and smart technologies creates the opportunity for communities to take back control of their energy systems. This can keep money in the local economy and turn energy production into an asset for the local community. In doing so, localities can generate income to help address wider community infrastructure and service needs.
"Burnham and Weston Energy has been set up to help the communities of Burnham and Weston take advantage of this opportunity, with around £3 million in surplus profits going into the local community over 23 years. We want to involve investors who share our values, and the Triodos Crowdfunding Platform is a key part of getting this project off the ground."
The minimum investment in the scheme is £200; roughly equivalent to two of the farm's 36,000 solar panels. Investors will also become owners of Burnham and Weston Energy and have a say in how the company is run by appointing directors to the board on a 1-member-1-vote basis.
Justin Sargent, Chief Executive at Somerset Community Foundation, said: "We look forward to working with Burnham and Weston Energy and with the local community to support locally-led organisations and projects, that contribute so much to making our local communities vibrant and sustainable. Community-based charities and voluntary groups need and deserve the support of this fund, which will deliver lasting change to people's lives on our doorstep."
Research from Triodos Bank reveals the growing appetite for crowdfunding among savers, particularly in the South West. A quarter of savers (26%) nationally think that crowdfunding is becoming an increasingly attractive option to invest, rising to a third (32%) in the South West - the second highest of all UK regions. Furthermore, a third (36%) of savers in the UK say they would be more willing to trust a crowdfunding site if it was run by a bank or building society.
Dan Hird, head of corporate finance at Triodos Bank, said: "The status of the UK's energy system makes headline news almost every day and we're very proud to be working with Burnham and Weston Energy CIC to create the type of change we need to see. To tackle the big issues we face, we hope to inspire investors to support progressive and pioneering businesses like Burnham and Weston Energy CIC. It is exactly what the Triodos Crowdfunding site is set up to do."
The bonds will be used to repay the remainder of an £11million short-term loan facility from specialist community energy loan fund Leapfrog Finance. Over £7million has already been refinanced through a long-term loan from Triodos Bank. The bond already has the support of a £1.3 million investment from Big Society Capital, a social investment organisation which aims to improve the lives of people in the UK by connecting investment to charities and social enterprises that are creating social change.
Candice Hampson, Investment Director at BSC said: "Burnham and Weston Energy puts power and resource into the hands of the local community - not only giving them long-term income for projects which improve their community, but also helping the UK's essential transition to renewable power. And by bringing investment crowdfunding into the mix, Triodos Bank is laying the groundwork for individual investors to participate in growing a sustainable and future-oriented energy system."
Back to the future of local energy
Like most coastal communities, Burnham and Highbridge and Weston-super-Mare are at the periphery of an energy system that drains value from the local economy and causes social and environmental problems. This includes:
- Over £360 million spent per year on energy (electricity, heat and transport), almost all of which leaves the local economy,
- 10-20 per cent of households living in fuel poverty with health-related issues and burden on local healthcare services,
- The health and local environmental impacts of a fossil fuel-based transport system, and the contribution to climate change.
The town's first street lighting was provided by the local coal gas plant owned by Weston-Super-Mare and District Gas Company. As local energy companies were regionalised, nationalised and then privatised, energy has become a drain on the local economy of towns like Burnham and Weston. Burnham and Weston Energy is going back to a future where energy generation is part of the local economy, only this time it is low carbon and community-owned.
An investment in Burnham and Weston Energy CIC bonds is not covered by the Financial Services Compensation Scheme. Burnham and Weston Energy's ability to pay the interest and repay the bonds is not guaranteed and is dependent on the continued success of its business model. These bonds are unquoted securities with a fixed repayment date and although the bonds are transferable, investors should be aware that they may not be able to access their capital during the life of the bond.
Notes to editors
Research conducted by Opinium Research on behalf of Triodos Bank, 9th to 12th February 2018, among 2,002 nationally representative UK adults (aged 18+).
BEIS 2016 data and DECC 2015 data
BEIS 2015 data
For further information please contact:
About Burnham and Weston Energy CIC
Burnham and Weston Energy CIC is a new local energy company which has been set-up to generate low carbon energy and income for the communities of Burnham and Highbridge, Weston super Mare and the surrounding rural area. The Wick Farm solar project has been up and running since June 2016, and was initially owned by a commercial solar firm, until it was acquired by Burnham and Weston Energy CIC in October 2016. The solar project is built on land leased from a local farming family at Wick Farm who continue to use the land for agriculture, with the added benefit of shelter for the sheep.
The project is financed by a long-term loan from Triodos Bank, an ethical bank with UK head offices in Bristol, and a community bond offer to launch shortly. It is governed by local volunteer directors and professionally managed by Communities for Renewables CIC.
About Communities for Renewables CIC
Burnham and Weston CIC was set up with the support of Communities for Renewables CIC (CfR), a community energy enterprise which helps communities set up and manage their own local energy enterprises to generate low carbon electricity and income for their locality. www.cfrcic.co.uk
For more information contact:
t: 01326 567 161
About Triodos Bank
Triodos Bank is a global pioneer in sustainable banking using the power of finance to invest in projects that are good for people and the planet. Triodos uses its €14.5 billion (2017) in assets to create social, environmental and cultural value in a transparent and sustainable way.
With UK operations based in Bristol, Triodos Bank has branches in the Netherlands, Belgium, Spain, Germany and an agency in France. Globally, Triodos Bank has microfinance projects in Central Asia and Eastern Europe, and is a founding member of the Global Alliance for Banking on Values (GABV), a worldwide network of 43 banks seeking to transform finance into a vehicle of positive influence.