Earlier this year Sheriffhales Community Energy launched a community bond offer to raise funds to bring a solar farm on the edge of the village into local community ownership. The bond offer raised £565,000 with a further £3million secured from a long-term bank loan from the Bristol-based ethical bank Triodos. The financing completed at the beginning of October.
Sheriffhales Community Energy is a not for profit community benefit society, governed by local volunteer directors, and set up to generate energy and income for the parish.
Local director Peter Bonsall said, “It was a huge relief to get the financing over the line amidst challenging financial circumstances. Sheriffhales is now one of the few villages in the UK to own its own solar farm. We are a rural parish with an agrarian economy. We don’t have a village pub or a shop or a bus. Bringing the solar farm into community ownership will bring an income to the parish that is more than the parish council precept. We will be using those funds to help address some of the challenges we face as a rural community, to tackle fuel poverty and support our low carbon transition. It’s also a confidence step; if we can raise £3.5million to fund our own solar farm, what can we do next?”
About the solar farm
The 3.2MW community solar array on the outskirts of the Shropshire village of Sheriffhales is made up of 11,976 panels and generates around 984,000kWh of green electricity each year. That’s equivalent to the annual consumption of 825 homes or enough electricity to make 95 million cups of tea or send an electric car 11 million miles. Since it was commissioned in 2016 the community solar array has exceeded the long-term average generation projections by 5%.
The land under and around the solar panels is managed to maintain a species rich meadow of grasses, herbs and wildflowers and encourage wildlife and biodiversity. Bat and bird boxes have been placed in multiple locations around the site and woodpiles have been placed along the fence line to further enhance habitat opportunities.
The community solar array generates over £400,000 per year in revenue. As well as covering operating and finance costs (including interest and capital repayments to our bond investors), we expect to generate around £1,000,000 over the solar array’s 25-year operating life to support local community initiatives in the parish of Sheriffhales. Initially the annual community payments will be £20,000, rising once the bank loan is paid off.
Sheriffhales Community Energy has distributed £150,000 of community funds from the solar farm to date to a range of local community projects including LED light bulbs, community transport, and supporting the community’s response to the Covid 19 crisis.
We would like to find a way of supplying solar electricity generated directly to local households, but market reform is needed to enable that.
What is a community benefit society?
A community benefit society (CBS) is an incorporated industrial and provident society that conducts business for the benefit of the community. A CBS trades to generate income to support its community purpose. CBSs are owned by their members who have a one member one vote say in annual general meeting decisions such as the election of directors. CBSs operate in accordance with their governing rules which set out the community purpose, the rights of members, how the CBS is governed and an asset lock. The asset lock ensures surplus profits are used towards its community purpose.
CBSs are regulated by the Financial Conduct Authority (FCA), separate to the FCA’s role as financial ombudsman. A CBS can raise finance by issuing shares or bonds to the public and pay a reasonable rate of interest.
About the community bond offer
The community bond offer gave people the opportunity to get involved as investors in the community solar array and earn an interest rate of 5% per year with capital returned over 15 years. Bonds can be held in an Innovative ISA which enables eligible investments to exempt from income tax. Interest payments and return of capital are not guaranteed. The funds were raised via the Ethex crowdfunding platform. The bond offer is now closed.
How did the community purchase come about?
The solar array was built by a commercial renewable energy company and acquired into part community ownership in 2018 with £3.4m of short-term investment from a social investment fund Community Owned Renewable Energy Partners LLP (CORE). The community bond offer and Triodos Bank loan raised the capital needed to repay CORE, complete the long-term financing of the community solar array, and bring it into full community ownership.
Peter Bonsall, Director Sheriffhales Community Energy Ltd