£10m community energy project to power 5,000 homes in the UK
A groundbreaking community owned energy platform which aims to supply over 5,000 homes with solar panels has been launched in Barnsley, UK.
Gen Community, British Gas Solar and Social Finance have joined forces to create a social enterprise energy model that offers Barnsley Metropolitan Borough Council and local housing associations the opportunity to install solar panels on their corporate and domestic properties.
British Gas Solar are responsible for installing and managing the solar panels, while Gen Community and Social Finance raise and manage the project finances. A locally registered Community Benefit Society (CBS) – Energise Barnsley – owns the solar systems, which allows local residents and other investors to have a direct stake and vote in the project. Revenue from the feed-in tariffs of the solar panels will be used to create a community cash fund, which will be spent on local projects that members of the society vote for.
Andy Heald, director of Gen Community, said: “Our aim is always to try and retain as much of the feed-in tariff revenue and offer a social enterprise model equivalent to the commercial models in the renewable sector – instead of profit going back to financiers and international corporate investors, it goes into the community.”
Sharing the solar
While enthusiasm around community energy schemes has increased in recent years, it has largely been centred in more affluent regions and carried out on a small scale. Gen Community is working to change this by launching much larger projects in areas of low income or high deprivation, such as Barnsley. Community Gen will work with the local council to ensure the community fund delivers maximum social impact and will measure and report on the social impact to review the benefits of each project.
The benefits for Barnsley Metropolitan Borough Council and the wider community are threefold;
- Environmental – through reduction in carbon emissions and energy advice clinics for tenants
- Social – through local ownership, fuel poverty support and creation of a community fund to help the most vulnerable in the community
- Financial – through return on community shares and distribution of the community fund which is generated from financial surpluses
The launch of this platform is a culmination of over two years hard work for all those involved, as it is the first project of its kind. Heald said: “We’ve had successes and failures – our first project was in Newport, South Wales in which we raised £450,000 and put solar panels on 74 houses for people in fuel poverty.” With the ambition to supply over 5,000 homes, as well as schools, housing associations and other properties, the Barnsley project takes things to a new level.
Project risks involved in community energy projects include contractors going into administration and the failure to raise enough money. These risks have been mitigated by working with such a well established energy company such as British Gas Solar and by securing a £2m underwriting facility from IGNITE for the community shares part of the project, which removes the time risk associated with raising community shares. This in turn gives Barnsley Metropolitan Council the knowledge that the project will be delivered.
Heald explained: “Whilst the solar panels are being installed, we offer a share offer asking people to become members of the society.” IGNITE – the UK’s first impact investment fund focussed on energy – is putting the money up front so if not enough capital was raised through community shares, IGNITE would fund the assets. This is not expected to happen however, in part because investors will be eligible for Social Investment Tax Relief.
Sam Salisbury, investment principal at IGNITE, said: “This will be the first community energy project we are backing, which is intriguing for a fund in the energy sector.
"We see three things that are unique. Firstly the team's ambition – we see a lot of small community projects but nothing at this scale. Secondly the fact they’ve really thought through the social impact – more so than the average proposal. It’s not only free electricity for low-income houses, there’s a considerable amount of money going into the community fund as well. And lastly the attention to detail that has been paid to governance. How the Community Benefit Society is structured is very mature and how the different stakeholders will work together has been thought through very well."
Until now Heald said there has not yet been “a tipping point for approval of the model”, but having the backing of IGNITE has played a crucial role in changing this. “When three years ago we tried to get money from Big Society intermediaries nobody understood the model and the financial mechanisms, as well as the motivation for doing it,” he said.
Currently a similar model to that being launched in Barnsley is being developed in Carmarthenshire County Council and Heald said “If government support around community energy continues, we expect this scheme to have a lot of legs in 2016.”
The pipeline agreement between the partners – British Gas, Social Finance and Gen Community – was for £60m worth of projects. The Barnsley and Carmarthenshire projects account for £20m of this.
Installations of solar panels in the Barnsley region are set to begin next month and be completed in the March next year. The community share offer is due to be launched in October and the community fund will follow in March next year.
Photo credit: GollyGforce