Written by Whitni Thomas, Head of Corporate Finance at Triodos Bank UK
Triodos Bank has been a proud supporter of community energy for many years, being one of the country’s leading lenders to community-owned wind and solar energy projects and raising crowdfunding bonds directly from investors. Helping to address the climate emergency through finance has always been at the forefront of what we do as a bank and we work with clients that try to tackle the problem with sustainable solutions.
We’ve lent to numerous community-owned energy schemes, most recently in November 2022 to refinance a solar farm owned by Sheriffhales Community Energy. Located on the outskirts of the village, the 3.2MW solar farm generates 984,000 kWh of renewable electricity, enough to power the equivalent of 825 homes. Commissioned in 2016, the solar farm was brought into part community ownership the same year. With the new finance arrangements, the company expects to generate around £1m surplus for community projects through to 2040.
We’ve raised finance through our crowdfunding platform for many community-owned schemes and have been blown away by the level of interest and support from retail investors for these schemes. As interest rates have risen, prospective investors expect a higher return on their investment so new investment offers are being priced accordingly. That being said, the spike in the cost of the electricity has meant that community energy schemes able to secure higher power purchase price agreements are now in a much more comfortable financial position. For those that have shorter term debt that they want to refinance, the higher electricity price has meant they can afford to structure investment offers that are a win-win for both the community energy group and investors.
In May 2023, we promoted the second tranche of the Empower Community Foundation’s bond offer to enable them to refinance more costly subordinated debt in their Scottish solar project. The bond offer was first promoted exclusively to existing bondholders who invested £600,000. The offer was then opened to the public and the remaining £1.4m was raised in just 24 hours.
Our crowdfunding investors really ‘get’ the purpose behind community-owned renewables and many of them are comfortable with the need to invest for the long term (15 years +). We surveyed our crowdfunding platform investors in April 2023 and asked them which impact areas they were most interested in, and community-owned renewable energy was the most sought-after.
We firmly believe in the power of community renewable energy and hope to support many more projects across the UK. The power of co-ownership and of revenue generation for local communities can be transformational. We understand that financing must be tailored to each project, which is exactly what the team at Triodos Bank is expert at.
To find out more about our lending and capital raising for renewable energy, please visit our website.