Supporting community energy schemes is top of Triodos crowdfunding investors’ wish list
A blog for Community Energy Fortnight by Whitni Thomas, senior manager for investor relations and crowdfunding at Triodos Bank UK
Triodos Bank has been a proud supporter of community energy projects for years now, being one of the country’s leading lenders to wind and solar community-owned energy projects through our bank loans and through 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 to build what will be the UK’s largest community-owned solar park. Ray Valley Solar will be a subsidy-free, community-owned solar park near Arncott, north east of Oxford. The project will have a total installed capacity of 19.2 megawatts and aims to generate enough electricity to power the equivalent of over 6,000 homes annually through its ground-mounted panels.
We’ve also created the innovative Triodos Community Underwriting Facility (TCRUF), which is available on a match-funding basis to support community groups with the construction, acquisition or refinancing of renewable assets in wind, solar and hydro where Triodos Bank is the senior bank lender. Mendip Renewables CIC and Burnham & Weston Community Solar both benefitted from TCRUF, which gave certainty to the community groups that they would raise the required funding.
And finally, we’ve raised finance through our crowdfunding platform for four community-owned schemes and have been blown away by the level of interest and support from retail investors for these schemes. Most recently, the refinancing of the operational Ferry Farm Community Solar CBS included an £850,000 crowdfunded bond that was fully funded in just five days.
Our crowdfunding investors really ‘get’ the purpose behind community-owned renewables and are also savvy enough to understand that the economics of these projects has become more challenging since the withdrawal of tax reliefs which has reduced the financial returns and the need to invest for the long term (15 years+).
Earlier this year we surveyed our crowdfunding platform investors and asked them which impact areas they were most interested in, and community-owned renewable energy was the most sought-after.
With the phasing out of the feed-in-tariff, more novel thinking is needed, for example by refinancing existing operational assets to help fund the development of new generation. This is an approach that is being used effectively on a transaction we are working on for a private developer and would work equally well for community groups who already have an operational site.
In a subsidy-free environment, bringing together public sector bodies like hospitals and local authorities to increase the value of a power purchase agreement and help to provide more certainty around long-term revenue streams is another way forward.
Despite the sector having its challenges, we firmly believe in the power of community renewable energy and hope to support many more projects across the UK. The last 18 months has proven the value they can deliver to communities in times of need with a host of community-owned projects providing funding to tackle the impact of the Covid-19 pandemic. The key to their success will be financing that is tailored to each project and the design of new solutions, which is exactly what the corporate finance team at Triodos Bank is expert at.
If you’d like to discuss any of the above, Whitni can be contacted at firstname.lastname@example.org