Government Consultation on the Feed in Tariff & early notification of BWCE share offer

What chance for new community energy projects in the future?

As you may know the government has launched a consultation on the Feed in Tariff, the main mechanism for supporting small to medium scale renewable energy projects in the UK. The proposal is that from January next year, there will be a major cut of up to 87% in the tariff. As you can imagine, this will have a devastating affect on the industry and in particular on our community energy sector.
It is important to note it will not affect our existing projects or those that have already been registered, but it will drastically affect the potential to realise new projects.

The consultation on the proposals can be found here and closes at 11.45pm on the 23rd October. A good summary has been put together by Regen SW and can be found here.

We know the government is getting a lot of responses from the community energy sector and we will be adding BWCE’s voice to this. We hope that you will add yours too. 

In summary, BWCE will be saying that:
1. Community energy is capable of delivering a wide range of additional benefits beyond renewable energy capacity, not least the re-investment of profits back into local communities ensuring that local communities benefit significantly.
2. Even though community energy is rapidly growing, it is particularly vulnerable to such heavy cuts as it has less access to commercial and institutional finance than its commercial counterparts.
3. Within the next few years as the community energy sector matures, communities may posssibly be able to compensate for the loss of the Feed in Tariff through the development of creative financial instruments, perhaps via the Green Investment Bank, or through local supply offers that enable them to secure greater value for their generating assets. But in the meantime they still need support of the FiT.
4. Some renewable energy technologies like solar PV could well reach grid parity within the next 3-4 years, the point at which time renewable energy will no longer need subsidy to compete with conventional energy generation. However the drastic cuts to the Feed in Tariff are too much, too quickly. The harm they are likely to do to the sector will set back the move to grid parity, rather than bring it closer.
5  In the short term, without the Feed in Tariff, it is probable that the community energy sector will wither before it is ready to stand on its own – without subsidy.

In addition we will also press hard for the re-instatement of pre-accreditation which was removed on 1 October. This is the process by which projects can secure their Feed in Tariff level at the point they have planning and a grid connection offer, rather when they commission. Without pre-accreditation it is impossible to model financially whether a project is viable or not. In consequence little can get built with any degree of comfort for potential investors.

What can you do?
You can add your voice to the tens of thousands of others who are responding to this threat to our industry by:
1. Getting involved in the online campaign run by 10:10. Their ‘Keep Fits’ campaign can be found here. Responding to their simple questions provides an easy way of making your voice heard within the context of the consultation.
2. Signing the online petition started by 38 degrees here.
3. Most importantly get in touch with your MP. Ask them whether they are concerned about the prospect of undermining the community energy sector in this way, if you are already a member of a community energy organisation, tell them why you think community energy is a good thing and what motivated you to get involved. Ask your MP to write to the Secretary of State, Amber Rudd, to voice their concern about the impact on community energy and their communities.

A number of MPs, including some Conservatives have voiced their concerns, it is important to encourage more to speak out. We have lobbied our local MPs as have many others in the South West and across the country.

So while stocks last…. 
In the first half of November we will be launching our last share offer to fund projects that have already secured the current Feed in Tariff and so are not vulnerable to the proposed cuts. So, keep looking out for your BWCE newsletter for more news and email us on [email protected] if you are interested in investing. Please forward this newsletter to friends, colleagues and neighbours so they can get involved – while they still can!

Regards

Pete Capener
Chair
Bath & West Community Energy
E: [email protected]
T: 07775781331

Interest payments and EIS certificates

9 October 2015

Interest Payments
An interest payment of 7% per annum was declared at the last AGM for the fourth year in succession. Members should have received by now an email confirming the amount of interest they will receive for their shareholdings up until 31 March 2015. There will have been an email that pertains to each one of their shareholdings. So for example if you hold three share certificates you will have received three emails. If for any reason you haven’t received the emails please contact Peter Andrews as soon as is convenient. The actual payments will be made, by bank transfer, over the next few days. Please note investors in the Wilmington Solar Array will be receiving interest pro rata, dated from the date on their share certificates.

 Enterprise Investment Scheme ( EIS) 3 certificates
The blank EIS 3 certificates have now been received and will be filled in (by hand unfortunately) and sent out to you as soon as possible. For those of you who don’t know how to claim your tax rebate our financial director David Bunker has written these instructions.

How to Claim EIS Relief

HMRC have now authorised the tax submissions made by BWCE so now we can distribute to all qualifying investors a Form EIS 3 which sets out the amount invested and states that the investment is eligible for tax relief.

For Investors who Normally Complete a Tax Return Form

You need to claim the relief on your Tax Return form by completing the Additional Information Section. In Box No 2 on Page 2 you need to enter the total value of the investment upon which you are claiming relief. In the large box on Page 4 of the Additional Information Section you need to provide details of the name of the company invested in , the amount invested, the date of issue of the shares and the name and reference number of the HMRC office issuing the tax certificate. All this information can be found on the EIS certificate we will issue.

You do not need to complete pages 3 and 4 of the EIS certificate. You do not need to send the EIS Certificate to HMRC but you do need to retain it in a safe place. HMRC may request to see the certificate as evidence in support of your claim.

The tax relief will normally be allowed in the year in which the shares were issued to you. If you wish to claim relief against the previous tax year you can either amend the Tax Return previously submitted for the earlier year, or fill out Page 3and 4 as detailed below and send it to your HMRC office.

For Investors who do not Normally Complete a Tax Return Form

If you are employed under PAYE or retired and do not normally complete a Tax Return form, the procedure for claiming relief against tax deducted from you is slightly different. You need to complete the blank sections on Pages 3 and 4 of the EIS Certificate. The details you need about the date of issue and the HMRC office reference number can be found on Page 1 of the certificate.

Detach Pages 3 and 4 of the EIS certificate and send it to the HMRC office that deals with your tax deductions. If you are employed or have a pension from a former employer you will be able to find details of the HMRC office dealing with your affairs from your employer. If you cannot find this information you will need to telephone HMRC on 0300 2003300.

The tax relief will normally be allowed the year in which the shares were issued to you. There is a space on Page 3 of the form to specify if you wish to claim the relief against the preceding tax year.

Consultation Response – Changes to Feed in Tariff Accreditation

Bath & West Community Energy – Consultation Response  – Changes to Feed in Tariff Accreditation

Introduction

Bath & West Community Energy (BWCE) is a Community Benefit Society set up in 2010. BWCE has raised over £10 million through community share offers, plus debt, to finance the construction of just under 6 MW of community owned solar PV for BWCE and its community energy partners. Last year BWCE distributed £20,000 of its surplus income, via its independent community fund, back into local community projects. This year BWCE will be distributing a further £45,000 via the same route and will be retaining 60% of project income within the local economy. To date BWCE has paid 7% interest to its members, the majority of whom live in the local area.

The community energy sector is laying the foundation for local community acceptance and so the continued successful roll out of distributed renewable energy, by increasing local governance and control, recycling profits back into local communities and retaining economic value within the local economy. So the community energy sector is crucial to the UK’s response to climate change, particularly as current projections suggest that more needs to be done to meet the UK’s fourth carbon budget to deliver a 50% reduction in carbon emissions by 2025.

BWCE is deeply concerned about the potential removal of the ability to pre-accredit community energy projects. The enthusiasm, commitment and momentum that have been generated by community energy projects could be stilled at a stroke with the removal of pre-accreditation.

Community energy projects have longer development periods than comparable commercial schemes, bringing as they do the need to build support for projects locally and to raise finance. This was recognised by government very recently with the increase in pre-accreditation periods for community energy projects.

In addition, if there is no pre-accreditation then the likelihood is that commercial schemes, with their ability to move to commissioning more quickly than community energy schemes, will trigger degression rates more rapidly, increasing further the inherent risk associated with investing in community energy.

If finance is to be raised without security around income levels, then the level of risk will again be greatly increased, reducing numbers of potential investors, driving up the minimum level of interest required to secure investment and so removing or greatly reducing the community benefit that projects will be able to generate. This is something that the FCA is already greatly concerned about, as evidenced by their recent consultations.

This increased risk and uncertainty is acknowledged within para 1.19 of this consultation. However, no mitigating factors or suggestions are made as to how community energy projects in particular can accommodate this massive change in the regulatory framework. Community energy projects will be going from an expectation of a 12 month period to reach financial close and commission, for solar PV for example, to nothing, in very short order.

The removal of pre-accreditation and pre-registration as described in para 1.11 of the consultation document will devastate the community energy sector and we urge government to re-consider their plans.

QUESTION 1: Do you agree that, in the context of deployment and spend under the FIT scheme significantly exceeding expectations, it is appropriate to remove the ability to pre- accredit from the FIT scheme?

No we do not agree that it is appropriate to remove the ability to pre-accredit.

The most effective mechanism for controlling spend is degression. Pre-accreditation adds to the levels of deployment and if projects do not come to fruition then degression could be triggered prematurely, but will nevertheless increase degression rates. This will reduce spend and so deliver the cost control required by DECC.

QUESTION 2: Are the assumptions made above on the impact of removing pre-accreditation reasonable? Please provide robust evidence to support your response.

Whilst BWCE would agree with the impacts outlined in terms of increased risk and uncertainty (paras 1.16-1.19), the consultation states that due to the uncertainty in the impact of changes, there has been no attempt to quantify potential savings or impacts on deployment.

The admission that DECC is proposing changes that have substantial, known and acknowledged negative impacts with no attempt to quantify whether the changes would actually make any savings at all is at the very least questionable.

The impact on the Community Energy sector would be particularly severe. A typical fund raising cycle for a community project takes at least 6 months from start to finish. For example, BWCE supported the fund raise for the 5 MW community project at Braydon Manor that is owned by Wiltshire Wildlife Community Energy. The fund raise was prepared in September 2015, launched in October and closed in January 2015. It then took a further 6 months to agree bank debt and contract terms before financial close could take place.    Removal of pre accreditation would have made it impossible for this project to reach financial close because there would be great uncertainty on the FIT level.

This is really damaging to a sector that offers an alternative vision to the incumbent power companies and which DECC has clearly stated previously it wishes to support.

BWCE would strongly recommend that before DECC enacts such major changes to the FIT it carries out a full impact assessment to provide evidence that the changes proposed will deliver the savings required.

QUESTION 3: Are there additional measures which could achieve the objectives of encouraging deployment under the scheme while ensuring value for money under the LCF?

Whilst BWCE does not believe that the LCF is an appropriate control mechanism for delivering the necessary UK response to climate change, it would be better to give the sector clear policy direction in terms of priorities. Rather than enacting change that will undermine the whole sector, government has the ability to bring forward the technologies and scales of project that it wants to see through the setting of FIT levels and or/differential degression rates.

Otherwise there is the high chance that changes will be implemented that will not deliver the desired cost savings and will fundamentally undermine the renewable energy sector at a time when there is the real prospect of renewable energy delivering grid parity for some technologies, within the near future.

Ultimately, subsidy free renewable energy is the most effective way of delivering value for money. The removal of pre-accreditation will make grid parity less likely and so will have a negative impact on value for money.

DECC should also consider the potential for making savings in other areas, for example subsidies for conventional and nuclear energy production, which would have a less devastating impact given the far higher levels of funding involved.

QUESTION 4: Are there groups or sectors where it may be appropriate to reintroduce pre-accreditation in the future?

For the reasons outlined within the introduction and in our response to Q2, community energy projects are even more vulnerable to the removal of pre-accreditation than commercial projects. So whilst BWCE believes that pre-accreditation should be retained for all projects, there is a very strong case based on policy precedent (extended pre-accreditation periods for community energy) for special dispensation for community energy projects.

Chelwood Solar Array

Join us on Tuesday, 18 August at BRSLI, Queen Square, Bath, BA2 3AF

One of the projects we were working on when we handed over our development work was the solar array at Chelwood – to the southwest of Bath. This ambitious scheme for a 5MW array has bought together BWCE, Triodos Bank and Mongoose Energy in the setting up of Chelwood Community Energy.

The project is currently in the middle of a fund raise of £2.75 million to complete and build the installation. Underwriting has been secured for £600K meaning a minimum raise of £2.15m. As of yesterday £1.542m had been raised – well over 70% of the minimum total required.

BWCE will host an evening where you can hear a presentation about the project from the directors and ask any questions you may have. The meeting will be next Tuesday, 18 August at BRSLI, Queen Square, Bath, BA2 3AF. It will start at 6.30 and finish about 7.30pm.

All the details of the offer including the Share Offer Document can be found on the Chelwood.org website. You can also go direct to the Ethex website where you apply directly online.

All BWCE members and non-members are very welcome

Smart Metering

BWCE is working with Encraft on a new project entitled ‘Empower’. It’s testing a new approach to optimising energy performance in domestic buildings. It works by managing energy demand and supply across a community or portfolio connected buildings, rather than merely optimising energy demand and supply an individual properties. To read more follow this link to the article in the CIBSE journal

Pete Capener’s speech to the Smeatonian Society

Your Royal Highness, Smeatonians and guests.

Thank you for inviting me along tonight. I’ve been asked to give you a quick flavor of what community energy is all about.

I’d like to start by giving you up front my assumptions, you may like to agree or disagree, but for me they lay the foundations for why community energy must be a central part of the energy agenda going forward

First, I believe climate change and energy security represent two of the greatest threats to the human race… ever.

Second, the rate of reduction in carbon emissions in the UK may be sufficient to meet coming international commitments in 2020, but it is nowhere near enough to deliver a fair and equitable contribution to our global response.

Third, unless we drastically reduce our reliance on fossil fuels we are also offering our children a world in endless and rapidly escalating conflict.

Fourth, in order to build the acceptance for the scale and speed of change that these things require, we will have to totally rethink our relationship with energy.

Click here to read the rest of the speech

At the moment we are consumers, and passive consumers at that. We give our energy suppliers money, they give us energy – a fair exchange you may say. But it also instills a sense that we have the right to use as much energy as we want, or at least can afford.

Community energy challenges this assumption, shifting us from merely passive consumers to being active participants in a process of change.

The community energy vision has three elements, communities owning and benefiting from their own renewable energy projects, that supply energy back to local people, underpinned by a community led approach to demand reduction and energy efficiency.

And by community, I mean both geographically defined communities as well as communities of interest.

The first part of that vision, community owned renewable energy, is the most developed. It involves community enterprises owning renewable energy projects, offering the opportunity for local people to invest and earn a good return and then recycle profits back into meeting community needs. As a result economic value is retained locally, where it’s generated. But it also gives local people a stake in local projects, fostering positive debate and increasing acceptance as a result.

As one example only, Bath & West Community Energy has helped raise £10 million through community share offers that together with debt finance has helped commission or finance 15MW of community renewables, with a pipeline worth over £60 million. We have paid members 7% on their investment for the last three years and will recycle profits from these projects alone that will build to £250,000 per year.

This sector is still small and faces challenges around community capacity and investment readiness but the model is proven and the sector is rapidly growing, with hundreds of community enterprises around the country at various stages of development. Government has established the first ever UK community energy strategy with a 3GW aspiration, creating a fifty-fold increase in community renewables by 2020.

The second part of the vision, creating community controlled local supply coops, goes one step further by enabling local generation to be supplied directly to local consumers, increasing community benefits significantly.

Local supply coops face regulatory and scaling constraints, but there are business models that are emerging within the market that offer some solutions. These models look to aggregate community interests to generate the scale necessary to meet commercial challenges and establish a supply licence.

Together community owned generation and supply offers a radically different way of doing business. One that is based on strong commercial and financially sustainable business principles, but one that also offers a different take on who benefits and who controls.

The third and final leg, a community led approach to energy efficiency and demand reduction involves building a sense of collective purpose, a sense that I am not alone and so my actions can make a difference.

For example a community dimension within the roll out of smart meters and the development of smart grids could increase the visibility of what is happening on energy across a whole community rather than just in our own homes and create new discussions between friends, family, neighbours and colleagues.

Or the delivery of area-based insulation schemes or bulk discount schemes illustrate how the trust and credibility of local community networks can increase the take up of energy efficiency measures.

This is perhaps the hardest area to make progress around. For many reasons, but in particular it’s hard to develop viable business models that value and reward the added value of the community contribution and so community action remains primarily volunteer led and grant dependent and so becomes difficult to replicate and scale.

So to summarise –

The community energy vision is built on three three foundation stones, community owned renewable energy, community controlled energy supply and community led demand reduction and energy efficiency.

These three strands are progressing at different speeds, they face different challenges and there is much to do to make them a reality. But together they offer a different way of doing business on energy, a way of fundamentally challenging our assumptions about energy and forging a response to climate change and energy security that is truly fit for purpose.

Pete Capener gets MBE in New Year Honours list

Huge congratulations to our very own Chair and founder director Pete Capener on getting recognised for 30 plus years of work in the clean energy sector. He received his award of the Member of the British Empire, or MBE, in the 2015 New Year Honours list for ‘services to sustainable energy. Presumably they will be casting a special medal for him, and fellow sustainable energy champion Barbara Hammond, in recycled metal with a reused cloth bit that it hangs on.

You can read more about Pete Capener and his lifetime of toil in the clean energy vineyard here

The Bath Chronicle reported the story thus with Pete quote as saying  “I’m very pleased to have the work that we’ve been doing on community energy acknowledged, recognised and valued. It’s good to see that this is an area of activity that is regarded as important.” He went on to say it would be increasingly important for communities to take control of their energy destiny by finding sustainable ways of generating their own power.

And so say all of us – very well done Pete

New sideboard wanted

Not content with being named Leader of the Year at the UK Community Energy Awards Pete Capener, our chair, has just added another trophy to his groaning sideboard. He was voted South West Sustainable Energy Champion at last week’s ‘Renewable Futures and Green Energy Awards’ held in the Assembly Rooms in Bath. After years of work championing the once unfashionable community energy sector – congratulations Pete – you deserve it.

BWCE Fund extended

BWCE-Fund-LogoFollowing feedback we have decided to extend the time for applications to the BWCE Fund. The fund is open to local groups to apply for grants ranging from £500 to £5000 for low carbon and fuel poverty projects. The new closing date will be 23 January 2015. Quartet are administering the Fund for us so visit their website and download the Criteria and an Application Form. If you have any questions as to what does and does not qualify, or have an idea for a project you need to check out, don’t hesitate to contact us.

Third Share Offer closes early

homepage-share-offer-doc-photoIt won’t have escaped your notice that we have had a share offer running to raise £1.6 million to build the Wilmington Farm Solar Array. It all looked a bit hard going with 2 weeks to go but, as seems to happen with these things, over a £1 million flooded into Ethex in the final 2 weeks. In fact we reached our target and had to close 5 days early. So a huge thank you and welcome to all our new members and a big thank you to all our existing members who re-invested.

Sorry if you missed out – there will hopefully be another share offer in the New Year so sign up to our newsletter if you’d like to be the first to know. The lesson, as my dear old investment advisor used to say, is that ‘the early bird catches the worm’ – though the portfolio of Annelids he recommended hasn’t being doing so well of late.