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Bristol Energy Cooperative

Financial Performance

BEC’s project development experience since 2011 gives confidence to the view that funds raised in this Share Offer can still be effectively deployed in the event of forced changes to the project pipeline outlined in this document.

As the hydro project expects to receive the largest share of this raise, more detailed financial information and predictions for Bristol Community Hydro Scheme are set out below by way of an example.

Please note this is an example of the type of project that may be funded through this share offer, it is not a certainty that this specific project will go ahead.

Investing in BEC

You are investing in Bristol Energy Cooperative (BEC). In the future BEC are likely to invest in a range of other renewable energy and energy efficiency measures that will provide an overall comparable return, and your investment will also be exposed to the risks associated with these additional projects, although increasing the breadth and size of the portfolio reduces exposure to the risks associated with any one project.

The detail of which projects are included in the overall portfolio may need to change from that outlined in the Offer Documents. Any such changes will be at the discretion of the Directors.

Annual interest setting for investment in Share Offer 7 will be a separate process from that of all previous BEC share offers which will continue to be managed in the same manner as they have been from their inception, honouring commitments made to existing BEC investors.

Key General BEC Project Assumptions

  • Each project is financially modelled over its expected life or a significant defining characteristic such as the length of a lease, whichever is the shorter.
  • Every individual project is modelled to payback its capital cost over this period.
  • Currently all BEC projects in development are using a long-term flat inflation rate of 2.5% across the whole project period for both costs and energy sales or services revenue.
  • For energy generating projects, generation figures are calculated using appropriate industry standard tools, supplemented where necessary with third party expert opinion. For newer and more innovative technologies such as grid servicing batteries and microgrids a range of expert opinion is factored into the financial modelling.
  • Plant degradation and replacement costs are built into the financial modelling.
  • All projects are insured for risks and loss of income.
  • Financing costs are calculated individually for each project to include all funding sources used in that particular project - share equity, bonds, bank debt, bridging finance, and the associated internal management costs for each.

Bristol Community Hydro Scheme

 A 25-year operational project period is used for financial modelling purposes. In reality the scheme is likely to run for 45 years plus which would give better overall project lifetime financial performance.

Predicted total project outputs over this 25-year period:
Generation: 24,475 MWh
CO2 saved: 6,928 tCO2e
Community Benefit payment: £184,694

The figures above are based on full capital repayment from the project to BEC over the project life with repayments beginning in year 6. The figure in years 1-5 represents repayment of a temporary loan from BEC to the project. (This may not be needed if contingency is not used in construction).

If small operating deficits do materialise in some years as modelled in the table above this will be managed by shifting some capital repayment to later in the project.

The losses in the first 10 years are paper losses driven by depreciation.

Key assumptions

  • No bonds, bank debt or external bridge finance is being considered for projects in the Share Offer 7 project pipeline.
  • Bristol Community Hydro Scheme (BCHS) financial modelling includes a substantial grant funding element (which is not yet secured) and donated contributions (secured). Both are a BEC first.
  • BCHS is modelled over 25 years because this is the minimum lease length, but the expectation would be to extend the lease and run the project over a much longer period.
  • In the BCHS £8,000 of revenue a year will be held back into a major parts replacement Fund in anticipation of operating the project for longer than the modelled project period. (This is in addition to expected spare parts costs included in the Operation & Maintenance budget.)

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