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Brighton Energy Coop

Financial performance

To raise money to install solar panels, Brighton Energy Coop sell shares in the Coop, with shareholders becoming Coop members.

They aim to provide new members a return on investment of 5% a year, as they have for existing members, starting 12-18 months after each project is installed. 5% of capital is also available for repayment each year. The minimum shareholding is £300 and the maximum is £100,000.

New Project Funding

The 2019 fundraise is to raise £519,750. The money will be spent on the installation of solar panels at host sites, a project development fee for the Brighton Energy Coop team, structural surveys and EPC certificates if required. The costs of installing and operating these new solar systems are set out below.

Profit and Loss

Profit & Loss
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6 - 25
Total
Income
(FITs, electricity used onsite and exported)
£61,870 £62,534 £63,213 £63,906 £64,613 £1,209,074 £1,525,210
Operating and Admin expenses (£35,594) (£36,710) (£37,030) (£37,358) (£37,694) (£858,393) (£1,042,778)
Profit
(before tax, interest and community fund)
£26,276 £25,824 £26,183 £26,548 £26,920 £350,682 £482,432

Cash Flow

Cash Flow
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6 - 25
Total
Share Issue £519,750
Income from power generated £61,870 £62,534 £63,213 £63,906 £64,613 £1,209,074 £1,525,210
Total Cash Income £581,620 £62,534 £63,213 £63,906 £64,613 £1,209,074 £1,525,210
Capital Equipment £472,500
Project Development £47,250
Operational and admin expenses £15,608 £15,920 £16,240 £16,568 £16,904 £442,593 £523,832
Interest on shares (5%) £25,988 £24,948 £23,909 £22,869 £21,830 £218,295 £337,838
Repayment of shares (4% of total share capital a year) £20,790 £20,790 £20,790 £20,790 £20,790 £415,800 £519,750
Total Cash Out £582,135 £61,658 £60,938 £60,227 £59,523 £1,076,688 £1,381,419
Net cash flow after interest and share repayment -£516 £876 £2,274 £3,679 £5,090 £132,387 £143,790

 Note

  • Forward-looking statements are merely unaudited projections based on a number of assumptions and should not be relied upon as indicators of future performance. There is no guarantee these projections will be achieved.

Key assumptions

The key assumptions underlying these projections are as follows:

It is expected that all investments will receive a return of 5% yearly interest. The Board aims to ensure that new projects are installed and generating electricity in the shortest practical time after funds have been raised from investors. However, investors should note that the first interest payments will only be made after the projects financed by new funds have generated an income for Brighton Energy Coop for a minimum period of 12 months after installation. The latest possible installation date for these project is March 2020, so the aim is to allocate the first interest payments in April 2021.

Please note that the figures given in this share offer are provisional. There remain several key risks around these assumptions, so it's important to read the risk factors too.

Income
Brighton Energy Coop expects to generate and sell electricity produced by solar PV technology. This means there are two income streams: one based on Feed in Tariffs (FiTs - index-linked to the Retail Price Index) and one based on income through electricity sales to host sites (also linked to RPI) or through exporting to the national grid. The FIT rate is currently circa 30-40% of the projected income from these projects, while sales/ exports account for the rest.

Outgoings

The greatest costs are interest payments and capital repayment to members. Projections are based on the assumption that capital is returned to members as the assets are gradually written off over the 25-year life of the project. Other costs include maintenance (repairs, renewal or replacement of generating equipment), insurance, and BEC running expenses, which are all projected as increasing with RPI.

Assumptions

The projections make the additional following assumptions:

  • Brighton Energy Coop intend to return all members' capital back over 25 years at an average rate of 4% a year
  • Performance degradation 1% pa. This is a normal degradation rate for solar PV.
  • Retail Price Index (RPI) 3%. This is based on recent experience, but may during the life of the project be much higher if medium–to long-term historic trends are followed
  • Interest payments to members are targeted to be 5%. This is based on a projection of profit and reserves in Brighton Energy Coop's bank account, but the Board will review project performance and determine what rate of interest is affordable on an annual basis. The Board expects 5% to be paid annually for the life of the project but this is not guaranteed. There may be periods when Brighton Energy Coop don’t generate sufficient income to pay 5% interest due to sites not using all the electricity generated, but they will seek to minimise these through prudent selection of sites and sizing of arrays to match electricity usage
  • Administration costs and running costs are estimates, again based on Brighton Energy Coop's experience
  • Projections are based on the project securing Feed in Tariffs appropriate to the different sizes of systems.
  • Projections are also based on the production efficiency of existing systems.

Inheritance Tax Relief

BEC Shares would generally be expected to attract Business Property Relief at rates of up to 100% for IHT purposes, provided the shares have been held for at least 2 years.

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