Energise Barnsley

Financial performance

This bond offer is for £1.2 million that will enable Energise Barnsley to take into community ownership up to 2MW of residential and community rooftop solar assets on Barnsley Metropolitan Council owned property.

Project Costs

The total cost of the project is £2.6 million.  This will be from this £1.2 million retail bond and a loan facility of up to £1.5 million from Charity Bank, subject to final due diligence.

Project Income and Expenditure

The society’s principal income is generated through the Feed in Tariff (FIT), which is a UK government legislated mechanism which awards a guaranteed unit price for electricity generated and exported from FIT-registered renewable energy generators. Additional income is generated through selling electricity from larger solar assets to Barnsley Council through a power purchase agreement (PPA).

The key operational expenditure is:

  1. Payments to British Gas Solar for the delivery of the O&M contract
  2. Payments to reserve and maintenance accounts
  3. Payments to Gen Community Ventures for managing the assets, and associated contracts with British Gas Solar and Barnsley Metropolitan Borough Council

Key assumptions

The financial projections are based on the following key assumptions:

  • Averaged net energy yields are for the residential solar assets are 866 kWh/kWp and 841 kWh/kWp for the non-domestic solar assets
  • Retail Price Index long term average of 2.5%
  • The average performance degradation of the solar panels is 0.4% per year
  • All FIT and PPA income will increase with RPI each year
  • There is a 50% correlation between RPI and UK LIBOR
  • The solar assets continue to be insured for risks and loss of income
  • The bond capital will be refinanced on maturity at a rate lower than 6% + RPI
  • This bond offer will raise a maximum amount of £1.2m

Annual return

Energise Barnsley aims to pay members 5% per annum for a 5-Year fixed rate bond. Interest will be paid annually on or shortly after end October each year from 2017 onwards and so long as the investment is held. Capital will be returned on or shortly after October 2021. 

If the bond is not refinanced after year five, the financial model can support paying a default interest rate of 6% plus RPI.

Although the bonds are transferable, they will not be listed on a recognised stock exchange due to the considerable costs involved. Instead, EB has decided to partner with Ethex to manage this market. The bonds will be registered on Ethex secondary market from the end of year two.

Through Ethex, bondholders may be able to buy and sell bonds on a matched bargain basis whereby registered sellers are matched with registered buyers. A modest charge will be applied by Ethex which can be reduced if the Bondholder opens an Ethex Member Account (providing access to other Ethex portfolio services).

Underwriting of offer

Several parties have conducted due diligence on the project and legal structure to provide loans to the society. A loan facility of £2m has been offered by Ignite, a social impact fund specialising in the energy sector. 

An investment in principle has been agreed for a facility of up to £1.5m by Charity Bank*. If this facility is secured, it will mean that Charity Bank’s commitment will match the investment in this bond offer. All construction finance has been provided by British Gas Solar. The overall funding structure ensures the project will proceed even if the bond offer is not fully subscribed. The directors of Energise Barnsley reserve the right to close the bond offer early, at any time.

Energise Barnsley has a period of three years to refinance the loan facility from Ignite. If the loan facility is not fully repaid within a period of three years, a default interest rate will be paid until Energise Barnsley refinances the outstanding capital and interest. The interest will not compound and the default interest rate is serviceable from the project’s forecasted revenues. However, the increased costs of finance may decrease the community fund.

*Subject to final due diligence

Energy generation

Further information regarding the forecast energy generation is available in the Offer Document. 

Generation (kWh) Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6-25 Total
Domestic 107,315 776,183 773,070 769,957 766,844 763,732 10,983,715 14,940,816
Commercial - 542,933 920,236 916,843 912,843 909,146 16,766,120 20,967,819
Total 107,315 1,319,115 1,693,306 1,688,497 1,679,687 1,672,878 27,749,835 35,908,634

Financial projections

The following information is a summary of the financial projections for Energise Barnsley’s rooftop solar PV project.

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6-25 Total
Total Revenue (£) 14,643 187,631 248,547 251,710 255,953 261,167 4,917,953 6,137,605
Total Expenditure (£) -3,014 -2,630,870 -48,455 -50,566 -51,278 -49,334 -1,081,984 -3,915,500
Total Senior debt finance (£) - -1,368,435 133,856 133,881 136,511 138,513 1,486,736 661,063
Community bond underwriting (£)
Underwriting investment -200,000 -1,000,000 - - - - - -1,200,000
Underwriting capital redemption - 1,200,000 - - - - - 1,200,000
Interest payment and fees* - 40,000 - - - - - 40,000
Total -200,000 240,000 - - - - - 40,000
Community bondholders - first issue (£)
Community bond investment - -1,200,000 - - - 1,200,000 - -
Interest payments and fees* - 60,000 60,000 60,000 60,000 60,000 - 300,000
Total - -1,140,000 60,000 60,000 60,000 1,260,000 - 300,000
Community bondholders - refinance (£)
Community investment - - - - - - -1,190,481 -1,190,481
Community redemption - - - - - - 1,190,481 1,190,481
Interest payments - - - - - - 728,637 728.637
Total - - - - - - 728,637 728,637
Total Community benefits (£) - 20,000 7,500 7,500 7,500 7,500 442,405 492,405
End of year cash position 211,629 76,826 75,562 75,325 75,990 81,809 3,722

 Notes

  • The Senior debt finance relates to the £1.5 long-term loan provided by Charity Bank.
  • The Community bond underwriting relates to the loan provided by Ignite (the leading Social Impact Fund).

*Interest is paid on top of capital repayment.

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