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Solar for Schools

Bond Offer 2020

£1000 minimum

Risk factors

All investment and commercial activities carry risk, and investors should consider whether the Solar for Schools Community Benefit Society is a suitable investment for them in light of their own personal circumstances. The bond is unsecured and there is no guarantee that investors will receive either interest payments or their initial capital returned.

 This offer is not covered by the Financial Services Compensation Scheme.

 


Risks associated with your investment

The Directors believe the following risks to be the most significant for potential Bondholders. However, they do not necessarily comprise all those associated with an investment in the Bonds and are not intended to be presented in any assumed order or priority.

  • Capital Risk: Investment in smaller, new and unquoted businesses is likely to involve a higher degree of risk than investment in larger, established companies and those traded on a stock exchange. Investing in Bonds is not the same as investing money in a bank account as your capital is at risk and you could lose up to, but no more than, your entire investment.
  • Repayment: An investment in a bond of this type is speculative and involves a degree of risk. The Solar for Schools Community Benefit Society’s ability to repay the Bond on 31 October 2024, or at all, is dependent on the continued success of its business model.
  • Security: The Bonds are an unsecured investment and will rank behind secured or preferential creditors. In the event of the Solar for Schools Community Benefit Society’s financial failure, the Bonds would have the status of an unsecured creditor and may not be capable of being repaid in full or at all should the proceeds from a sale of the Solar for Schools Community Benefit Society’s assets fail to cover all unsecured liabilities.
  • Liquidity: Although the bonds are transferable the Bonds will not be traded on a recognised exchange and are therefore non-readily realisable.
  • Long-term commitment: Applicants should consider investment in the Bonds as a long-term commitment until the Repayment Date as the original amount invested may not be available to them before the repayment date as there is no guarantee of repayment if a request is made to do so by the Bondholder.
  • Bond redemption: Bondholders will have the contractual right to full redemption of their bonds at the end of the initial term. The Solar for Schools Community Benefit Society’s ability to repay the bonds at these points is dependent on it being able to secure finance from third parties and/or future bond investors. However, there is no guarantee that there will be sufficient finance available to repay all the bonds at this point.
  • The Bonds are not covered by the Financial Services Compensation Scheme (FSCS) or the Financial Ombudsman Service (FOS).
  • Past performance is not necessarily a guide to future performance: Events in the past, or experience derived from these, or indeed present facts, beliefs or circumstances, or assumptions derived from any of these, do not predetermine the future.
  • Financial projections: Hopes, aims, targets, projections (including the financial projections in this offer), plans or intentions contained in this document are no more than that and should not be construed as forecasts.

 


Risks associated with the project

  • Mechanical failure: Installations will be insured for damage, breakdown and loss of income in line with standard industry practice. However, there may be interruptions to the generation of electricity from the installations once built, caused by damage to or mechanic/electrical failure of equipment or roof maintenance work at the school.
  • Solar PV performance: The assumptions around energy generation levels each year are based on project capacity and yield calculations based on methodologies commonly used by the industry. However, long-term changes to weather patterns and/or equipment under performance may result in lower levels of electricity generation and therefore income.
  • Schools default: Over 80% of income to the CBS is from the sale of electricity to each school. Therefore, should a school default on the agreement or shut down, revenues for those schools could be up to 60 per cent lower as the electricity would be exported at about 5p instead. The impact of such a reduction on the entire portfolio of a single project failing in this way in the later years is very small, but if multiple schools defaulted in the early years, the CBS may not be able to meet its repayment schedules. 
  • Schools consume less solar electricity than forecast: Solar electricity ‘self consumption’ rates are calculated based on comparing new schools to historic data of over 50 systems installed on schools so far. If many schools actually consume significantly less than forecast, the reduction in income to the CBS could result in the CBS not being able to meet its forecast re-payment schedules if the shortfall is greater than the ‘surplus’ or profit share.

 


Industry risks

  • Government legislation: Once each system is installed and registered, where applicable the subsidy tariff is fixed for 20 years. However, changes in government legislation may affect the profitability of the Solar for Schools Community Benefit Society’s renewable energy projects. While government subsidies were in place, the price paid for any spare electricity not used by the school and exported to the grid was guaranteed by the government. The model assumes that we will continue to sell electricity to green electricity providers such as Good Energy at similar prices. (~5p a unit) adjusted to inflation over the next 20 years. This is very likely for at least the next 5 years, but no longer guaranteed for the full 20 years as before. Income from export is generally less than 20% of total income for projects in the future, but if electricity export prices halved within 10 years, the CBS could struggle to pay back interest and even capital..
  • Electricity prices: If mains electricity prices fell rather than rose over time as expected, schools might choose to default on their contract with the CBS and refuse to pay the contracted price for solar electricity if higher than mains electricity. This risk is reduced to some extent by the schools’ entitlement to a profit share that should counteract the higher contracted solar electricity price vs. lower mains electricity prices.

 

£159,29863%
Applied for to date, of
£250,000 target
or
Invest with IFISA
Minimum IFISA investment is £1,000

What is an Innovative Finance ISA?

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