1. BEC may be unable to raise enough capital to proceed with installations.
Mitigation: BEC could still proceed with some schemes and consider alternative funding sources, including further share raises, to fund outstanding projects. It is currently exploring the possibility of securing an underwriting facility for the offer with an institutional investor.
2. Capital costs of the installations could be higher than anticipated and operational costs may rise faster than anticipated.
Mitigation: BEC will as far as possible negotiate fixed-price contracts for installation and maintenance. Contingency is built into BEC’s cost predictions.
3. Long term project revenue may be below predicted due to climate change e.g. river flows, solar irradiation; the technical performance of equipment; or adverse changes to energy market conditions.
Mitigation: Wherever possible installations will be performance warranted and innovative power purchase agreements sought to protect against the downsides of wholesale energy price fluctuations. There could however be limits to what mitigation strategies can achieve and in worst case scenarios investment returns could be affected.
4. There may be interruptions to the generation of electricity from the installations once built, caused by damage to or mechanic/electrical failure of equipment.
Mitigation: Installations will be insured for damage, breakdown, and loss of income, though the usual ‘Acts of God’ exceptions apply.
5. Previous investments made by BEC and possible future projects in which it invests could affect its ability to pay interest.
Mitigation: BEC has delivered successful projects and generated its target return to members over the last eight years - annual accounts from previous years are available for inspection. The directors will ensure prudent on-going management practices are used to minimise risk. BEC will only make investments in future projects if they meet the required financial performance criteria.
6. The grant for Bristol Community Hydro Scheme does not materialise resulting in the project becoming financially unviable.
Mitigation: Funds raised in Share Offer 7 would be used to finance other BEC projects which could have the net result of delaying future anticipated BEC share raises and /or reducing the target of future raises. A further fall-back position would be to use some of the raised funds to replace more expensive BEC financing. The latter would not be a preferred option but would have a positive net effect on the BEC business.