Funding to date
The feasibility costs for the TEC Solar Roofs Project were funded by a £20,000 grant from the Rural Community Energy Fund. The installation works, which were completed in 2016 and 2017, were funded by a combination of short-term seed loans from a number of local supporters (which raised £118,100 in total) and a £285,000 long-term loan facility from the Low Carbon Society (LCS Loan), a specialist community energy loan fund.
Target for Share Offer and how the funds will be used
TEC is launching this Share Offer to enable people and organisations in the Local Community and beyond to participate in the ownership of TEC and have a say in how it is run. The target for this Share Offer is to raise up to £290,000. The funds raised will be used, firstly, to repay the short-term seed loans and, secondly, repay up to 60% of the LCS Loan (the maximum early repayment permitted under the loan agreement). TEC is seeking to repay the LCS Loan as the loan interest cost is higher than the target share interest for this Share Offer. Therefore, raising new capital through this Share Offer will result in a lower cost of finance for TEC and increase the community surplus generated.
If the Share Offer raises less than £290,000 a greater amount of debt will remain with the Low Carbon Society. The Minimum for the Share Offer is set at £160,000 to achieve repayment of the seed loan investors in full and at least 15% of the LCS Loan.
Income and expenditure
The Solar Roofs have been up and running generating electricity and income from the sun for over 3 years. The Feed-in Tariff and Power Purchase Agreements and operations contracts are all in place.
TEC’s anticipated annual income from Feed-in Tariff payments, electricity sold to the host buildings through a PPA, and payments for electricity exported to the electricity network (where applicable) is around £59,000 per year, increasing with inflation each year. Whilst the Feed-in Tariff and PPA rates are fixed, TEC’s income will vary according to the amount of electricity generated each year and the amount that is consumed by the host building.
Projections for annual electricity generation are derived from averages of the actual generation over the last 3 years. To account for the fact that the months on record may have received more, or less sunshine than long term models predict, a factor was applied to scale the monthly generation up or down accordingly. Degradation of generation from the solar PV modules over time is assumed to be 0.4% per year, which is in line with industry practice. Finally, any months with technical issues that have since been solved were omitted from the average.
The electricity at three sites will be sold to an energy supplier at the FiT export tariff rate which is currently 5.5p/kWh or via a commercial export PPA agreement, whichever yields the best overall return. The cost of metering and the high onsite use at the two Mount Kelly School sites make export metering uneconomic. Tesco Callington uses all energy generated on site.
Operating costs for the Solar Roofs Project include service and maintenance, insurances and business rates. A reserve fund will be built up to cover foreseeable component replacement and repair costs that fall outside of the warranties and service and maintenance agreements. These costs will be paid by TEC.
TEC will also incur administration costs which have been factored into the business plan. These include company and director insurances, book-keeping, annual accounts and member relations.