The largest community-owned solar farm in the UK has just secured a £16.3m finance deal to help secure its long-term future.
The 60,000 solar panel Heart of England Community Energy (HECE) solar farm near Stratford-upon-Avon, Warwickshire, has the capacity to generate 14.7MW of electricity – enough to power around 4,500 homes. The solar farm is co-located with 3MW of batteries operated by a third party, allowing it to generate clean energy and provide battery storage services to the grid.
Its new deal, with Triodos Bank UK, alongside Social and Sustainable Capital, secures long-term, lower-cost finance for the solar project, with reduced loan repayments allowing more money to be used to support community projects. The total package of £16.3m combines senior loans of around £12m from Triodos with junior loans from Social and Sustainable Capital (SASC) of around £4.3m. SASC provided capital to fund the community acquisition of the solar farm in 2016.
HECE uses profits from the solar farm to support a fuel poverty advice service run by local charity Act on Energy and a community grant fund. The community grant fund has so far provided funding to Harbury e-Wheels, a Warwickshire-based community transport charity, and SolarAid, a charity working in Africa to provide solar lights.
The project is managed by Communities for Renewables (CfR) CIC, which provides company and asset management services to 50MW of community solar projects across seven localities and has a longstanding relationship with Triodos Bank. The two organisations have worked together on a previous solar farm financing for Burnham and Weston Energy in Somerset, the second largest community solar farm in the UK.
Jake Burnyeat, director at Communities for Renewables CIC, said: “The loans provide a long-term lower cost finance solution which will help increase surplus income generated by the community solar farm to support local projects. It is also important that the funders share our values. Look out for the community bond offer which will launch next year and give an opportunity for people from the local and wider community to get involved.”
Philip Bazin, environment team manager at Triodos Bank UK, said: “This transaction proves that community energy schemes can be delivered and financed at scale. It also demonstrates our expertise at financing solar projects co-located with batteries, and at combining different tranches of finance.
“Such schemes have multiple positive impacts: not only do they help the clean energy transition, but their profits also benefit local people. By driving down the cost of finance, we have helped Heart of England solar to operate more profitably and increase its financial contribution to the community.”
Krishna Chokshi, investment manager at SASC, said: “We are delighted to renew our investment in HECE, whose performance has significantly exceeded our expectations since coming into community ownership two years ago. This is a great community-owned project with an outstanding local board of trustees who are overseeing its governance and performance. HECE is providing real financial benefits for individuals and families living in fuel poverty in the region through the distribution of community benefit. Work done by HECE unlocks significant additional grants for fuel efficiency, leveraging in as much as seven times the amount of funding generated by the project.”
“Community energy projects like this are essential as communities look to provider greener energy solutions and surpluses for the benefit of their local area. It is fantastic to see social investment providing finance that is enabling projects like this to thrive.”
Legal counsels on the transaction were TLT, CMS, Michelmores and Lux Nova. Technical due diligence on the transaction was provided by Green Cat Renewables.