A co-operative challenger to a £10bn energy-saving market has voluntarily ceased trading.
The Energy Saving Co-operative, which was established in 2011 and attracted almost £1m in investments, made the announcement following an unsuccessful attempt to raise additional capital. The co-op traded in south Staffordshire and East and West Midlands and employed 12 people who were both office- and field-based. It also worked with contractors who delivered energy saving efficiencies to homes, such as wall and loft insulations, solar panels and draught proofing.
Bob Burlton, the organisation’s chair, who spent the majority of his career as chief executive of Oxford, Swindon & Gloucester Society, said that all ongoing jobs booked by homeowners were being reviewed and was hopeful of solutions so that almost all will be completed. He added: “The society was founded with the best of intentions to help consumers reduce their energy consumption and bills, and to make a positive, co-operative contribution to address climate change issues. We have been gratified by the many messages of support we have received since announcing the decision to wind-up the society.
“Also, we express our gratitude to the founding and main investors, notably Midlands Society for its consistent and strong support. The society’s board sincerely regrets this outcome and will do all it can to reduce adverse consequences for customers, staff, suppliers, members and supporters and other co-operatives.”
Midlands Co-operative was a significant investor in the hybrid co-operative, which also had stakes from building owners and tenants, co-ops, community groups, suppliers, tradespeople and individual investors.
Around £500,000 was invested by Midlands Co-operative in the form of loan and share capital, while Midcounties invested around £50,000. Other support was provided by the Phone Co-op and CDS Co-operatives.
A spokeswoman for Midlands said: “Like many other investors in the venture, we saw the potential for success, and it is very disappointing that the organisation has entered the insolvency process. We would, however, like to state we do not hold any liability to other investors, who like ourselves, have lost out financially as a result of this latest development.”
At the Co-operatives United event in November 2012, the US-based National Co-operative Grocers Association made an investment of $100,000 in the venture, with the intention to replicate the idea.
Individual investors made investments totalling £330,000, with the first £150,000 coming through the Seed Enterprise Investment Scheme (SEIS) and the subsequent amount, which is being returned to subscribers, through the Enterprise Investment Scheme. The SEIS scheme provided tax relief of 50%, which subscribers will retain. Some holders will receive extra tax relief, which will mean the maximum loss is between 25-40%.
There were around 65 individual SEIS investors, who each invested no more than £5,000 in the co-op. £10,000 of share capital was also held by some individual members, who will lose the investment.
Chief executive Ewan Jones said the difficulties arose from being a start-up business, but that the scaling back of the government’s green initiatives caused further challenges.
He said: “The Energy Saving Co-operative has been adversely affected by this government’s retreat from its aspiration to be ‘the greenest government ever’. In particular, the poor design and implementation of the Green Deal, and allowing the Big Six energy suppliers to constrict delivery of the Energy Company Obligation, did not help to build momentum for a sustainable energy saving market.”
Ed Mayo, secretary general of Co-operatives UK, said of the insolvency: “We are saddened to hear the news … Despite having an innovative and ambitious plan when it entered the market, this relatively new business has struggled to gain traction in a highly competitive sector which has seen significant policy changes.”
Members have been notified of the special meeting to wind-up the society, which will take place on 10 February.