It’s a virtuous circle: our community ‘partners’ receive solar panels on their roofs that are installed and maintained free of charge; our investors receive a good return on their investment; and SELCE receives an income to support its work to reduce fuel poverty in the capital.
Help generate a fairer, greener future with South East London Community Energy (SELCE)
Our vision is not only to generate renewable energy right here in London but to ensure that this energy is owned and governed by the people who use it.
Huge thanks to everyone who invested in South East London Community Energy’s second community share offer. The offer was so popular that it was oversubscribed and we had to close a few days before the official end date of August 4th 2016. We have now raised £120,000 of investment from the community to install solar panels on three sites in South East London. These are:
- Alderwood Primary School
- Deansfield Primary School
- Bannockburn Primary School
For our second project:
- we intend to pay 4% annual interest on our shareholders’ initial investment
- shares may be exempt from inheritance tax if held for more than two years
- shares can be withdrawn after three years
- retained investments will be automatically returned to investors after 20 years.
And what about the community and the environment?
- Overall, SELCE’s new solar arrays will save more than 60 metric tons of CO2 emissions each year
- The schools will save an estimated £143,000 in electricity costs over the 20-year project, enabling them to spend more money on the things they really need
- As well as paying interest and returning capital to investors, we aim to produce £40,000 of surplus over the lifetime of the project. This will be used to expand the work we already do to reduce fuel poverty in South East London.
Share offer opened: 1st July 2016
Share offer closed: 4th August 2016
Minimum investment per member: £250
Maximum investment per member: £20,000
1. Based on our financial model, we forecast that, in our base case, we will be able to provide a 4% interest rate to members – with full capital repayment in or before year 20.
2. Exemption from inheritance tax: our shares also attract Business Property Relief, meaning they are exempt from inheritance tax, provided the shares have been held for at least two years. See https://www.gov.uk/business-relief-inheritance-tax for further guidance.
For the community buildings: our solar partners will benefit from reduced electricity costs. Taken together, the solar arrays in our second share offer will save around £143,000 on electricity bills over the 20-year lease period of the project. What’s more, each building will get a special solar display that will monitor the output of the panels and provide an educational tool for pupils and users of the other community buildings.
For those struggling to pay their fuel bills: There are 21,342 households in Greenwich and Lewisham that are forced to choose between heating their homes and buying other essentials. SELCE is committed to tackling fuel poverty head on. We will use any financial surplus from our renewable generation work to fund support for those who are most vulnerable. We have estimated that the cumulative contribution to our fuel poverty fund from our second community share offer will amount to £40,000 over 20 years.
For everyone: By generating electricity from the sun, SELCE’s project will result in an approximate carbon emissions reduction of 60 metric tons of CO2 every year.
When you buy SELCE shares you become a member of SELCE. This means that you will be invited to the AGM, receive newsletter updates and have lots of opportunities to feed into the organisation. In accordance with co-operative principals, all decisions are made on the basis of ‘one member, one vote’ regardless of the size of shareholding. All members can stand for election to the board of directors. Becoming a SELCE shareholder is therefore an invitation to get involved as much (or as little) as you like.
Shares in SELCE are different to shares you may have in public or other private companies. By law, you are not able to sell or otherwise transfer your shares and the project has been designed to encourage long-term investment. Our members will be able to apply to withdraw funds after three years, at the discretion of the board. Withdrawals will depend on what funds are available and what impact these withdrawals will have on the good of the co-operative and its stakeholders.
The directors of SELCE believe that this offering is comparatively low risk because we will be receiving a guaranteed income in the form of Feed-in-Tariff subsidies. This is a government mandated subsidy paid to anyone who produce renewable energy. Once the solar panels are installed, SELCE will receive a guaranteed payment for every unit of renewable electricity generated – and an additional payment for every unit of electricity exported to the grid – for the next 20 years.
However as with all investments, withdrawable shares can lose some, or all, of their value and they are not protected by the government’s Financial Services Compensation Scheme or the Financial Ombudsman Service. Please ensure that you read the share offer prospectus, paying particular attention to the risk analysis section.
I’ve heard that the feed-in tariff rate is being reduced. Won’t that affect SELCE’s ability to pay annual interest to shareholders?
In August last year, the Department of Energy and Climate Change announced the government’s intention to review the Feed-in Tariff scheme. The subsequent reductions in the Feed-in Tariff affect all solar installations commissioned after 1st Jan 2016. However, the changes did not affect our second community share offer. This is because SELCE has ‘pre-registered’ all installations in its two solar energy projects (2015 and 2016).
Pre-registration is a facility that allows community benefit societies such as SELCE to receive a guaranteed tariff rate that is valid for one year from the pre-registration application date. SELCE successfully applied for pre-registration for installations on all of the buildings in our second share offer. So, in short, we have secured a viable tariff rate that was available in September last year. The reduction in solar subsidies won’t affect this project unless SELCE fails to install the solar panels before the pre-registration period has elapsed (September this year). We now have considerable experience of installing solar arrays on community buildings and we are confident that we will meet this pre-registration deadline for the buildings in our second share offer.
We think this is highly unlikely. Once renewable energy is installed and the Feed-in-Tariff has been granted. Continued payment of these subsidies is guaranteed by primary legislation. Further legislation would be required in order to withdraw the Feed-in-Tariff once granted. We think this would be difficult in the face of opposition from the renewables and environmental sectors. If the Feed-in Tariff was rescinded or abolished for exiting projects before the end of 20 years, we believe that SELCE (along with every other installer of solar energy panels in the country) would have a legitimate legal claim for any remaining revenue.
What happens if the ownership of the property changes? Do the panels stay the property of SELCE and will they be allowed to continue producing energy for shareholders?
Yes. Our lease agreements stipulate that we have use of the roofs in our projects for the 20 years of the project and this will continue regardless of who owns the property.