What is a Community Energy Share Offer? – A Guide
by Cara Whelan, Funding and Development Manager, Selce
This article is adapted from an event which you can also watch on YouTube – Learn about Community Shares with Selce!
In this article, I’ll be explaining who Selce are, what community shares are and how they work in practice. I will also outline how we use solar and LED lighting to benefit the wider community, how we raise the money, plus what you get out of being an investor in community shares with us.
Selce is a community energy cooperative – we’re a social enterprise. So we’re a non-profit, providing energy saving advice and practical support to people who are struggling with their energy bills. We advise nearly 2,000 people per year. Often people who are struggling – we provide them advice and help with grants to access insulation and the means to stay warmer at home.
But we also own and operate several megawatts of both solar panels and LED installations on and in local buildings, all of which have been financed through community shares.
So far, we have 11 solar arrays and seven sites at which we’ve installed LEDs. And we estimate that we’re saving the local community nearly £100,000 pounds on their bills, generating clean energy and saving on carbon emissions.
Shares For People, Community & Climate
So how do community shares actually work?
They have been used by a huge number of different organisations across the country. One way to look at them is that they are simply a democratic way for the community to buy the assets that they need.
For the beginner, it’s a little like a crowdfunder. It’s not a donation, but an investment.
The money is returned to you after a specific number of years and an annual return is also provided for your investment, as well as well as membership benefits. According to Cooperatives UK, the membership organisation for co-ops, there are more than 7,000 registered co-operatives in the UK, with 17 million people as owners.
Community shares specifically have been used by more than 500 co-operative and community businesses. They can be anything from pubs, shops in rural areas, housing projects, to community spaces.
And those shares are used in a whole range of ways, ultimately as a way of securing the assets that the community need via member ownership.
Across London, there are 30 active community energy groups. Groups similar to Selce – nearly one for every one of the 32 London boroughs.
And it’s important to note that community ownership is an incredibly stable way to run businesses. Cooperatives UK ran a survey and they believe that 92% of all businesses that have used community shares are still trading.
Community Shares in Action
But how does it all work in practice? In this example, we’re looking at an LED lighting installation, but the model and process is the same as if it were for a solar array.
Here we see how community members contribute to our share target. The target is just over £41,000. We’re looking at putting in LED lighting for four schools and a community centre in the local area.
Cooperatives are democratic organisations. They all have a ‘one member, one vote’ setup, irrespective of their financial contribution.
So there’s a level of equality there. Everybody can stand to be a director if they wish. They can participate in the community activities that we run, which include our AGM where everyone has the same say over decisions – again, one member, one vote.
When we reach our target in the above example, LEDs are then installed in our four schools and one community centre. The energy savings the schools receive mean that overall, they pay less for their bills. This also enables us to repay our initial investors with a return which is forecast to be 4%. We’re also then able then to send some surplus funds to support Selce’s community work, like our energy advice service that we talked about at the top.
So with this project, we’re raising just over £41,000 for our five LED sites. When we hit that target, we close the share offer and this project will contribute just over £28,000 towards energy advice over the six years of the programme.
Practical Details for Investors
From the perspective of potential investors, how exactly does investment work and what is it going to do for us? If you’re thinking of investing, there are some very strict rules about how community shares can operate. You can choose to invest between £250 and £20,000, not a penny more or less. And you need to be at least 16 years old.
All being well, everyone should then receive a forecast percentage return on investment annually – in this case 4%.
You’ll be invited to come to the AGM. The board of directors will report to you whether they have achieved their target through this share offer of achieving a 4% return. And then they will give you the opportunity to either receive your 4% or to donate that towards Selce’s energy advice service if you wish.
And obviously as a member you’ll receive regular updates about what we’re achieving in the community and so that’ll be completely transparent to you whether you want to do that.
Best of all – you will be part of making a positive difference both locally, and in a sense, globally, in the fight against climate change.
