Swindon claims ‘first’ with solar farm bond
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Photo: Belectric, Flickr
Swindon Borough Council is set to raise £1.8m towards a solar farm investment through a bond issue to its residents – in an initiative it claims is a UK first.
Councillors will next week vote on proposals which will see citizens allowed to buy bonds for a minimum stake of £5, providing an estimated return of 6% over 20 years.
The council is teaming up with direct investment platform Abundance to create the scheme using a debenture model.
Dale Heenan, council cabinet member for transport and sustainability, said: “We have a compelling case to show benefits to the local community, and local residents who invest should receive a better return than a normal bank saving accounts. This could be the model all councils use in the future for community investment projects.”
According to council officers, the council will create a community investment company to run the solar farm, which will cost £4.8m to build.
It will lend almost £3m to the company at a rate of 3.5%, enabling it to make a small profit on the loan until interest rates rise.
The council will also receive an annual rental payment from the company based on 4.5% of revenue streams, initially estimated at £25,000 a year, and business rates estimated at £19,000 a year.
Profits made by the company will be split 65% towards local community initatives and 35% to investors and the council.
If approved by next week’s cabinet meeting, the investment offer is expected to be formally launched next month.
The solar farm, which will generate enough energy to power 1,200 homes, will be on council-owned land, with construction expected to begin this Spring.
Bruce Davis, managing director of Abundance, said: “We expect this to be a real game-changer and provide a new model for cash-strapped local authorities to fund community projects.”
Photo (cropped): Belectric, Flickr
