The hydro site on the River Thames at Osney. Image source: Oxford Times.
Many viable UK projects to generate renewable electricity are not being financed because of shortages of credit from banks. At the same time, individual savers are only able to get tiny returns on their savings. In recent days a number of schemes for linking the UK surplus from household savings to the deficit in renewable financing have surfaced.
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Tim Helweg-Larsen presented at the Manchester Report conference. (Disclosure: I was a judging panel member – Chris Goodall.) His scheme for energy bonds focused on the obvious need to bridge the gap between the savings looking for a home among ordinary householders and the shortage of investment funds for large-scale energy projects. He put forward several persuasive schemes for matching cash needs with savers’ money.
In this spirit, Low Carbon West Oxford has developed (July 2009) a portfolio of renewable energy projects that will be funded by local savers and others. It has plans for a micro-hydro plant on the Thames in Osney, just outside central Oxford. In addition, a battery of PV panels will sit on a local warehouse roof and a large wind turbine is going to be sited at a local school.
These schemes have been bundled into a co-operative venture. The idea is that individuals – local and far-away – will buy shares in the venture and eventually get a return from the profits. Lois Muddiman, one of the originators of the scheme, tells me that the financial return to an investment will be about 10% (matching the dividend that I calculated in the article on feed-in tariffs for wind turbines). In the first few years, all the spare cash will be spent on eco-refurbishing the elegant Victorian housing stock in West Oxford, an area that was badly affected by the summer floods of 2007. Later, the co-operative hopes to pay a dividend of about 5% to investors, far more than is currently available from banks.
The projects that the scheme has in its development portfolio are as follows:
| Energy generated per annum (kWh) | Gross income per annum (£) | Gross income with FiT* (£) | Cost (£) | |
|---|---|---|---|---|
| Solar PVs 1 | 9,500 | 2,000 | 5,270 | 50,000 |
| Solar PVs 2 | 40,000 | 9,000 | 22,000 | 225,000 |
| Solar PVs 3 | 112,500 | 25,900 | 62,000 | 600,000 |
| Microhydro | 180,000 | 32,000 | 38,700 | 400,000 |
| 15 kW wind turbine 1 | 26,000 | 5,800 | 6,370 | 50,000 |
| 15 kW wind turbine 2 | 26,000 | 5,800 | 6,370 | 50,000 |
| 394,000 kWh 112 houses’ electricity use |
£80,500 | £140,710 | £1,375,000 |
* FiT = feed-in tariff.
Source: West Oxford Community Renewables, a venture of Low Carbon West Oxford.
Lois Muddiman writes about the plans to raise money:
Can you say that you don’t have to live in West Oxford to buy shares? They are available in blocks of 10, 250, 1,000 and 20,000 and cost £1 each. You can request a prospectus by emailing us at lowcarbon.hotmail.co.uk and one will be sent to you. (We are sending them by Royal Mail, so we need home addresses.) Please include the details of our website – which goes live later this week www.lowcarbonwestoxford.org.uk.
As the UK government is now belatedly acknowledging, renewable electricity generation will be encouraged if community groups have the freedom to use local resources to build PV, hydro and wind installations. Low Carbon West Oxford is one of the best community carbon reduction initiatives in the UK and is well placed to develop good generation schemes because of its wonderful reputation in the local community. If all goes well, the co-op will both reduce local emissions by a significant amount and return reasonable returns to investors.
Tags: investments, power generation, renewables
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This isa great idea for raising finance and a really exciting sounding project. You might know about it already, but there are quite a few examples of communities in the UK using the co-operative model to raise finance for renewable energy plants. Energy4All has undertaken large scale share issues for wind turbines for example.
There are a number of examples, factsheets and the chance of free advice and support from a project called Community Shares which is running at the moment – http://www.communityshares.org.uk
Let me know if you want any more information. And good luck!
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West Oxford Community Renewables is an Industrial and Provident Society ‘bencom’, not a co-op.
This is an important point as the term ‘co-op’ implies that the community benefitting from the organisation are its members- its investors. This is not the case. WOCR was set up to benefit the community of Oxford and its surroundings and its investors cannot, by law, be paid any money that is related to the surplus (profits) made or sell the assets. They may be rewarded for the amount they have invested but WOCR is run for its social benefit, not to make investors wealthy.
WOCR will still be run in a business-like fashion and aims to generate income as well as electricity. It has been set up to reward investors with both a social and financial return and to benefit the community, hence ‘bencom’.
http://www.wessexca.co.uk/ is the link for more info. on IPS bencom rules.
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Thanks for the clarification, Sean. However, I still do not understand why two legal forms – community benefit IPS and community interest company – had been created in statute for (it appears) broadly similar purposes. http://en.wikipedia.org/wiki/Industrial_and_provident_society
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Avoiding an IPS anorak dialogue with Sean seems important so that others retain the will to live.
I must point out however that there are co-operative bencoms.Such as The Schools Co-operative Society
“The Schools Co-operative Society…….from its inception it will operate as a co-operative.”
“The Co-operative College has recently overseen the development of a new co-operative organisation which is being registered as a society for the Benefit of the Community – generally known as a Bencom.”
http://www.co-op.ac.uk/schools-and-young-people/co-operative-schools/co-operative-society/Also Shared Interest
“So what exactly is Shared Interest?
We are an ethical investment co-operative.”
http://www.shared-interest.com/So a bencom can be a co-op and co-ops can work for community benefit.
A co-operative is not a specific legal form. It is a set of values and principles in action.
http://www.ica.coop/coop/principles.htmlFor an IPS bona fide co-operative working in community owned renewable energy see http://www.communitypowercornwall.coop
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Paul is correct right about anoraky-ness, but the details are important.
CICs are used to create some community benefit but do not have the guarantee of democracy both IPS bencoms (community benefit societies) and IPS co-ops (co-operative societies) have.
The Schools Co-operative Society does not seem to have been registered with the FSA yet, so I don’t know about that.
I don’t think the FSA would agree that a bencom can be a co-op. They quite specifically ask whether it is for member or community benefit.You can decide (and should according to the Principles) to do some CSR as a co-op but members can vote not to. Any objects can be changed.
Co-ops always have the option of voting to distribute assets amongst members, I don’t know if that is why Shared Interest has a charity- to remove assets from the co-op members’ control?
Co-ops are not intended to be used for the benefit of all, and legislation backs that, at the moment. A community benefit society can have a legally enforceable asset lock creating commonly-owned assets but co-ops don’t.
Energy4All schemes are set up as co-ops and this matches their need for well-rewarded high-risk capital provided by members. A bencom set up for the same purpose might well find that there was no cash left after rewarding investors and so community benefit would be limited. E4All’s model allows local people to receive a cash compensation for having a turbine near them and are set up for member benefit- ideal co-ops. Non-investors looking at the turbine out of their window are not benefitted in the same way.
It does matter whether an organisation is a co-operative society or a community benfit society. It also matters whether you fill up with diesel or petrol but people get that wrong, too. Not all hydrocarbons are the same, it is worth asking if you are not sure.
I expect you agree wholeheartedly with all this, Paul?
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Well…I agree that IPS bencoms and IPS bona fide co-ops have differences in how capital is sought, treated, paid for and applied. There are also differences between the statutory asset lock available to bencoms and the entrenched asset lock available to all IPSs. That is the anorak conversation that I am avoiding. Maybe when it is not the weekend I will come back to those issues.
I was addressing whether a bencom can be a co-op. I was not discussing whether an IPS bencom can be an IPS bona fide co-op. As Sean states an IPS is registered as either a society for the benefit of the community or a bona fide co-operative, however that does not mean that a bencom cannot be a co-operative. There is no one legal form for co-ops in law. Identification of a co-op is through the International Co-operative Alliance statement of identity. It is not possible to conform to the ICA statement and only exist to create member benefit. Principle One: if co-ops only existed to benefit members then membership would not be open and voluntary. Principle Five: includes education of the wider community. Principle Six: co-operation amongst co-ops. Principle Seven: care for the community.
So, four out of the seven principles involve more than member benefit.
Also some of the values from the ICA statement are; equality, equity, solidarity, honesty, openness, social responsibility and caring for others. Now again this is about more than just mutual benefit or enlightened self interest.
Even the “…common economic, social, and cultural needs and aspirations…” mentioned in the definition is about more than just benefiting members. Is it not that most people have a common social need for a safe stable community beyond their own door?
At the beginning of the model rules for a community co-op the objects state that the co-op exists to benefit the community it was established to serve, it does not say that it exists to benefit only its members.
Although very closely aligned there are employee owned businesses that are not co-ops. That is because they have chosen to not be co-ops, not to buy into, identify with and act by the ICA statement. They do not conform to the full set of co-op values and principles. That is not to say that these are not principled values based businesses. Just that they subscribe to a different set of values and principles. So for example a worker co-operative is a type of employee owned enterprise with values and principles beyond just creating member benefit.
Similarly there are mutual’s that are not co-ops, that do not subscribe to co-op values and principles, that have a different set of values. So for example a consumer co-op is a type of mutual owned by its customers with values and principles beyond only mutual benefit.
The Co-operative Groups recent branding talks about, “The Co-operative, Good for Everyone
“, It does not say, “The Co-operative, Good for just its Members”.
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