Tresoc - a new type of community renewables company

Sawton Mill near Totnes. Tresoc will buy a share in this if it is fully financed Totnes Renewable Energy Society (Tresoc) in Devon is trying to raise up to £1.5m to fund a portfolio of six PV and hydro projects near the town.  What makes Tresoc unusual – and perhaps unique in the UK – is that is both financing current projects and developing a wide variety of new ventures, including an innovative waste-to-energy plant and biomass scheme for future investment.

This is an ambitious scheme to create a genuinely local energy company that might eventually hope to directly supply its electricity and heat to investors, rather than selling to a big power company. One day, this may make it an exciting form of new energy enterprise. But therein lies in the problem. Tresoc is asking for investors to back what is, in effect, a renewables development company.

This isn’t a standard community financing  in which a Community Benefit Society offers 5% annual return on the basis of a virtually risk free photovoltaic installation in local fields. It is more complex venture that can only offer lower returns on the hydro and solar assets it has permits for but which hopes to be able to generate better income on the larger projects it has in the early stages of development.

If Tresoc only raises £0.5m of its £1.5m target it only intends to pay a return of 1.25%, rising to 4% if get the full amount. These aren't high figures for community energy - Abundance, for example, offers more on its already constructed assets  - and Tresoc investors may partly be putting their money in with a hope that the company will be able to successfully develop new ideas. (I should stress that investors should only invest on the basis of the schemes specified in the prospectus and the directors of the company are making no commitment to developing any of the projects they have on the drawing board.)

In other words, this looks much more like a standard risky new business than a typical community energy funding raising. As might therefore be expected, investor money is coming in relatively slowly. The company’s effort to raise the cash it needs is further impeded by the overhang of antagonism between local residents over Tresoc’s failed attempt to get planning permission for two commercial wind turbines a couple of years ago.

Tresoc is a business that should be funded. Some of its PV and hydro projects are already operational, with records of output and costs. Totnes is not far from the edge of Dartmoor, with good access to the steep streams and large flows off the moor so there will be no shortage of new hydro schemes with good year-round supplies of water.  The woodland in the local area is mostly completely unexploited for any purpose. Biomass heating or electricity production from waste wood is likely to be as economic here as it is anywhere else in England. Solar radiation is excellent for the UK. Able people are giving huge amounts of voluntary time to make Tresoc work and to build a diverse portfolio of low-carbon energy producers.

In the longer run, Tresoc may enable Totnes to become one of the first towns to operate its own independent generation and energy retailing company supplying local homes and businesses with ‘local’ electricity under the ‘Licence Lite’ scheme. [1] ‘Licence Lite’ rules were established by Ofgem to allow small generators to sell directly to a defined group of customers, such as the investors in a renewables company. Progress has been slow and only the Greater London Authority has used the provisions to generate power in one location and sell it directly to another GLA building in a different part of the capital without going through an intermediary. But, at least  in theory, Licence Lite allows a community renewables company to be the retailer of electricity to a local consumers of power.

Tresoc has the enormous advantage, were it ever to exploit the Licence Lite rules, of having the potential diversity in its portfolio to allow it to match the profile of consumer demand (high in the morning, high in the evening, low at other times) with the output from its generating plant. Solar PV is, of course, likely to produce most power around midday but Tresoc’s other assets, such as future waste-to-energy plants, can be cranked up and down to match customer demand patterns. This freedom to follow the electricity demand of customers is completely critical for a successful Licence Lite venture. Otherwise the generating company will have to buy and sell at unpredictable times, and perhaps at very short notice, in a possibly highly illiquid electricity market.

Tresoc will probably need to add other flexible low-carbon sources, such as anaerobic digestion assets, to the range of generating plant available to it. However Totnes’ wide range of agricultural enterprises make this perfectly possible. And it has the powerful benefit of able directors operating within a local community that is both knowledgeable about renewable energy and – as the first Transition Town – very committed to the move away from fossil fuels.

[1] This is my statement of one of the opportunities open to Tresoc in the future. No details of such a scheme are in the fund-raising prospectus and I haven’t even talked about it with the directors of the company. So in no sense is it part of the current Tresoc share offering.