Fantastic News !
Scottish Government’s Community and Renewable Energy Scheme (CARES)
will fund us through their Enablement grant and Capital grant awards.
This will help us to progress through the next steps with the proposal to put Solar PV panels on the sports hall roof of the Auchrannie Spa Hotel.
It will cover all the front end professional services work like legal, technical, planning, financial, community engagement and share offer preparation.
The capital costs of installation will be part funded by shares that will be sold to the community and the capital grant. This all has conditions and break points that we will need to confirm during the enablement stage.
To learn more please scroll down to our 15 FAQ’s or drop us an email. Contact details are at the bottom of this page.
There is a huge amount of work to do but the ball has started rolling …..
When we form the new Community Benefit Society we will need to give it a name.
How did we get here ?
The steering group has been working towards a renewable project for some time and identified options.
We recently held a virtual meeting where we discussed work done so far and held a Q & A session.
The presentation was recorded before we knew we had funding so you can watch it anytime.
What types of renewable energy will work for Arran and how can we make sure they benefit our community?
We have a short questionnaire where you can also let us know your views
We very much hope that whatever initial scheme is successful, it will foster a series of projects that collectively will make a considerable impact for the benefit of the whole Arran community.
Now that we have received funding, one part of the work will be to create a ‘share offer document’.
When this is launched it will contain all the details of the project & final offer.
Meanwhile, here are some FAQs
- Q: What exactly is it that you have asked for funding for?
A: We have applied to the Scottish Government’s Community and Renewable Energy Scheme (CARES) for a Solar PV project on the sports hall roof of the Auchrannie. This will enable technical, commercial and legal support to take the project from where we are now through to construction. Although we have a good idea of how the project will run, it is important for us to get external input to stress test our assumptions based on similar projects. We also need to cover both ourselves and future shareholders against possible risks, such as changing electricity prices. We also need professional support to negotiate with SSEN on the design and cost of the electricity grid connection and to set up a new legal entity to run the project so that the governance is clear and cash flows are guaranteed to flow back to the community. This request is for a CARES ‘Enablement Grant’ – we have also applied separately for a capital grant towards the construction costs of the project.
We have not submitted our final proposals for the Auchrannie Board to approve yet. The financial model is not finalised at this point. However the Auchrannie Board has been very supportive and helped us make considerable progress identifying the various factors in this potential project.
- Q: When will this all take place?
A: We are currently working with Community Shares Scotland on possible details of a share offer and expect this to carry on until Christmas. Between November and February we will undertake all outstanding technical, commercial, permitting and legal work as well as gaining feedback from yourselves on anything else we should be considering for the project. If there is sufficient community buy-in we will look to launch a community share offer in early spring and if we raise sufficient local capital, look to start construction in Spring 2021. The construction period is short and so all being well the project will be live before summer 2021. By virtue of being a community project, if there is insufficient local interest and therefore insufficient community investment, the project will not go ahead.
- Q: How will the project be in the best interests of the wider community?
A: The benefits of all types of community owned renewable schemes are both for residents, the shareholders and Arran as a whole. The aim is to Stop Climate Change by enabling investment in renewable energy. We can’t all have solar panels on our roofs but some of us may have savings that are not acquiring much interest in the bank. Investing in community renewables can give better returns while supporting community projects continue further work towards stopping climate change. By setting up a Community Benefit Society we will keep all investment in the local community, allowing the benefits to flow back to a community green fund for important environmental island projects.
- Q: What is a Community Benefit Society ?
A: Community benefit societies or Ben Coms, are owned by the people that live and work or support the community it is set up to benefit. This is a not for profit legal form for organisations that wish to operate for purposes that benefit the community as a whole. Members hold at least one share in the organisation and have one vote. Unlike in a limited company, the number of votes a member has does not increase with the number of shares they hold, making them a democratic model that works well for social economy organisations. This type of organisation is set up to have a Social Purpose and to re-invest any profits made back into the society rather than existing to maximise financial returns for members.
- Q: Why Community Shares ?
A: Community Shares are a way for people to invest in what matters to them. To raise the additional funds we hope to launch a share offer to allow the community to invest and become members. This will result in the Ben Com owning the solar panels and the electricity they generate will be sold. The profit will allow dividends to be paid to shareholders and a community fund to be set up.
Community Share Scotland are helping us to develop the business plan and shares offer document. With good returns to shareholders, other community groups have been running similar projects very successfully. We will be eligible for support and funding from sources that commercial companies can not access. This puts us in a position to lead the way and help our wider community reduce carbon and inject profits back into other environmentally important island projects.
- Q: Where will the profits go?
A: After paying the costs of the project including administration, insurance and maintenance, the remaining money is then split amongst those in the community who have invested in the project. An excess will be planned in to allow for risks – where these do not materialise this will be directed to a new community fund.
This fund will be ring fenced through Eco Savvy for community projects on the island. The intention is that the community fund will be green and support the continuation and progression of the environmental work on Arran.
- Q: Who pays for the solar panels?
A: You do. We could go to a bank and pay interest on a loan, but borrowing through community finance means that if you share our vision we can invest together, keeping investment local and sharing the profits with you rather than a commercial bank.
- Q: How does the project generate money?
A: Solar panels generate free electricity but are expensive to buy up-front. Investing in solar is similar to putting money in a savings account; you won’t double your money overnight, but the panels generate electricity and therefore a modest income from day one. The electricity sales are generated from selling power to the Auchrannie – the panels on the roof will be fully owned by the community. We will set the price of the power so that everyone wins; in return for letting us lease their roof we will make sure the Auchrannie get (100% renewable) energy cheaper than they would buy normally from the grid. We will also endeavour to make sure all community investors get a return at least equivalent to a typical savings account.
- Q: Why the Auchrannie, why not other sites?
A: To ensure that a solar project will always make economic sense, we need an easily accessed roof or field and an energy user close-by who will always need the power we generate – at the time we generate it. Some buildings have a high demand but this is focussed on the morning or evening when the sun is less likely to shine. The Auchrannie Sports Hall has a large, uncomplicated roof and is next to the Spa – a large energy demand even when the building is not busy. Although we hope to take on more projects with different characteristics and community links it is important that our first project carries the minimum financial risk.
- Q: Why doesn’t the Auchrannie just buy the solar panels themselves?
A: The simple answer is that they can – solar panels provide a good payback, however this is only realised over a long timeframe; often investors do not want to invest in projects that do not payback within a set period. By financing the project through the community, we can take a longer-term view – individual community investors may come and go, but the new community organisation that owns the solar panels will be around for up to 25 years. We will look to lease the Auchrannie roof with all infrastructure on the roof belonging to the community.
- Q: What are the main project risks?
A: At the moment, the main risk is the potential cost to connect into the electricity grid, which has come back higher than expected. We are hopeful that we can reduce this cost either through redesigning aspects of the scheme or through the additional grant support requested from CARES. Either way, this is a risk which we know we can address prior to deciding to push go on the project. The largest long term risks are that we do not secure enough investment from the community, or that the Auchrannie decide to not buy the power generated from us. Both these risks are heavily mitigated by the financial return of the project, plus we will maintain the ability to sell electricity directly to the grid as a backup. By offering competitive prices to both shareholders and the Auchrannie, we can be confident that the project will attract interest on both sides and have modelled a’ Covid’ scenario to ensure that the project is sufficiently robust to such unexpected events. In a case where there is a shortfall in community investment, we also have the possibility of topping up equity shortfall with a small commercial loan, or not taking the project forward.
- Q: Why solar rather than other renewables?
A: We are actively considering other technologies and other sites, but this is primarily about risk. Roof mounted solar is extremely well proven and easy to predict generation and income into the future. It is also more straightforward in terms of planning permission than other technologies and so gives us the chance to deliver a project within the short to medium term and establish a foundation from which to explore other projects.
- Q: How much money will the Auchrannie and community shareholders make?
A: We have modelled a number of scenarios to make sure that the project makes commercial sense for all involved, but the exact payments are yet to be negotiated and will depend on final costs for the grid connection, construction, and the prevailing cost of electricity. What we can say for definite is that we are committed to only launching the share offer once we have confidence that we can give community investors a dividend at least competitive with a typical savings account, whilst also providing the Auchrannie with an energy bill saving.
- Q: What is the risk of investing, could I lose my money?
A: As with any investment, money would be invested at risk. We are busy modelling all possible scenarios so that we can be fully transparent with the effect of any risk on the project and will set these out clearly in the share offer, alongside offering independent advice in partnership with Community Shares Scotland. We will also factor in whether we should restrict payments to shareholders for the first few years– this is so that we can build up a pot of money to see the project through any unforeseen consequences and make sure shareholder dividends are always paid in full. As well as making the share offer open to small investments, it should be possible to withdraw your money at any allocated time, subject to standard conditions. The full details of any such arrangements will be set out in the share offer document and discussed extensively before we look to raise any capital.
- Q: I don’t want to take part in this project, but I would be interested in similar projects, will there be other opportunities?
A: We hope so. At the moment we have no idea if there is sufficient interest in the community to invest in one or 100 projects, but so long as there is interest, we will look for further opportunities, and hope that we can do this succinctly once the first project is up and running