Our investors tell us community energy is simply the best

Helping to address the climate emergency through finance has always been at the forefront of what we do as a bank, and we work with clients that try to tackle the problem with sustainable solutions. With a nod to Community Energy Week, which falls between 10 – 23 June this year, Whitni Thomas, head of corporate finance, reflects on our latest community energy raise and how it galvanised support from our investors. We’ve been a proud supporter of community energy for many years, being one of the country’s leading lenders to community-owned wind and solar energy projects as well as raising crowdfunding bonds directly from investors.

Through raising finance for many community-owned schemes, we have been blown away by the level of interest and support from retail investors for these schemes. As interest rates have risen, prospective investors expect a higher return on their investment so new investment offers are being priced accordingly. The sharp increase in the cost of electricity has meant that community energy schemes able to secure higher power purchase price agreements are now in a much more comfortable financial position. For those that have shorter term debt that they want to refinance, the higher electricity price has meant they can afford to structure investment offers that are a win-win for both the community energy group and investors.

In May 2023, we promoted the second tranche of the Empower Community Foundation’s bond offer to enable them to refinance more costly subordinated debt in their Scottish solar project. The bond offer was first promoted exclusively to existing bondholders who invested £600,000. The offer was then opened to the public and the remaining £1.4m was raised in just 24 hours. While the second tranche of bonds was priced at a higher interest rate than the first, much higher electricity prices mean that as much as £8 million of community benefit is projected to be distributed to the charity over the life of the scheme – much higher than originally forecast.

Our investors really ‘get’ the purpose behind community-owned renewables and many of them are comfortable with the need to invest for the long term (15 years +). When we surveyed our platform investors in April 2023 and asked them which impact areas they were most interested in, community-owned renewable energy was the most sought-after. For this reason, our corporate finance team is prioritising looking for new community energy investment opportunities.

We are members of Community Energy Wales and Community Energy England and are attending their annual conferences in June and September respectively. We are also delighted to be sponsoring Community Energy England’s renewable energy awards this autumn. The power of co-ownership and revenue generation for local communities can be transformational. And we want to help create further investment opportunities for our investors in this sector.

Do you know a community energy project that needs additional finance? We’re always on the lookout for new projects to raise equity for. You can enquire about funding here.