January – the month when the Government is proposing to cut the Feed-in tariffs, looms large. As a result of this tight deadline, coupled with a decision to cut Enterprise Investment Scheme relief and Seed Enterprise Investment Scheme Relief, along with Social Investment Tax Relief, from community energy, those still determined to succeed are ploughing ahead with their plans to get their projects installed in time to be eligible.
Ethex, the ethical investing platform, says it has seen a “surge” in community energy share offers launching on the site, including Bristol Energy Cooperative, Wolverton Community Energy (Milton Keynes), and Meadow Blue Community Energy (Merston, West Sussex) already open to investors with Bath and West Community Energy (BWCE), Wiltshire Wildlife Community Energy (WWCE) (Wroughton, Wiltshire) and Nottinghamshire Community Energy (Colton Bassett). The offers are all supported by Mongoose Energy.
Here is a map, produced by 10:10, of all the community share offers still open around the country.
A number of community energy schemes have already run aground in the face of the proposed cuts, including REPOWER Balcombe, a community solar scheme set up in response to plans to frack the village – the locals decided they wanted clean power instead.
Investors worried about the eligibility of schemes for tax relief and Feed-in tariff rates should take note: the incentives are fixed on the date of installation and the tax reliefs are still available until November 30, meaning projected returns from the projects could vary from actual returns.
Lisa Ashford, chief executive of Ethex, said: “We would like to see people investing in the wide range of community renewable schemes Ethex has listed in November to show the groundswell of support for the community energy sector in the UK.”
Jan-Willem Bode, CEO of Mongoose Energy said: “Since we launched this year we’ve helped communities from across the UK raise over £25 million for 27 such projects. The Treasury may have made a surprise announcement at the end of last month, but the cooperatives that are in a position to launch have reacted fantastically. And this means there has never been a better time to invest in these ethical-energy projects, be it to support your local area, to build your retirement fund, invest for your children, or simply buy an ethical Christmas gift for a relative.”
Ethex says that the changes will put “strain” on a sector that had been thriving.
Most investment into community renewables comes from local people who want to back renewable energy schemes in their area and see the community benefit.
The platform says: “Community energy schemes result in an extraordinary range of community benefits beyond reduction of carbon emissions: support for fuel poverty, free energy provision in schools, improvements to community buildings, computers for low income schools, improving wildlife areas and providing local healthcare services.
“The change in legislation applies to community energy organisations that are registered as community benefit societies (IPSs) or community interest companies (CICs) and have community benefit embedded in their rules or articles of association. These community benefits had, until now, been supported by individual investors encouraged by the 30% tax relief. Many of these schemes may not go ahead and the carbon reduction and all the community benefits lost.”
“It’s hard to understand Treasury’s rationale for the switch. Community energy raised £36 million last year and has been the fastest growing area of community investment. That would have cost £11 million in tax relief.”
But even then that has to be balanced against jobs created, VAT, income tax and National Insurance collected, and carbon saved. The Community Energy England survey, published in October, found that 38 of the community energy groups surveyed had received £7.4 million in Feed-in Tariff subsidies since the scheme began in 2010, which has brought in £50 million of private investment and generated £45 million for local economies.
The tax reliefs are important to community energy projects as the risks are often higher than commercial projects as returns to investors are capped to maximise the community benefit they generate.
Emma Bridge CEO of Community Energy England says: “Community energy enables people to take greater control over how energy is generated as well as ensuring wider benefits are fed back to the local area. Schemes offer a range of benefits from reducing energy bills and developing skills to generating revenue in the local economy, as well as the more obvious benefit of encouraging the production of cleaner energy.”
One hundred and fourteen organisations – including Ethex and Community Energy England – have now signed a letter to the Chancellor, the Rt Hon George Osborne MP to ask him to reconsider the proposed amendments to the Finance Bill. This is perhaps the largest mobilisation of community energy groups yet.