In connection with British Gas Solar and Barnsley Council, Energise Barnsley will launch a five-year solar retail bond which will pay out 5%.
The community energy project run by the local authority hope to raise £1.2 million to fund up the installation of up to 2MW of rooftop solar panels throughout Barnsley for sheltered housing, residential homes, schools and other community buildings.
The bond is expected to yield a 5% annual return, which will be paid starting from October 2017.
The project is set to be the biggest rooftop solar joint local authority community project in the UK and is part of the drive to build a ‘Northern Powerhouse’.
The total cost of the project will be £2.6 million, but £1.5 million will come from a loan already agreed with Charity Bank.
The solar panels will be installed and maintained by British Gas Solar, which is part of Centrica’s new Distributed Energy and Power business that helps large energy users take control of their energy use.
The revenue that the new solar panels will earn from feed-in tariffs will flow back into a community energy fund to support local social enterprises and educational services tackling fuel poverty.
The fund will amount to £20,000 in the first year, and community groups will be able to apply for funding from June 2016.
In addition to the Feed-in Tariff income, larger non-domestic sites have a Power Purchase Agreement with Barnsley Council for a 25-year period, providing long-term, RPI-linked income.
Over the last six months, Energise Barnsley has installed solar panels on 321 homes in the town. These solar panels have provided residents with more than 273 MWHs of energy, reduced their energy bills by £11,742 and removed 145 tonnes of carbon emissions.
How to invest
Anyone over 18 can invest in this five-year solar bond from now until 10 August 2016 – unless the target amount is raised sooner.
The minimum investment is set at £1,000 but Barnsley residents (living in postcodes S70 through to S75) can buy a stake in the project from just £100. The maximum investment amount is £500,000.
Capital will be repaid after five years by October 2021.
The solar bond will be administered on behalf of Energise Barnsley by savings and investments platform Ethex.
The five-year project is expected to yield annual returns of 5%. However, this return is not guaranteed and is dependent on the success of the Energise Barnsley project.
It’s also important to remember that the money you put into the solar bond will not be covered by the Financial Services Compensation Scheme (FSCS).
So if the project doesn’t perform as well as forecasted and Energise Barnsley goes bust you could lose your money.
The bonds can be transferred from the end of year two, but won’t be listed on a stock exchange. Instead Ethex will manage this market which will allow bondholders buy and sell bonds.
If you are a cautious investor you may want to look into putting your money somewhere that carries less risk.
You can find out more about the bond, how to invest and the risks on the Ethex website.