You can download a PDF of this update here or read the contents below:
The Gawcott Fields Community Solar bond offer was launched in June 2016 whilst the Community Solar Farm was still under construction. Significant progress has been achieved since then, as summarised in this update. The Directors have issued an updated bond offer document with confirmation of all the details. A decision to invest should only be made on the basis of the updated offer document.
Construction is completed and the solar farm is performing well
The Community Solar Farm was commissioned on target at the end of June 2016, and in time to qualify for the feed-in tariff (FiT) rate that applied in June 2015 – prior to the recent cuts by the government. Full FiT accreditation has since been confirmed by the regulator, Ofgem. The FiT rate is locked in for 20 years, increasing with inflation.
The Community Solar Farm has been performing well – site testing completed in November showed the performance ratio (“PR”) to be above the ratio assumed in June. PR is a measure of the solar farm’s efficiency at converting the available sunlight to electricity.
Loan finance is progressing
A loan offer from Santander was accepted by the Directors in November for a higher amount (just over £3million) and lower cost than the Directors could assume in June. This has enabled the target for the bond offer to be reduced from £2million to £1.12million, and has a positive impact on the financial projections.
The Directors are also in discussions with a social investment fund that is considering providing a “junior” loan to reduce the bond offer target further and help fund any gap between the funds raised from the bond offer and the Santander loan. Due diligence is underway and we expect the offer will be confirmed later this month. The Directors are delighted with the opportunity to work with this social investment fund, particularly as it shows strong faith in the project and the aims of Gawcott Fields Community Solar.
Higher Community Surplus income projected
On the basis of the updated financial projections (including the finalised Santander loan terms) it is expected that the Community Surplus generated for local projects will be significantly higher over the 30 year life of the project than the base case assumed in June.
The Directors have also developed more detailed plans for how to use the Community Surplus. For an initial period of 3 years, half the Community Surplus will be used to fund a program in the local area to help people struggling with their energy bills. This program will be run by Buckingham and Winslow Citizens Advice in collaboration with the Milton Keynes-based energy charity, the National Energy Foundation. The other half of the Community Surplus will be used to support a community fund to provide grants to local community organisations. The grants will be awarded through an application process open to organisations operating in the Local Community, and will have a defined focus each year. For the first year the focus will be local sports.
Timing of the offer
The bank loan process has taken longer than expected and Bonds cannot be issued until the bank loan is ready for drawdown. The team are now working towards completion of the bank loan process and first close of the bond offer on 10th February 2017. Assuming a first close on 10th February, Bond investors will accrue interest from 10th February at 6%, subject to the terms set out in the offer document.
The Directors have made a commitment to investors who applied and paid for bonds prior to 31 October that they will receive a small additional interest payment, as appreciation for their early commitment to the offer.
The Directors are very pleased with these positive developments.