Group to raise £75,000 for solar panels scheme despite feed-in tariff cut
London co-op issues shares to fund PV
A Brixton-based co-operative has launched a share issue, to fund the installation of solar photovoltaic panels on a Lambeth estate, using an innovative model which it hopes to roll out to social housing across south London.
Brixton Energy is selling 75,000 shares, each worth £1, in Brixton Energy Solar 1, a co-operative society set up to install 50kW of solar PV on the roof of a block on the Loughborough estate. The building is owned by Lambeth Council and run by arm’s-length management organisation United Residents Housing.
The co-op, made up of investors in the project and which sprang out of community climate change campaign group Transition Town Brixton and Brixton Low Energy Carbon Zone, decided to go ahead with the offer despite cuts to the feed-in tariff - the subsidy payment made to generators of renewable electricity - which has seen the returns fall from around 10 per cent to 5 per cent, leading to warnings from the solar sector that investor confidence has been shattered.
Investors in Brixton Energy Solar 1 will earn about 3 per cent a year, the offer document predicts, with another 2 per cent diverted into a community energy efficiency fund which will invest in greening the estate.
The co-op decided to push on with the plan regardless of the FIT reforms, which will see the tariff fall by 10 per cent every six months, because of the community benefits set to emerge from the fund.
The panels will earn a FIT of 15.2p/kWh, plus 3.1p/kWh from the sale of the electricity back to the grid, and the co-op plans to sell some of the electricity at a discount to URH.
‘It’s a beta model [a prototype] for re-powering South London,’ said Agamemnon Otero, one of the directors of Brixton Energy, a Stockwell resident and former analyst at investment bank Better World Finance.
Lambeth Council has installed some solar panels on some of its housing stock, however, Afsheen Rashid, who is part of the co-operative and works for the council, said that there wasn’t enough funding for the Loughborough Estate.
In the first five days, the share issue had raised £14,000 from 17 investors.
The co-op hasn’t yet signed a lease with Lambeth to rent the roof, but according to the offer document, this should be agreed by March when the co-op also hopes to install the panels.
The offer is open until 10 March.
Rob Beiley, partner at law firm Trowers & Hamlins, said it was ‘an innovative funding mechanism for a small-scale project’. However, he warned it could be ‘difficult to scale up for larger installations’.