brighton energy coop share invitation
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Share InvitationBrighton Energy Coop 2 - community solar for the South
www.brightonenergy.org.uk
OverviewChairman’s Introduction
Community-owned renewable energy is now a proven model.
More than 150 energy coops have been registered in the last few
years, with about a third launching share issues. So not only are
these community projects generaing renewables on the ground,
but there are plenty more in the pipeline too.
The value of locally-owned energy schemes is also something
that's increasingly recognised in government. That's the reason
DECC minister Greg Barker came to visit our solar roof at St
George's Church this year, and the reason that more and more
policy work is being done to support co-operaive energy.
With more and more projects being realised, and increasing
government support, this exciing movement can only get bigger.
Brighton Energy Co-op is part this dynamic upsurge of grass roots
acion. As such it's with great pleasure that we present here our
second scheme, a huge new PV project for the South Coast.
Renewable energy maters, and with our society set to treble in
size, I hope you find what is set out here of interest - and that you
join our growing movement.
Will Cotrell
Chairman, Brighton Energy Co-op
(L-R) DECC minister Greg Barker, Kemptown MP Simon Kirby and BEC Chairman Will
Cotrell on a visit to a BEC solar roof at St George's Church in Kemptown,
September 2013
By purchasing shares you will:
•Gain an equal vote with every other member in how the
Society is managed and how your local energy resources
are used
• Ensure that you paricipate in the ownership of local
renewable energy resources and benefit from the
Government incenives
• Be eligible for any interest paid to members. As set out
below, we are aiming to pay members an annual return on
their shares
• Contribute to developing a local energy supply, which
aims to offer protecion against fluctuaions in energy
supply and costs
•Help support further renewable energy and community
energy efficiency programmes via our surplus income thus
creaing a ‘double carbon dividend’.
• Contribute to the provision of renewable energy
supplies for our area that, in turn, aims to retain benefits
locally and strengthen the local economy
• Support a scaleable model that can be replicated in
other communiies
• Help fight climate change and fossil fuel depleion
• Contribute to saving more than 450 tonnes of CO2 over
the course of our PV system's lifeime
To join visit www.brightonenergy.org.uk/join.
Summary
Brighton Energy Co-op 2 (BEC2) aims to capitalise on the success
of our first solar project which raised £230,000 in July of 2012
and installed 132 kWp of Solar Photovoltaic (PV) in and around
Brighton. With BEC2 we want to generate more low-carbon
renewable electricity, enable more people to invest in clean
energy and enjoy the financial benefits of the project. As well as
enabling the community to work together in reducing its carbon
emissions, investment in BEC2 allows you to take control of our
energy producion.
This document details the opportunity to buy shares in Brighton
Energy Co-op, the trading name of Brighton Energy Limited
(BEL). We are a Community Benefit Society with the express
purpose of developing more community-owned renewables
for our area.
BEC2 aims to install a minimum of 200 kWp of solar PV on
several buildings around the area which will require a minimum
capital investment of £232,800.
This share invitaion, therefore, invites you to purchase a new
class of ordinary share in Brighton Energy Ltd and thus help us
raise the money to finance the development, markeing and
capital costs of our new project.
You may purchase up to 20,000 shares, the minimum being 300.
Each share is worth £1.
Risks
All investments and commercial aciviies carry risk. By buying
shares members should weigh up financial risk and reward as
they would with any other investment opportunity.
Those considering an investment should do so only ater reading
this document in full (including the secion on risks below),
should regard this Invite as a long-term investment and should
consult a financial advisor before invesing.
The project
Our new ProjectOur new project is to install up to 565kWp of solar PV in Brighton and surrounding areas. This is broken down into three phases, as
outlined below. See www.brightonenergy.org.uk/documents for our Profit and Loss projecions for Phase 1
Minimum target:
£232,800, 200kWp of
solar (Phase 1)
Phase 1 is to install a large solar array of 200kWp on Shed
10 at Shoreham Port, cosing £232,800. This will be the
biggest solar system in the city, composed of nearly 1000
panels. Electricity will be fed into the shed and a nearby
office block as well as the naional grid.
To this end we have secured a leter of intent from the
Port, giving us the right to install 200kWp of rootop solar
PV. Based on figures from DECC, we expect this will save
around 450 tonnes of CO2 a year, typically the amount
consumed by 300 domesic homes.
Maximum target:
£616,050, 565kWp of
solar (Phases 2 & 3)
Phase 2 involves a similar building at Shoreham Port: Shed
3a. Again this is a 200kWp building, so we will look to raise
a further£232,000 similar to Phase 1 before compleing
installaion.
Phase 3 involves several other sites with whom we are
currently in discussion. Working with these sites we
esimate up to a further 165kWp will become available for
our development in the next six months. This would
require addiional capital in excess of £150,000
We may, therefore, extend this share offer to raise this
money for phases 2 and 3, condiional on being able to
pay all shareholders a 5% interest rate.
If the minimum fundraising target is not acheived then we will then refund the enire BEC2 shareholder capital.
The offer period is open unil 1st February 2013, but may be extended at the discreion of the board.
Financial projectionsWe expect that shareholdings will receive a projected return of
5% interest plus a tax break of 30% of the amount invested (see
Enterprise Investment Scheme below). The first interest payment
will be made on the 1st August 2015.
Please note that our figures are provisional. There remain
several key risks around our assumpions, so it's important to
read the risk factors below.
We have an offer to install the systems outlined above cosing
£1050 per kWp of solar PV installed. In addiion to this cost we
have also added provision for the development of the further
projects outlined in our Maximum fund-raising scenario above.
You can see our Profit and Loss projecions for the Minimum
fund-raising target here – brightonenergy.org.uk/documents
Income
We expect to generate and sell electricity that will be produced
by solar PV renewable technology, so qualifying for the Feed-in
Tariff (FiT).
This means there will be two income streams: one based on FiT
(index-linked to the Retail Price Index) and one based on income
through electricity sales to our host sites (also linked to RPI).
Outgoings
The greatest costs will be interest payments and capital
repayment. The projecions underlying this share offer are based
on the assumpion that capital is returned to members as the
assets are gradually writen off.
Other costs include maintenance, insurance, inverter
replacement fund and BEL running expenses.
Assumptions
In our projecions we have made the following assumpions:
• Performance degradaion 0.8% pa. This is a normal
degradaion rate. Panel manufacturers have different ways of
expressing guaranteed performance levels, but these are
normally based on degradaion in the panels at about this rate
• Retail Price Index (RPI) 2.5%. This is based on recent
experience, but may during the life of the project be much
higher if medium–to long-term historic trends are followed
• Interest payments to Members start at 5%. This is based on a
projecion of profit and reserves in hand when the Board first
considers the mater
• Insurance figures are based on the quotes from our exising
insurer
• Administraion costs and running costs are esimates, again
based on BEL's experience but with an increase to approximately
200 members
• Projecions are based on the project securing Feed in Tariffs
appropriate to the different sizes of systems.
• Projecions are also based on the producion of our exising
systems - 950 kWh per kWp.
Enterprise InvestmentSchemeInvestors in BEL may qualify for the Enterprise Investment
Scheme (EIS) which provides tax payers
with tax incenives when they invest in EIS Qualifying
Companies:
Income Tax Relief
An individual can invest up to £500,000 per tax year in EIS
Qualifying Companies and benefit from 30%
income tax relief. The individual can only claim this relief if
he holds less than 30% of the shares, is not an employee
and holds the shares for at least 3 years. The minimum
investment to qualify for EIS is £500.
Inheritance Tax Relief
Shares would generally be expected to atract Business
Property Relief at rates of up to 100% for IHT
purposes, provided the shares have been held for at least 2
years.
Loss Relief
This latest share offer has been given provisional accept-
ance of EIS Qualifying Company status (we can only obtain
full acceptance ater we have installed our solar panels).
We received EIS acceptance for our two previous share
issues in 2011 and 2012. Full details of the EIS scheme can
be found at: htp://www.hmrc.gov.uk/eis/
Coops and renewable energy
Co-operaives and Community Benefit Socieies are democraic
structures with the legal ability to raise money directly from the
public. With a one-member one-vote system and a board elected
from the membership, they offer a fair and transparent way to
operate a community-owned renewable energy business. They
also have the power to give priority to investment from the local
area, ensuring that, as much as possible, local people enjoy the
financial benefits of renewable energy.
Co-operaive ownership of renewable energy is not new. In 1997,
Baywind in Cumbria became the first community-owned
renewable installaion in the UK. It has been paying out annual
interest to its members ever since. As a result, Baywind was in-
undated with quesions from other community groups waning
to do the same thing and this led to the creaion of Energy4All in
2002.
Since then Energy4All has helped to set up seven wind energy
co-operaives in the UK with over 6,000 members. This has led to
communiies across the UK staring to set up wind, hydropower
and solar co-operaives along similar lines to the original wind
co-ops. The highest profile solar-based co-operaive, Westmill
Solar Co-operaive (www.westmillsolar.coop), raised £16.5
million through a share issue and bond finance in summer 2012.
In Germany and Denmark renewable energy cooperaives have
been instrumental in driving both renewable energy and
government policy; in both countries individuals and civil society
groups own more than 30% of the renewable energy
infrastructure.
Our History
Brighton Energy Limited formed in June 2010 when three locals
met in a central Brighton cafe to discuss ways in which
renewable energy might benefit the Brighton and Hove
community.
In January 2011 BEL launched a start-up fund and raised £18K
from eight Brightonians commited to BEL's development.
A month later BEL created its Advisory Commitee and invited
Jeremy Legget to join. Talks began with various sites about host-
ing panels. Over the course of its gestaion BEL has talked to
more than fity such building owners. Negoiaions coninued
with
potenial site partners, leading to an exclusivity agreement being
signed by Shoreham Port Authority in mid 2011.
Our first share offer launched in June 2012, ulimately raising
more than £230,000. We are now the proud owners of 132kwp
of solar PV which has been generaing for over a year.
A copy of our latest accounts is available here:
www.brightonenergy.org.uk/documents
Community Benefits
An ambiion within this share offer is to provide a
community fund to support relevant schemes in our area.
This will be coningent on acheiving the target interest
payments for members, however, and at the directors'
discreion.
Since its incepion Brighton Energy Limited has worked on
various projects that help promote energy efficiency and
renewable energy in our city. In January 2012 BEL oversaw
and delivered a survey of the energy efficiency of more
than 50 homes; we are also acively supporing local
schools to implement and fund raise for renewable power
on their roofs.
Recently we received a £5,000 grant to invesigate the
feasibility of anaerobic digesion in Brighton and
Hove, and we coninually push for community
involvement in other renewable schemes, such as the
Rampion offshore wind farm.
As a high-profile community energy group, we have also
been acive in consultaions on community energy policy;
6 DECC officials visited BEC in June 2013, to discuss how
best to promote community energy throughout the
country, and DECC Minister Greg Barker visited our St
George’s Church array in September 2013. We are also a
founding member of Community Energy South, a group
formed topromote a community-based response to
energy issues and climate change.
To join visit www.brightonenergy.org.uk/join.
Project background
About Brighton Energy CoopBrighton Energy Co-op is the trading name of Brighton Energy
Limited (BEL), a Community Benefit Society (CBS) formed in
2010. BEL has three PV systems in operaion. See
www.brightonenergy.org.uk/documents for our latest accounts
and current financial posiion.
Brighton Energy Limited Structure
As a CBS, Brighton Energy Co-op is democraically owned. Each
member has one vote, regardless of the number of shares they
hold. Unlike a limited company, which is designed to benefit
shareholders, a CBS is designed to benefit the community
whether they are members or not.
For our new share offering we are offering a new class of share.
We also aim to increase returns to our BEC1 shareholders, so
that all shareholders receive the same returns and payback
schedule.
BEL is bound by its Rules, and the powers of members and
Directors are set out within those Rules. The Directors run BEL in
line with the Objects set out in the rules on behalf of the
members. The members have the right to elect and remove
Directors. A copy of our rules is available for download via our
website.
Board practices
Directors serve in accordance with the rules of Brighton Energy
Ltd. There are no service contracts for them or the Secretary. BEL
will manage the day-to-day operaions under the supervision of
the Board. The Board will bear ulimate responsibility towards
the members. As an Industrial and Provident Society, Brighton
Energy Ltd complies with statutory requirements and the
regulaion of the Financial Conduct Authority. As its shares will
not be listed on any exchange, the BEL is not obliged to comply
with the Combined Code on Corporate Governance
Right: our existing systems from space. Top to bottom: St
George’s Church, Hove Enterprise Centre, City Coast Church
Meet the teamWill Cottrell, Chairman
Will began his business career in Barcelona, publishing a
monthly, 20,000-copy English magazine. Later he established
Yoga Travel, a holiday company operaing in Egypt, Thailand and
Morocco. In 2009 he bought a website traffic provider, Yogaholi-
days.net; that same year he established Brighton Energy Co-op
ater paricipaing in the Copenhagen COP15 Climate Confer-
ence. In 2012 he steered Brighton Energy Limited through a
successful fund-raising to raise more than £200,000 for PV in the
Brighton area.
Damian Tow, Director
Having originally read Business Studies at Hull University, Damian
completed a Masters in Leadership for Sustainable Development
at Forum for the Future in 2009. Prior to that he had 14 years
experience as a project and programme manager at Cable &
Wireless and BT and was a Director of a small sotware company.
He has Prince 2, MSP and APMP project management
qualificaions and has been working with BEL since August 2010.
In 2012 Damian oversaw the project development and
installaion of 132Kw of PV at our Brighton sites.
Ross Gilbert, Director
Ross, who has a Masters in Sustainability of the Built
Environment from the University of Brighton, is a Director of
QED Capital Assets, a Sussex-based property development and
investment company. Ross, who joined the BEL team in May
2012 has completed a number of renewable energy projects in
the UK and Germany and brings knowledge of property and
renewable energy development to the BEC team.
John Smith, Director
John is the Director of Cityzen which specialises in Architectural
Technology, Low Carbon Consultancy and Sustainability. As a
CIBSE-accredited Consultant he advises on the design of
renewables and carbon modelling.
Danni Craker, Advisory Committee
Danni is a chartered accountant who spent nearly 8 years
working with PricewaterhouseCoopers in their London and
Tokyo offices. In late 2009 Danni set up Craker Business
Soluions, a Hove-based environmentally- conscious accountancy
pracice. She started working with Brighton Energy Limited in
August 2010.
Disclosure
None of the Directors of Brighton Energy Ltd have, for at least
the past five years, received any convicions (for any fraudulent
offence or otherwise), or been involved in any bankruptcies or
receiverships, or received any public recriminaion or sancion by
a statutory or regulatory authority or designated professional
body, or been disqualified from any funcion by any court.
Conflicts of interest
The directors are not aware of any other potenial conflicts of
interest. The rules of BEL include provisions relaing to potenial
conflicts of interest; related party aciviies are disclosed and
dealt with according to the rules.
Remuneration
BEL pays remuneraion to its Directors to develop new projects.
We cost these payments at a market rate and what has been
spent by comparable organisaions, either via paid directors or
our independent consultancies. DECC also recently recognised
that £20K is required to start energy co-ops with the Rural
Community Energy fund, which awards a grant of £20k to start
rural energy co-ops. The directors are elected each year at our
AGM. See our Management Accounts summary at
www.brightonenergy.org.uk/documents for details of directors'
pay.
When the project is generaing electricity each Director will be
enitled to claim expenses. BEC2 also provisions a fund of £6,292
each year to pay for the running of the coop. Directors’ share
applicaions will be met in full, but there are no pension schemes
or share opion schemes.
Risks
Not securing sites
The Maximum fund-raising Target (above) depends upon
obtaining contracts with several further sites. Without contracts
we are obviously unable to proceed further. It is therefore a risk
that the money we spend on developing these projects may be
spent without a result.
Mitigation:
The Minimum fund-raising target is able to offer investors a 5%
return, including a fund for developing these future sites. Any
future installaion will not proceed unless they are able to
deliver 5%
Raising insufficient funds
It is possible that, once the main BEC2 share launch is under way,
not all the required capital can be raised.
Mitigation:
Should subscripion be incomplete, we may apply for a bridging
loan pending the issue of a future share offer or share offers. If
that happens, the loan provider is likely to charge a 5% annual
interest rate. This would effecively neutralise any effect on
members’ returns.
The Board is confident that all subscripion targets set are
realisic and achievable, however, and considers it unlikely that
there will be any significant deficit 12 months ater
commissioning.
If the required Minimum fund-raising target is not met by this
date we will refund the enire shareholder capital invested.
Feed in Tariff Reductions
Previously changes in government policy have provided an
insecure foothold for start up solar schemes.
Mitigation:
DECC have since introduced the opportunity for Community
Energy Projects to lock in a feed in tariff rate for up to 12 months
to allow project delivery based on a given tariff. BEL has already
locked in tariffs on 2 of our sites prior to reducions. Community
lock in of tariffs is available up to the change of tariff date,
announcements of tariff changes generally come 2 months prior
to the change date. With rates currently fixed unil 1 Jan 2014
and the next announcement due on or around November 1 2013
we have ime to lock in our projects at present FiT rates.
General investment risks
The value of shares can fluctuate according to the value of the
underlying business. The Offer shares will never rise in value but
may fall.
Offer shares will not be transferable or traded on a recognised
stock exchange, but only buyable back by BEL.
Risks associated with the assumptions
The RPI and cost increase rates are variable and unpredictable.
FiT is linked to the RPI but so directly and indirectly are some of
the costs, therefore variance within recent RPI ranges will not
have a major impact on profit.
Energy cost inflaion may prove to be more volaile; it is ex-
pected to rise ahead of inflaion on average but will probably do
so in an irregular fashion. Revenue may surge ahead of
projecions in the short term but fall back to trend later, or vice
versa; alternaive energy sources might in the long run reduce
energy cost in real terms and so reverse recent inflaionary
trends and erode profit. The Board will need to review actual
revenue and developing trends before making interest payments
or allocaing funds to the grant fund.
Risks specific to Brighton Energy Ltd
Warranies and insurance will be in place in the event of
mechanical breakdown of the equipment. Complete failure and
loss of revenue through mechanical breakdown is reduced
through the use of muliple inverters and the system will be
monitored and managed to minimise interrupions to supply.
Accidental and malicious damage will also be covered under
insurance and public liability insurance of up to £2m. BEL’s
equipment is presently insured.
Renewable energy industry risks
Government policy towards renewable energy may change,
although long-term commitments relaing to the FiT make this
unlikely, since FiTs are part of primary legislaion and thus
difficult to change. Throughout the operaion of the FiT the
Government has maintained the commitment to the process of
‘grandfathering’ which ensures that whatever tariff a project is
registered for at the commencement of operaion, the tariff will
remain the same for the duraion of the FiT period, (20 years in
the case of this project). This payment is also linked to the Retail
Price Index.
Projecions are based on current FIT rates on the assumpion
that we are able to comply with preliminary registraion through
Ofgem ROO-FIT regulaions. The Board is unable to guarantee
that this will be possible so a lower FiT rate may apply.
Any changes to the FiT that occur before the end of the share
issue could result in the Co-operaive returning funds received
from prospecive members at the end of the Share Offer Period.
Membership and ShareholdingShare Withdrawals
Shares are withdrawable up to a maximum of 5% per annum of
issued share capital in issue at the start of the financial year. The
Board may resolve to require any proporion of its share capital
to be withdrawn, in which case it shall treat as agreed to be
withdrawn on behalf of every member (and not some only) that
proporion of the shares held by them (with such rounding to
the nearest whole number of that Proporion which is a fracion
as the Board may determine). All members are deemed to give
any consents required to the withdrawal of their shares in this
manner.
The withdrawal of shares is currently suspended for 3 years. The
scope for being able to withdraw shares in the future will be
dependent upon the Society developing a successful business
and hence cash flows to pay out share withdrawals or coningent
on the Society raising addiional capital for the purpose of paying
out share withdrawals.
In the case of joint investments, all investors concerned must
agree to a withdrawal. Shares will be repaid at the original price
(subject to comments hereater).
The Directors of the Society have the right to change the with-
drawal facility, or to suspend withdrawals. Similarly the Directors
have the right to write down the value of shares, if the liabiliies
of the Society (and its share capital) should exceed the value of
its assets. Members who then withdraw their shares will only
receive the writen down value of their shares.
The value of your shares may fall and their value will not exceed
the £1 per share. Although shares are withdrawable, you may
not be able to withdraw the full price you pay for them if the So-
ciety does not have funds available at the ime you want to
withdraw your shares. In some circumstances, the Directors may
be compelled to write down the value of your shares. Should you
then wish to withdraw your shares, you should expect to receive
only their writen down value.
Returns to Members
The Society will pay only a sufficient rate of interest on money
paid for its shares and may pay no interest at all. A sufficient rate
is determined by the Directors as the rate necessary to obtain
and retain the capital required to carry out the Objects of the
Society as set out within its Rules.
Voting
Each member has one vote regardless of the size and value of
their shareholding. Members are kept informed of developments
through the Brighton Energy Co-op website, by e-mails where
the member so wishes, by occasional newsleters, annual
reports and Annual General Meeings.
Legal Information
This document is issued by Brighton Energy Limited, registered
number 31107 R, as a Community Benefit Society incorporated
in England and Wales on the 10 November 2010 under the
Industrial and Provident Socieies Act 1965.
This offer of shares is not regulated by the Financial Services and
Markets Act 2000 or subsidiary regulaions. The money you pay
for your shares is not safeguarded by any depositor protecion
scheme or dispute resoluion scheme. The Society, unlike banks
and building socieies, is not subject to prudenial supervision by
the Financial Conduct Authority, nor has it been approved by an
‘approved person’ under secion 21 of the above act.
This document does not consitute a prospectus within the
meaning of the Prospectus Regulaions 2005. These regulaions
do not apply because there is a specific exempion for
community benefit socieies that conduct their business for the
benefit of the community.
As a member and shareholder of the Society you own the
Society. If the Society is unable to meet its debts and other
liabiliies, you will lose the whole amount held in shares. This
may make it inappropriate as a place to invest savings.
Your investment in your share account receives interest but does
not enjoy any capital growth. It is primarily for the purpose of
supporing the society rather than making an investment. As a
Society, the maximum return offered to investors will always be
limited.
Nomination option
In the event of the death of a member, the repaid value of the
shares will normally be added to the estate for probate pur-
poses. You may elect to nominate a recipient for the value of the
shares (but only up to the amount set out in law) and thus
(under current legislaion) remove the value of the shares (up to
the amount set out in law) from your estate for probate
purposes i.e. the shares may pass to the nominee outside the
Will of the deceased). The nominated property will nevertheless
form part of the deceased’s estate for Inheritance Tax Purposes,
unless the estate is an excepted estate.
Documents
The Rules of Brighton Energy Limited, applicaion form, latest
financial statements and financial projecions are available on
our website: see www.brightonenergy.org.uk/documents.
Appendix: Current performance of Brighton Energy Ltd
Brighton Energy Ltd has been operaing for more than a year. Below is the current perfomance of the Society over the period 1 Sept
2012 to 31 Aug 2013.
Income
Feed in Tariffs £18.802
Site Electricity Sales £3.925
Total Income £22,727
Expenditure
Admin £1,420
Membership £169
Maintenance £1,050
Accounts £1000
Total Expenditure £3,939
Debt Repayments
Interest £1,832
Capital £9,218
Total £11,050
Sinking Fund
Inverter sinking fund £1,000
Total £1,000
Net Available Cashflow £7,037
Debt
We have paid back a porion of the loan issued to us by PURE/BRE at the ime of our first installaions; we are on schedule to pay
back the debt in full by 2017.
Ongoing projects fund
Our iniial share launch provided for a £20,000 fund to launch our next project. So far we have spent or allocated £19,458 of this to
implement the new project.
Money spent to date
Will Cotrell salary £3,607
Damian Tow Salary £2,080
Expenses £894
Payroll, HMRC, Misc £2,597
Markeing £618
Total £9,798
Money allocated
Addiional salaries, HMRC etc £4,750
Share launch markeing £5,000
Total £9,750