Community-owned solar project enthusiasts have something to celebrate in the UK: the world’s biggest crowd-sourced solar farm has reached its funding milestone of £2.5 million, putting it on track for the next phase of funding.
The project, called Westmill Solar, is located between Swindon and Oxford in south-central England. The 5-megawatt, 21,000-panel PV installation was built on farmer Adam Twine’s land about a year ago.
As part of the original contract, Twine kept the right to buy back the solar farm from the original owners. Now Twine is looking for small investors, preferably locals, to form a solar cooperative of sorts.
Now that the first hurdle of £2.5 million has been secured, the rest of financing comes from institutional bond holders for the remaining £12.5 to £14 million. The bonds will be at an interest rate of about 3.5 percent.
The details of the solar farm buy-back are a tad complicated, but include the following:
- A 5 percent buy-back of the farm each year, from year 2 to 10.
- Shareholders will be paid off gradually, starting with smaller amounts as bond holders are paid back.
- After year 24, when the feed-in tariffs end and the paybacks are complete, returns are expected to be over 50 percent a year on the remaining shareholder capital.
The feed-in tariffs and revenue from exporting electricity are expected to gross about £1.7 million. The bondholders will take about £800,000. After the running costs of about £200,000 are accounted for, about £700,000 will available to pay back some debt and provide a small return to investors. Investors aren’t expected to get rich quick, but over time Westmill Solar could show big returns eventually.
In other news, community-owned solar farm investors around the UK are crossing their fingers that there aren’t any huge volcanic eruptions any time soon.
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