UK improves attractiveness of community solar investment

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Investment in community and shared solar PV projects in the U.K. is set to be made easier and more attractive as the Solar Trade Association (STA) and the Department for Energy and Climate Change (DECC) come together today to deliver a ‘masterclass’ on the benefits of community investment.

In support for DECC’s push for greater levels of local and community ownership, the STA has amended the eighth commitment of its 10 Commitments on Solar Farms to reflect this altered approach.

The new commitment reads: "We will offer investment opportunities to communities in their local solar farms where there is local appetite and where it is commercially viable." Formerly, it simply stated: "We will seek the support of the local community and listen to their views and suggestions."

In a nutshell, this amendment is intended to make it best practice – where commercially viable – to open up community investment opportunities to all new solar farms. These investments could be in the form of bond offers, local authority partnerships, partnerships with legally constituted community energy groups, or other appropriate community partners, including revenue sharing through the reduction of local electricity bills.

From September, community solar projects will also be eligible for inclusion in British ISAs (Individual Savings Account) – which are tax-free accounts that could free up masses of private capital for solar investment.

The STA is to hold a masterclass on the new opportunities today – Wednesday February 3rd – in order to educate solar developers on the benefits and regulatory implications of community investment. Ed Davey, the government’s secretary of state for energy and climate change, will send a videomessage to the event, which will state: “Solar is a key part of the community energy revolution and I think we will continue to keep public support and grow that support.

"I am particularly grateful to the STA for its work in showing people the best practice in installations in the 10 Commitments and for including shared ownership and community energy as part of those 10 Commitments."

Growing demand for community solar

With more and more Brits living in rented accommodation, owner-occupier rates are falling for the first time in two decades. This transition in how Britons live could potentially impact the deployment of residential solar PV because, if a tenant does not own their roof, they have little recourse – nor desire – to install solar.

However, community solar programs allow investment into the sector for those not on the property ladder. In anticipation of this trend, DECC in January 2014 asked an industry taskforce to devise a framework for increased community ownership of local solar projects. The taskforce tabled its report in November, and DECC has confirmed it will respond to the suggested measures within the next few weeks.

"Our aim is to find genuine win-wins for the industry and communities that will ultimately enable the U.K. to accelerate the deployment of clean solar power," said STA head of external affairs, Leonie Greene, who represented the solar industry on the Shared Ownership Taskforce. "The policy framework has been unfairly tilted against the solar industry in the U.K., despite solar farms being the most popular local energy development."

Greene added that the ISA eligibility could potentially inject a much-needed and cost-effective source of financing into community solar programs that could give the industry a "mass advantage" as well as an upswell of "mass public involvement" at a time when uncertainty over the future strength of the U.K. solar industry hangs in the air.

The STA also pointed to market-based evidence that suggests a growing enthusiasm for debt-based investment, such as bond offers, in community solar projects. Such financing instruments have already been used successfully by Good Energy and Big60Million, and the inclusion of ISAs merely extends that financing model to a wider pool of investors.

"DECC has confirmed that crowdfunded bonds and debentures will be ISA eligible from the end of 2015," said Karl Harder of Abundance Generation, a U.K. crowdfunding platform. "This opens up a major new source of low-cost capital for the solar industry and will help the sector move towards grid parity while also making it possible for everyone in the U.K. to benefit from the solar revolution."