Swindon Borough Council and leading peer-to-peer investment platform Abundance has launched the UK’s first ‘Council Solar Bond’ which will pay an effective rate of return of 6% over its 20-year term to people investing as little as £5.
The Bond will fund construction of the Swindon Community Solar Farm at Common Farm, Wroughton, with £3m invested by the Council and £1.8m by small investors.
This first ever Council Solar Bond offers people living in the Swindon area and further afield the chance to invest for a bank-beating effective rate of return of 6%, paid twice yearly in cash instalments of capital and return, while benefiting from the lower risk inherent in investing alongside Swindon Borough Council.
An “early bird bonus” of 0.5% for the first five years will boost returns for those investing within six weeks of launch on Wednesday 24 February.
This initiative represents a big win for local small investors, for Swindon Borough Council on its way to providing sufficient renewable electricity to power all homes in the area by 2020, and for the environment. At a wider level, it also creates a new model for Swindon Borough Council to find new sources of revenue to fund core services without increasing the burden on local taxpayers, setting a great example to other councils across the UK.
Councillor Dale Heenan, Swindon Borough Council Cabinet Member for Transport and Sustainability, said: “Swindon’s Solar Bonds provide an opportunity for local residents to invest as little as £5 or more than £5,000, and enjoy better returns than their bank provides as they invest for their children’s future, their own retirement or just a rainy day. I am excited about this initiative because it will personally benefit local residents, the majority of profits will go to community projects and it will help the Council protect local services in these cash-strapped times.
“I’m really proud that Swindon is at the forefront of this groundbreaking new finance model which we hope will become popular up and down the UK. I have plenty of ideas for further projects, and look forward to working with Abundance to make these plans a reality in Swindon.”
A Community Interest Company, wholly owned by Swindon Borough Council, would own and manage the solar farm. Revenues will be raised from selling the electricity generated, as well as support from the Feed In Tariff subsidy (FIT). The solar farm was pre-accredited for the FIT before government policy changes at the start of the year, so revenues are guaranteed by the government for 20 years. Sixty-five per cent of the distributable profits from the solar farm will go towards funding local community initiatives, with the remaining 35% going to the Council.
Bruce Davis, Managing Director of Abundance, said: “This first ever Council Solar Bond will really help to put Swindon on the map. It proves that ‘win win investment’ can provide people with a better return on their hard-earned money, while creating innovative new ways for developing and improving local community infrastructure without increasing costs to the taxpayer.
“This is great news for people struggling to live off their savings or wanting to invest for their future without stock market risks, as well as for Swindon Borough Council as it seeks to beat the government cuts and make a difference to the local community.”
The bond offer will be open for investment from 23rd February to 30th June. Investing is quick and easy via the Abundance website