April update 4 - Community Generation Fund
The Community Generation Fund will be a £15million, 10-year Fund, aiming to provide funding to circa 100 projects nationwide.
It is estimated that these projects will create over 30,000MWh per annum of ‘Green Energy’, equal to the energy needs of around 8,000 UK households and equating to a saving of 13 million tCO2eper annum.
Finance South East is working to launch the Community Generation Fund, a national-scale initiative which will provide a catalyst for business and local community infrastructure projects.
National Energy Foundation (NEF) will join FSE as lead partner on this initiative. NEF has piloted and mainstreamed new approaches to energy efficiency & renewable since 1990, highlighting the key interaction between people & technology.
The Fund will provide funding at pre and post planning-consent stage, via a 2-tier structure:
1. Feasibility Loan:
Typically the most significant barrier to community led projects is lack of capital in the pre-planning/feasibility stage, which often results in a project never getting off the ground.
This part of the loan will provide funding for various environmental, technical and other studies as well as design refinements required to achieve final planning consents/licenses.
It will be a contingently repayable bridging loan, funding 50-75% of the pre-planning feasibility costs :
If the project does not proceed, the loan will fall away. If the project succeeds with planning consent, the loan is repayable (plus exit/success premium)
2. Construction Loan
This part of the loan will provide funding for the construction/commissioning costs of projects that will result in a long-term operational renewable-energy generating, or carbon-emission reducing, entity.
It will be a long-term “mezzanine” loan funding 50-75% of the funding gap between bank debt and total construction costs (including the feasibility loan repayment)
The Fund will periodically refinance these loans to 3rd parties, enabling the cash in the Fund to be applied to more new community projects.
Funding will only be provided to projects where primary economic ownership of the project remains with the community, so that in turn, surplus cashflows can be reinvested in the community.
Discussions are currently underway with interested investors into the Fund, which is likely to include charitable foundations as well as private sector corporate groups which are dedicated to supporting reduction in UK carbon emissions and to engaging with local communities.
For more information on the fund, please email Jeff Dober or call 01276 608520.