Community Ownership

[CommunityEnergy]

I've noticed a few posts where people have mentioned community ownership so I thought I would start a new thread.

Farmers and landowners may have noticed that the Government is getting serious about community ownership. The CARES scheme is an encoragement for resident landowners to take on a risk free loan to develop their own renewable energy project. This is great news but not all landowners have the time to develop their sites or have the wherewithall/security to pay the construction cost. This is where community ownership can help.

Community groups are also eligable for CARES and can either develop the project for you in exchange for a land rent, or purchase a consented site, either for a better rental agreement or as a joint venture.

There are a number of community models around but the most successful is the co-operative model which started in Denmark in the 1970's and is now the most common type of community ownership model all over Europe. This requires individuals from the local area to invest for a finacial return, with surplus profits made available for community benefit.

A good example is the Dingwall Wind Co-operative http://dingwallwind.org.uk/ or the Drumlin Wind co-operative in Northern Ireland http://www.drumlin.coop/home.asp

If landowners are concerned about whether local people have the capacity to undertake such a development, then there are agencies you can talk to who will help co-ordinate the commercial aspects of the project and ensure proffesionalism. Both of the above projects were assisted by social enterprises Sharenergy http://www.sharenergy.coop/ and Energy4All http://www.energy4all.co.uk/ respectively

 

[Goweresque]

It may be called a co-op, but it isn't is it? Its an offer for people to invest cash in return for shares in the venture. Thats called a share offer, not an invitation to join a co-operative. Twitter just had a big share offer - does that make it a co-operative?

I can become a member of the Co-Operative Wholesale society by just signing up, and buying their products, not investing cash. Now if you were planning to get locals to sign up to buy your (expensive) green renewable electricity, and giving them a share of the profits in return, then that would be a co-operative. But of course that might get in the way of paying off all those investors, so thats not going to happen is it?

 

[CommunityEnergy]

It may be called a co-op, but it isn't is it? Its an offer for people to invest cash in return for shares in the venture. Thats called a share offer, not an invitation to join a co-operative. Twitter just had a big share offer - does that make it a co-operative?

I can become a member of the Co-Operative Wholesale society by just signing up, and buying their products, not investing cash. Now if you were planning to get locals to sign up to buy your (expensive) green renewable electricity, and giving them a share of the profits in return, then that would be a co-operative. But of course that might get in the way of paying off all those investors, so thats not going to happen is it?

No that is incorrect. An Industrial & Provident Society Co-operative is the only organisation that may offer shares to the public in this way without forming a PLC company and registering with the FCA. This lack of regulation is great in terms of community groups being able to inexpesnively set up a co-operative and raise money form the public, however the lack of regulation can make the share offer less secure to an investor. It would be great if co-operatives were able to sell electricity to their members or indeed anybody who wished to become a customer, however the lecense to sell electrcitiy in the UK prevents this. The result is effectively an investor society that is open for anyone to invest and become a member, but the only way to benefit is through a finacial return on investment. However being a co-operative and the one member, one vote rule, means that some co-ops can decide to do other things with their profits, like reinvest to do other projects, or pay out surpluses as community benefit. I hope that makes a clear distrinction between a co-operatively owned renewable energy project and Twitter!

 

[Goweresque]

The shareholders in any plc can decide what they like too. Its their company. If they wanted to give all their profit to charity they could. Your 'co-operative' sounds all warm and fuzzy, but its not greatly different to a limited company. I'll hazard a guess that there'll be no more interest in reducing the annual dividend at the co-op annual meeting than at a limited company shareholder meeting, which given they've just stumped up an average of £7K each (in the case of Dingwall) is entirely understandable.

Dingwall's quite instructive - they are planning to raise £856K and pay a projected return of 7.5%. Which equates to an annual dividend to the investors of just over £64K. The local community are being offered around £8k per year in grants for local organisations (of which £2K is guaranteed). Seems like the investors are being quite co-operative amongst themselves, but not so much beyond that. All this talk of 'co-operatives' is just flim flam anyway to hide the reality - its a large capital investment by people who want a return on their capital. It would amuse me immensely to get 100-150 people to sign up for the £250 minimum and then get them to vote for all the profits to be given away at the first meeting. You'd see how co-operative the rest of the investors were then, if their 7.5% return went down the pan.

 

[CommunityEnergy]

Ok, the difference between a plc and a co-operative are vast but subtle. First of all co-ops have guiding principles that make them a more ethical business than companies that chiefly exist to make profit for the shareholders. Combine these with one member, one vote and you put people and not money at the heart of decision making. Then there are the founding members who give the co-op it's identity. These are people who are choosing the co-op model to provide something that is missing in their community, often to save a locally valued business that is no longer viable in the hands of private individuals. The co-op routes are in a 'self help' attitude to trade by groups of individuals who have a common interest. Individual's participation in the trade as a customer allows them to share in the profits of the trade. As I mentioned above this isn't possible for electricity generation which is why I sympathise with your view that it looks like a plc. However would a plc build a single turbine and allow local people priority on shares. No is the answer, so local people doing something for the benefit of local people which gives ordinary people a decent interest rate (not dividend) on their savings is very much in the spirit of co-operation.

Other co-ops by the way have a cap on their interest rate so any upside in profit is distributed as community benefit. Harlaw Hydro by Edinburgh is one such scheme where the founding members wanted to create a fund for the village by building a community owned hydro scheme.

I hope this helps make a clear distinction between co-ops and a plc

 

[Goweresque]

Ok, the difference between a plc and a co-operative are vast but subtle. First of all co-ops have guiding principles that make them a more ethical business than companies that chiefly exist to make profit for the shareholders. Combine these with one member, one vote and you put people and not money at the heart of decision making. Then there are the founding members who give the co-op it's identity. These are people who are choosing the co-op model to provide something that is missing in their community, often to save a locally valued business that is no longer viable in the hands of private individuals. The co-op routes are in a 'self help' attitude to trade by groups of individuals who have a common interest. Individual's participation in the trade as a customer allows them to share in the profits of the trade. As I mentioned above this isn't possible for electricity generation which is why I sympathise with your view that it looks like a plc. However would a plc build a single turbine and allow local people priority on shares. No is the answer, so local people doing something for the benefit of local people which gives ordinary people a decent interest rate (not dividend) on their savings is very much in the spirit of co-operation.

Other co-ops by the way have a cap on their interest rate so any upside in profit is distributed as community benefit. Harlaw Hydro by Edinburgh is one such scheme where the founding members wanted to create a fund for the village by building a community owned hydro scheme.

I hope this helps make a clear distinction between co-ops and a plc

Oh crystal clear indeed.......to anyone who reads beyond the fuzzy feel good flim flam.

 

[renewablejohn]

I have looked at the CO-OP model for funding two 250kw turbines but it seems far to rigid with share offers etc. I am all for crowd funding and a great believer in keeping funds within the local community. Personally I think the issue of fixed rate bonds (7.5% for 10 years) is a better method with a maximum cap of 20k for any individual investor with preference given to local investors.