Earth Notes: Kingston Community Energy (2012)

Attempting to get non-for-profit community (solar PV) energy projects together, undermined by whiplash changes in government support schemes.
solar PV on school

This is a record of how a how a few people (associated with Transition Town Kingston) are trying to put together a community-owned renewable energy system circa 2012, initially based on solar PV.

I am hugely in favour of distributed solar PV as part of the UK's energy mix, and indeed wish we had more like German levels of build out! I have filled a few roof areas with PV with my own money, and had a hand a a couple of others going up.

I'm also keen on community renewable energy schemes and I have invested (small amounts) in a couple of well known PV schemes as well as hydro/wind. And given typical returns similar to a bank or building society deposit account many people beyond core 'greenies' can find these schemes to be a decent 'socially-productive' alternative, so I think there will be good demand. (As I write this today 2012/09/09 I notice that Brixton Energy's has opened inventment in "Brixton Energy Solar 2" with returns of "up to" 3%.)

I have been working with a couple of other members of the Transition Town Kingston Energy Group (Liz D and Peter M) on trying to establish one or more community PV schemes in Kingston. We're not ruling out other forms of renewables (eg hydro) in future, but PV remains one of the most urban-friendly microgeneration technologies.

Liz D had done most of the leg-work up to our super-secret meeting of 2012/09/05 in Peter's back garden in lovely sunshine, and is still the driving force!

Meeting 2012/09/05

The Name

By the end of the meeting we had decided to give the project a working title of Kingston Community Energy for a number of reasons:

We don't know if the "KCE" name is already in use or otherwise encumbered or even if, in the event that we do multiple rounds of fundraising, eg for multiple projects, whether we'd in fact need multiple legal vehicles so there wouldn't be just one unitary KCE anyway...

We'd want some kind of legal vehicle for KCE that does not impose undue burdens (eg of liability) on those running it, which suggest some sort of company structure. We want to keep complexity and admin costs down.

Liz' researches suggested that some form of IPS (Industrial and Provident Society) without charitable status would probably be the way to go.

Liz' researches also indicate that some sort of "bencom" (society for the benefit of the community) would suit us better than a co-op.

A "bencom" can apparently pay something like a modest (~4% max?) dividend, but called something like "share interest" instead.

The bencom apparently cannot solicit for shareholders but must be able to advertise somehow.

As mentioned above, we're not clear if one or many legal entities would be needed to take multiple roof spaces or multiple rounds of install or different sorts of contract with different landlords (eg roof-rental vs JV), and we're going to do further research on this. Our suspicion is that each investment round would need a new company but could cover a pool of projects.

Timescales and Lighting the Blue Touch-paper

Liz has been working with a nominal switch-on date of October 2013, and we're all still happy with that for now.

We've guestimated initial creation of correct share offer paperwork (with offer of free review for bloopers from a chap at Wessex Community Assets) at £200, company formation another £200, and accounts costs per year (at least until doing anything significant) another £200 per year.

We have some model rules as used by OVESCo and Low Carbon West Oxford.

We resolved to gauge likely interest before spending money on company formation, etc, roughly on the following scale, allowing for pooling of space across multiple roof spaces if necessary:

  1. 25kWp of interest from from roof owners (~200m^2 pitched roof space) before spending any real money.
  2. A minimum pool size of 50kWp of available roof and a maximum of 100kWp for the project (at least first round); ie we aim to raise funds for 100kWp but make sure things are viable down to about half that.
  3. (Excess available roof space can be carried forward to another round.)

Target Roof Space

Our aim is to use roof space within the boundaries of RBK, though we might allow ourselves to be tempted by some nearby.

We are keen to use community roof spaces (and recent changes to the FiT rules make that easier too) such as:

I was keen on houses, the others less so.

I don't think that we meant to omit commercial/businesses premises, and Liz said in a later email (typos fixed):

I don't think it need be omitted at the moment - The Rose is surely commercial as well as community. I guess we were trying to focus on places that might have a network of people who could invest attached to it - which might make raising the funds easier. Which doesn't rule out business/commercial - but perhaps they don't automatically have people with vested interest in the building in the way that schools do other than employees... and depending on the company the employees may/may not be so engaged.

We took away various actions, including trying to find some of that initial 25kWp of potential roof space...

2012/10/01 Potential School Site

We went and visited a local school today which looks like it has room for somewhere between 15kWp and 25kWp (crystalline) capacity facing ~SW on a shallow pitch, for maybe 12MWh--20MWh/y output at first blush.

The school business manager seems happy in principle (no commitments yet!) which might give us the ~25kWp sanity-test minimum mentioned before, though I think we are agreed that we should have more than one potential roof in our portfolio in case of glitches with any one site.

Church, Abundance, and More

We've looked at a church roof (or at least buildings in the curtilage more likely to be acceptable from a conservation point of view), and a pub roof, and had long conversations with people such as Abundance about, for example, use of debentures to bring the minimum investement down to as little as £5 and allow gifting, eg to every child in a school.

2012/10/24: Liz has prepared a 1-page flyer explaining the idea.

2012/11/05: Liz D, Peter M and I met with Bruce D of Abundance and agreed a few points:

Project Management

2012/11/12: we (Liz, Peter, Damon) had a meeting at which we agreed:

  1. We need to pin down the rules/aims of the IPS and the legal structure. Aim to do this by mid December so that we can get registered in early Jan.
  2. Do the Wessex CA model rules allow multiple investment rounds? If not are there other model rules that do? All to review model rules, Liz to research further.
  3. Need to ensure that the IPS we set up allows us to convert to [Damon: or coexist with] a plc at a later date should we decide to.
  4. Agreed to start small with 1 or 2 primary schools and maybe a pub and then grow further roofs/buildings in future.
  5. Liz to send a note round to the energy group to explain where we are so far and find out if others want to be involved - chip in financially, be a director, any other way.
  6. Damon to approach about three solar companies at this stage to discuss the project: including Southern Solar, Evo Energy and Paarl.
  7. We decided that the £5 gift to all children at a school is probably not going to be compatible with round 1 of this project but we may do it anyway (eg with money going to another worthy project) for general awareness-raising, school and KCE PR, etc.

IPS Bencom

We seem to be settling on an IPS BenCom having run through the Co-op's checklist at our meeting 2012/11/26. Notes follow:

We are all aware that the big hurdle is going to be raising the money. We will work with Abundance on this, they will host us on their site (need to find out the cost) in addition we will need a local marketing effort. Continue to look out for someone with communications experience who can help us with this. We will have to be careful to ensure that we don't break any of the FSA rules on selling shares, but still manage to communicate about the project to the local community. We may need some advice from a lawyer on this in due course.

Legal structure

School negotiations

Company finances

Sketch Alternative To Roof Lease

Assuming for the moment that RBK would not seek a financial return from any PV mounted on one of their schools beyond the school getting free or cheap power, then if RBK remains against roof leases and cannot have its mind changed quickly enough for KCE purposes by local politicians, then as mentioned above one strategy might be to have full or part ownership of the PV system with RBK (directly, or in some kind of trust, or RBK takes a stake in KCE) as part of a contract transferring all FiT income to KCE, using power generated on site (free or cheap per kWh) and under which KCE contracts to perform any required maintenance on the PV system itself, eg inverter replacement. In this case RBK would probably avoid any leasing at all. Another variant may be to have ownership set to transfer to RBK (or successor) after the FiT period and investors are repaid, and have the IPS wind down.

The basic point is to swap ownership of the PV system itself for a guaranteed stream of revenue (eg the right to the FiTs) instead.

Whether a lease is involved or not it would be important to take model clauses from other places to allot responsibility if the PV system damages the roof or vice versa, or panels need to be temporarily removed to perform other works, or if for some reason the building or roof needs to be brought down, especially before the end of the FiT period.

Meeting 2012/12/14

We have agreed to use the Co-operatives' model rules for an IPS BenCom with the following adjustments:

Free or charged for electricity: we would prefer to give the school free electricity as it is simpler, there will be no need for a PPA (which has legalities, costs and time pressures associated), however we recognise that the interest repayments for investors will be quite low in this case. We could propose to the school that we adopt an open book approach where we agree to set a minimum return to our investors and if the panels fall below that minimum return then we ask the school to share some of their bill savings with us. This potential shortfall could also be met through a periodic small payment from RBK in lieu of a PPA - the council could pay for the right to our free electricity. In whatever actual model we adopt we will ensure that the school/council pays less for the electricity produced by the panels than they would do on the open market. Liz to do some more analysis looking at what level of interest repayments might work in 0.5% increments between 0.5 - 2.5%.

Repayment of capital: we agreed that we would like to give an option for repayment of capital to shareholders as we go along. The capital available for those who opt to not receive repayments can be used for investment in other schemes. We would like to avoid being subject to the vagaries of interest rates and so not retain too much capital. Also it reduces the problem of people coming to us wanting their money back if we give it back to them as we go. Obviously in a given year we won't repay capital until we have paid for all the company operations (panel maintenance, accounts, data collection and processing for FITs, shareholder interest, etc) plus accurals/reserves.

What happens to the asset at the end of the project: we would hope that we can give the solar panels to RBK/school as they will have a number of years of valuable productive life left in them. We may have to write off the very last bit of capital repayment to shareholders in order to make this happen.

We would like to know what the primary school are currently paying for their electricity and how much they use - so that we can estimate the potential savings and model accurately the council repayment option. Peter to try and get hold of bills data.

Negotiations with the council: we need to further the discussions with the council about using the roof of the school, roof lease or similar. Damon to follow up with Marcus from RBK. If we get stuck with the council officers, we also have the support of Sharon Hartley - lead councillor for env and sustainability to help to push things through.

Early finance: Liz to draw up a letter to go out to TTK energy group and TTK management group to ask for financial help to get the IPS BenCom set up. We need £670+VAT to register and we may need a little more for legal support from Co-operatives UK for the clauses we want to change. We will ask for £1200.

Business plan: we need a short 2-page business plan to summarise our project - Damon will send it to Lucius, we can send it to Abundance and Carbon Leapfrog to get their help. Liz to draw up a 2-page business plan.

Meeting 2013/01/04 With RBK

We had a very productive meeting with Nia P-W of RBK today, at which we showed her our draught business plan and risk register.

Interestingly, a major concern was that she thought our CAPEX numbers too low, but PV costs have dropped rapidly over the last year so I still think that our numbers stack up: we will in any case try to formalise and firm up quotes for the work to be done before 1st May when the tariffs drop again.

There did not seem to be any other major red flags, though that is not the same as saying yes yet, of course. Liz and I will be hunkering down to firm up spreadsheets and GANTT charts and the like at the start of next week. (We'll get these to Nia along with a model agreement such as ONCORE's, and we'll make sure that we cover the case where we miss 1st May.)

Today I sent emails to local MPs Ed Davey and Zac Goldsmith to see if we can have their support, as getting it will make it easier for RBK to say yes. We're also working on local councillors and so on for the same reason.

Zac Goldsmith responded 2013/01/05 with: "I'm very pleased to see Kingston Community Energy's effort to install more solar PV to help cut emissions and energy bills for a local community school, and I wish it the very best of luck.

Meetings 2013/01/07 and 08

We agreed to put our risk and task registers on line and make (and keep) them public as far as possible (which my require a little anonymisation for now).

I (DHD) went back to the 4 solar companies that gave us outline quotes primarily to ask them to give us timings to help with project planning for a mid-April install (for school holidays, and catching current FiTs).

We prepared a meeting agenda and LOI for the school, and will prepare a project status 1-pager that will be both for the school and for RBK (Nia P-W).

I am preparing our standard document set, both off-line snapshots and our public on-line/working copies.

2013/01/11: I confirmed over the phone with RBK Building Control that as long as we use installers within the right competence schemes (eg MCS installers, Part-P electricians) then BC does not need to be involved.

An email exchange with Ecotricity today (2013/01/11) says it is willing to be our FiT administrator and that it can lift its usual 50kWp scheme limit. (If we go over 50kWp total then because Ecotricity does not participate in the ROOFIT scheme for 50kWp+ systems we would have to register as more than one system, eg system+extension.) A call to Good Energy confirms that they do operate ROOFIT and would be prepared to be our scheme administrators also.

Given the above it occurs to me that we might optimise the finances by first putting up a 10kWp system on the flat roof with optmimum generation per kWp, and a the 10kWp tariff band. Then we could put up 40kWp as an extension, depending on money raised, to take us into the 50kWp tariff band for that second part alone. Then if we still have funds left we do a third round right up to the capacity of the roof and our bank account which would achieve the sub-250kWp tariff band return. Ofgem rules may prohibit such segmentation, but if forced to do it anyway because of ROOFIT issues, then it might improve our returns a little.

Also 2013/01/11 I emailed RBK Development Management (ie planning) to confirm that my understanding on the following points is correct to allow us to work fully within GPDOs to save time and money:

I am also emailing Ofgem to get details of the communities and schools EPC exemption (ie so that the actual EPC rating does not affect the FiT tariff), and to check the right way to do a PPA with the school from a regulatory point of view.

We've had a very positive response from RBK today, which while not in any way permssion yet, is supportive and says that the two officers so far involved have no issues in principle with our project, and urging us to get on with sorting out the legal agreements.

Also had a call back from Southern Solar, sounding flexible about payments, timing, etc, which is all good. We'll still plan for the most straightforward full permission, full fundraising, full install, in that order, before 1st May, but flexibility seems to allow lots of room to tweak various aspects to improve returns all round.

Enviko sent a helpful email, including a document on GDPOs. If I've interpretted the document correctly, the implication is that the highest part of the structure on the flat roof cannot be more than 1m above the roof. Depending on the dimensions of the panels and layout we use, that might constrain us from getting optimal tilt and thus optimal kWh/kWp/year, which we should bear in mind.

Meeting 2013/01/15

We had a positive meeting at the school with the people we've dealt with before plus the head and a governor, and will be sending them through more details of the overall plan and links to the background calculations and so on.

I hope to take the governor to see the installation at King Athelstan soon to get some idea of what one might look like.

I had a chat with an ex-investor of mine about (S)EIS status and he said that things to watch out for include:

Some other points:

IPS Registered

Liz sent out an email 2013/02/19:

Kingston Community Energy is finally registered! Thank you so much for your help (guidance, advice, finance, etc) in getting us this far. No stopping us now from getting solar panels up across Kingston!

Meeting 2013/02/04

Meeting 2013/02/18

Note: kce.org.ok set up for Web/HTTP.

Note: Carbon Leapfrog agreed to support us following the meeting.

Meeting 2013/03/13

We had a good meeting with Alex G of Carbon Leapfrog.

Services that CL will try and find for us:

Project stuff:

Meeting 2013/03/25

See notes prepared by Liz. See also outline propectus for discussion.

Meeting 2013/06/06

Yesterday Liz and I went to visit a Kingston church that has some money to put up solar; we were able to offer them some technical guidance, and we've said we're happy to do more without getting involved in the money. We care about getting PV put up rather than empire-building! Also, there may be space left over from their project onto we we could spill any extra PV if we slightly overachieve on fund-raising for another project. The church would be happy for us to mention their name as a project once everything is done.

Meeting 2013/06/11

Peter and I went to talk to the managers of the Kingfisher leisure centre in Kingston to see what we might be able to do there. Management (and longevity) of the roof is not entirely clear at the moment, so initial thoughts are to look at using PV to provide some screening in shoulder months to avoid glare (which otherwise requires extra lifeguards) and overheating.

Summary of Achievements as of 2014Q1

In one of the regular KCE meetings, partly for some regulatory paperwork, we summarised progress and achievements over the last year. While these did not include actually putting up any PV (hmmm) there were several of note:

Meeting 2014/07/07

Some brief notes:

Agenda:

Hilary points to take back to RBK:

Should we join CEE 'trade association' for orgs like KCE? Free with current zero turnover: 2 voted for, 1 neutral.

Speak to new FH acting head over summer to try to resurrect PV plan.

£1k is available from RBK grant: have to find appropriate equipment. Make sure camera gets thoroughly used, eg aggressively lend it out. PM do next round of camera research, with MB and DHD.

OpenTRV progress discussion.

Email Discussion 2016/04/22

After an extended period of inactivity it has been proposed that KCE is closed.

Document Set

This is our standard document set for the project as of the start of 2013, and will contain a mixture of live/public working copies and snapshots.

Dissolved 2016/11/11

Today the five members (including the four officers) signed the documents to dissolve KCE in front of a solictor (for free: thanks!).