Westmill Solar Co-operative

Westmill Solar Co-operative is “The largest community owned solar farm in the world.” The solar farm is near Watchfield, on an old airfield between Swindon and Oxford.  It is next to the Westmill Wind Farm Co-operative, a smaller project which helped pave the way for the solar park. The wind farm started as five turbines while the farm includes arable land, a dairy herd, a smaller number of beef cattle and some other small enterprises. It was a £6 million project which could power around 2,500 homes over 25 years. 

The idea for a large solar farm was discussed with the local community who encouraged the team leading the development of the co-operative to be ambitious. In March 2011 planning approval for the farm was granted and work began in May of the same year. The site was connected to the electricity grid by July. The development was undertaken by Low Carbon Solar and Blue Energy but an option was included in the deal for a co-operative to take ownership of the project, which happened in October 2012.

The project is a five MegaWatt installation, producing enough electricity to power 1,400 homes. The solar park is made up of 20,260 polycrystalline PV panels and covers 30 acres. The PV modules convert daylight into electricity. The project shares its connection to the electricity grid via the distribution network operator, Scottish and Southern Energy, with Westmill Wind Farm.

Income is generated through the government’s Feed in Tariff (FiT) scheme. The FiT is index-linked and guaranteed for over 20 years. This provides sufficient certainty of income with an estimated average return around 10% to member shareholders. Under the Energy Act 2008, the UK Government created this new incentive to encourage the development of renewable energy in the UK. The FiT is focused on smaller scale (less than 5MW) low carbon electricity generation. It is paid per unit of electricity generated. 

Once the project was in operation, UK residents were given the opportunity to buy shares, from £250 to £20,000. As shares were oversubscribed, priority was given to people living closer to the site. Over half of the shareholders live close to the site and around 80% within 40 kilometres or with some relationship with another community energy cooperative. Enough shares were bought for the co-operative to purchase the shares from the initial development partnership. A £12 million loan was raised form the Lancashire County Council Pension Fund. Investors also receive their original capital back. 

Shares in the co-operative are non-transferable like shares in a ‘normal’ listed company. But with approval, they can be redeemed or transferred. Co-operatives run along principles of democratic membership. Westmill Solar is a ‘bona fide co-operative’ (and therefore could be understood as a social enterprise or not, depending on various interpretations.) owned by and managed for the benefit of its members. These organisations are registered with, and regulated by the Financial Conduct Authority in the UK. All members of Westmill Solar have one vote regardless of how many shares they hold, the Board is elected by the Members and only members are eligible to serve on the Board. 

This was the first project of its kind in the UK. While community owned renewable energy has existed for some time, this was the first large scale community owned solar farm project in the UK. It is currently the largest community owned solar farm in the world. In July the share offer generated nearly £6 million through share sales bought by over 1,600 members. The share offer was significantly oversubscribed. This is also understood to be the first major funding of its kind by a local authority in community-owned energy infrastructure.

The nature of the institutional investors was also innovative. There have been increasing suggestions over the past few years that local authorities in the UK should look more for opportunities to invest both closer to home and in environmental projects rather than invest in global financial markets, particularly following the Icelandic banking crisis, where local authorities lost significant sums of money. The £12 million loan from the Lancashire County Council Pension Fund was a significant precedent in this regard. 

The project aims to “combat climate change by financing a reliable source of renewable energy, provide local people and other investors with a stable, reliable source of income, and help the area transition to a low carbon future economy.” The solar farm aims to reduce carbon dioxide emissions by 2,000 tonnes a year. One further aim of the project is to demonstrate that community energy can be created on a large scale for the benefit of many. The project will also help fund a partner project which will work to help develop more sustainable energy in local communities. 

The project also aims to boost the local economy, keeping profits in the local area and attracting visitors. A team of volunteers enable visitors to visit the site throughout the year. Community energy projects also tend to have an educational and behavioural impact - members begin to care more about where their energy comes from. 

Finance was at the heart of the challenge for Westmill Solar. The total project cost was £15 million. To finance this, the project sought £10-12.5 million of loan finance with the remainder secured through a community share issue. 

Risks included timing and changes to the Government’s rules around the FiT. The project was completed just a few weeks before the FiT price was revised downwards by the UK Government.  

Other risks include high inflation, which would increase the return owed to shareholders although this is mitigated as the FiT is index-linked.  Another risk is low levels of sunshine but levels of solar radiation are quite consistent in the UK.  Other risk include potential damage through vandalism. To mitigate these, Westmill Solar Co-operative has a maintenance contract in place and relevant insurances. 

The solar farm is producing more energy than expected and members of the co-operative are working with government, policymakers and others to help encourage the spread of similar models across the UK. Founder Adam Twine says that the project “reflects a collective desire to see change. My aspiration is that it will replicated by other groups in the UK.” Westmill Solar’s Chair, Philip Wolfe, organised a conference in December 2013 to explore how co-ordination and support for community renewable energy projects could be improved and to help instigate a new body to represent the community energy sector. 

The team behind the project believe that the next stage is for community energy to be not only locally generated and owned but also locally supplied. Westmill wind and solar coop members, Adam Twine, Maurice Dixon and Pete Bishop are developing plans to develop the UK’s first community owned hybrid clean energy generator and direct supplier. This means creating demand management and power storage systems which can manage intermittency of power generation and demand. They hope this will “further strengthen the opportunity for the greater penetration of renewable energy into the UK electricity mix.”

Westmill Solar believe that there are a range of benefits to the communities in which renewable energy projects are located. In particular they “enable local people to become involved in their energy supply rather than it being imposed on them from outside by faceless corporations. This can lead to a much more enthusiastic response to planning applications, for example. 

However, the team also found that community energy projects can be harder to deliver than those by commercial developers due to the “reliance on individual, usually unpaid, volunteers; and the lack of financial resources available to the cooperative at the inception of the project. They argue that grid connection and planning are the two main barriers to community energy projects of this kind. First, as “there is no national approach to prioritising renewables in gaining connection to the grid” and second, as the “The UK planning system is very patchy and can also apply delays and uncertainty to local energy projects… Certain elements of the press have been stoking opposition to local energy projects.”

The team behind the project have also been involved in feeding into recent policy developments and proposals from think-tanks, such as ResPublica’s 2013 paper The Community Renewables Economy, which makes the case for community owned energy and explores the national and local policy barriers faced by communities. Another important battleground for this agenda is around tax incentives for investment, where advocates of community energy have been feeding in to recent policy changes emerging from the Treasury, (around the new Social Investment Tax Relief and revisions to the Enterprise Investment Scheme) seeking to ensure that they continue to provide appropriate incentives to encourage investment in community-owned renewable energy projects.