Top tips from Triodos on community energy finance
In this guest post from our conference sponsors Triodos Bank UK, Dan Hird, head of corporate finance shares some key tips to help community groups secure funding to empower their long-term success. Communities should seek independent financial advice for their projects.
How do community renewable energy groups make sure they are empowered by finance, not held back?
Community renewable energy groups have an undeniable positive impact on both green energy generation and community cohesion in Scotland. Triodos Bank UK has been supporting the sector since its infancy and has seen the positive impact that these projects can have. They help groups through some of the challenges, most notably when it comes to raising capital and ensuring long-term financial stability.
Dan Hird, head of corporate finance at Triodos Bank UK, has some key tips for community groups to ensure they secure funding to empower their long-term success.
1. Recruit a finance lead for your board - setting up and managing a community renewable energy group requires sound financial knowledge. Having a board representative who is comfortable with financial terminology and processes helps to ensure the group has a strong understanding of the group’s financial options available and can help to judge which are best.
2. Seek advice – there are an increasing number of funding options available to community groups. Organisations like Triodos offer support to groups on a case-by-case basis to help choose and secure the right capital from the right investors. This can save time, money and ensure the group achieves its goals and maximises its impact as soon as possible.
3. Consider impact investment crowdfunding – there is an increasing number of environmentally minded and impact focused investors in the UK. Recent developments in the investment crowdfunding space have enabled individuals, including those in the local community, to support community energy projects. Through crowdfunding, groups can gain access to thousands of engaged investors who in turn can directly invest in projects and take advantage of tax-relief incentives.
4. Ensure your finance is sustainable – the sector has traditionally relied on short term bridge finance; however, this can be expensive and squeeze profits which may affect the community group’s ability to deliver on its impact goals. It’s important to assess the financials over the whole asset lifetime and consider longer term solutions in the marketplace and potentially avoiding additional transaction costs. The Triodos Community Renewables Underwriting Fund (TCRUF) was created precisely for this reason. TCRUF supports community groups with the construction, acquisition or refinancing of community owned renewable assets in wind, solar and hydro where Triodos Bank is the senior lender and can also reduce the amount of capital groups must raise from other investors.