Financial models for renewables
It is important for community groups to be able to understand and carry out assessments of the indicative financial performance of a community renewable energy project. Financial models are often complicated and can be difficult to set up for inexperienced groups. A community finance model has been created which will enable communities to understand the potential profitability of renewable energy projects before deciding whether it is worth undertaking further technical and financial due diligence.
This model is only designed to help groups in the early stage. As groups progress towards a realistic plan for delivery, they would be expected to employ their own consultants who may approach financiers on behalf of the community.
How to the model works
There are 36 cells that need to be completed for the model to work effectively. These cells are colour coded allowing for different stages of a project. Early stage, high level assessments can be completed with default figures given for approximately 50% of the inputs. For a detailed assessment all cells must be completed.
To access the community finance model spreadsheet - click here
A fully completed example has also been provided to assist with the use of the blank toolkit. The example inputs include capital costs, development costs, constant operating costs and energy price assumptions. The outputs show typical debt service cover ratios, semi-annual liabilities/assets and cumulative community equity investment figures.
To access an example of a community finance model - click here
Thrive Renewables Community Bridge Financial Model - Thrive Renewables will finance community energy organisations to help them acquire renewable energy technology. They have already supported communities with a £12 million investment into wind and solar projects across the UK. They can structure their investment as pure acquisition, joint ventures or mezzanine loans aslo. Find out more about the Community Bridge Model here.
HMRC provide general guidance on investment schemes available for eligible community energy schemes. This includes tax relief s including Social Investment Tax Relief (SITR) and venture capital schemes.
Cooperative UK offer management, governance and guidance associated with setting up a renewable energy project.
For inspiration from abroad, there are series of case studies from Denmark, Germany and the UK on cost and financing aspects of community renewable energy projects.