Green Energy Mull Ltd – the community energy renewables developer based on the island – is making good progress to raising all the £330,000 funding it requires from private investors. So much so, that the initial offer for shares is due to close on Friday, 28 February 2014.
Richard Thorne, Director, told Scottish Energy News that “we’ve raised more than “£260,000 to date and we’ve got some major new investors in the pipeline, so we’re confident that we’ll meet our target.”
The total cost designing, building, developing and installing the Garmony hydro-electricity scheme is £1.1 million but full capital funding depends on GEM raising the first third itself from investors. If the offering is over-subscribed, shares will be allotted first to local residents in Mull and surrounding areas.
Thorne added: “Our consultants Mott MacDonald have estimated the costs to build the scheme will be between £800,000 and £1.3m. Initial feedback from commercial lenders indicate that they require us to invest 20% – 30% of the funding from our own sources. We’re aiming to raise at least £330,000 by selling “withdrawable shares”.
“These shares have a fixed value of £50 and cannot be sold, traded or transferred between members, unlike the ‘ordinary shares’ typical of a limited company and only GEM can buy them back.”
Planning permission had been gained from Argyll and Bute Council, a water extraction licence has been granted by SEPA and Scottish & Southern Electricity (SSE) have granted Green Energy Mull Ltd an export licence to enable the generated electricity to be sold to the National Grid. GEM has secured a 40 year lease for the site from the Forestry Commission.
The Garmony hydro scheme will generate more than 1100MWh of green electricity each year – enough to power more than 280 homes a year and reduce the carbon footprint of Mull by over 450 tonnes.
Thorne added: “The Garmony scheme will aim to generate an average of between £30,000 and £50,000 a year to be donated to local projects during its first 40 years – enabling community groups to invest in larger projects and inspiring others to follow our example.
“The amount donated to community groups will vary from year to year as it largely depends on the weather. If Mull has a wet year then the amounts may be more than if we have a dry year.
“These amounts also depend on financial obligations that GEM has. During the first 15 years, it is possible that we will be paying off a commercial loan and therefore this will affect the amount available to donate to local groups and projects – which is why it is so important that we raise as much money ourselves as possible “.
Consultants Mott MacDonald wrote the Feasibility Study and Environmental Statement and took the project successfully through the Planning Permission phase while Hugh Campbell (Campbell of Doune) produced the detailed design of the hydro scheme.
The hydro scheme will be located on the Allt Achadh na Moine watercourse at Garmony, Mull.
This sort of community share offer is now becoming an established way of raising finance for renewable energy projects that go on to generate a benefit for the community – including Harlaw Hydro near Edinburgh, Whitby Esk Hydro in Yorkshire, Osney Lock Hydro in Oxford, and Torrs Mill Hydro in Derbyshire.