Council-backed green energy ISA attracts £1m
The UK's first green energy ISA, which allows people to invest in renewable solar power tax-free, has raised over £1m.
The Innovative Finance ISA (IFISA), launched by Abundance Investment, allows investors in Swindon Borough Council's second solar bond, which went live on Friday, to be held in a tax-free ISA wrapper. The bond, which will have an average annual rate of return of six per cent for 20 years, will fund a new solar farm on a council-owned former landfill site at Chapel Farm in Blundsdon, Swindon.
Over £500,000 has already been poured into the solar bond, which offers a minimum investment of £5.
Earlier this year, the council's first solar bond sold out a month early.
Communities secretary Sajid Javid has praised the new ISA, saying: "This is an excellent example of a local council working with the private sector to provide local people with a means of investing in their local community and its infrastructure. I wish it every success."
The new ISA was created following change in regulations that meant, as of 1 November, IFISA's could include peer-to-peer investments such as debentures, allowing individuals to invest directly into businesses and projects.
The solar farm it will help fund will support the council in reaching a target of installing 200MW of renewable capacity by 2020, enough to meet the equivalent electricity requirements of every home in borough. Completion of Chapel Farm, which will have a capacity of 5MW, will bring the total to 167MW, or over 80 per cent of the target. Profits from the farm are expected to help fund community initiatives.
The farm already has planning consent and has been developed by Public Power Solutions, a council-owned company. It will be managed by a new limited company, which will also be wholly owned by the council, and will start generating electricity next spring.
It will cost £5.4m to build, with £3m coming from the council's investment and the remaining £2.4m from investors, via Abundance.
"We want to turn investing in ISAs from something gathering dust in the forgotten corner of a bank or riding the rollercoaster of global stock markets into something that makes a difference in the real world," said Abundance co-founder and joint managing director Bruce Davis.
"Investors' money will be working harder than it would in the bank, boosting the UK's green economy and sustainable infrastructure, and returns will be tax-free."
Cllr Dale Heenan, cabinet member for transport and sustainability, said: "I am proud that Swindon is the home of the UK's first green energy ISA, following our very successful solar bond earlier this year. With interest rates still at rock bottom levels, the Abundance Innovative Finance ISA is a great way for people to invest in renewable energy tax-free.
"This project marries the economic benefits of renewables with finding an innovative way for local residents to receive a healthy return on investing, it delivers a tangible financial benefit to local public services, and Swindon Council is even using part of its profits to build a much-needed sound barrier along the A419 dual carriageway. This is a hugely positive scheme."