The 2018 Mendip Renewables bond was part funded by the Triodos Community Renewables Underwriting Facility
Triodos Community Renewables Underwriting Facility
(T-CRUF) makes available a £10 million affordable patient capital solution* for
community renewable energy projects.
According to the UK
Energy Research Centre (September 2018) there
are currently over 300 different
community renewable energy groups operating in the UK, accounting for 1% of the
overall UK’s renewable electricity generation.
the reduction in the government Feed-In-Tariff has made it a more challenging landscape
for community energy groups to operate within, they continue to play a pivotal
role in delivering new renewable energy capacity, encouraging local asset
ownership and helping to tackle climate change in a ‘post subsidy’ world.
Triodos has been a longstanding supporter of
community-led renewable energy generation. The bank’s business banking team
provide long term (up to 18 years) loans secured against the projects and its corporate
finance team provides structuring advice and help in raising community shares
and bonds through our investment crowdfunding platform www.triodoscrowdfunding.co.uk.
finance to build or buy renewable energy assets can be very challenging for
community groups and there is often a funding gap which can be expensive to
For instance, a 5MW ground
mounted solar scheme might have a total capital requirement of £5 – 6 million.
A bank such as Triodos might typically lend around 60% - 70% of this through a
secured project finance facility leaving the community group to raise the
balance of £1.5m - £2m through community shares or subordinated debt. In many
cases a funding gap arises because the community often struggle to raise this
amount of capital locally. The only current solution for many community groups is
to take on high cost (7 – 8%), short term (2 – 3 year) subordinated debt
funding in order to get the project built or acquired. The cost of securing and
then servicing this debt facility often means that profits available for
community benefit are squeezed. In addition, the community group are then all
too quickly faced with a refinancing challenge which inevitably means more cost
To address this problem,
we have designed a unique product called the Triodos Community Renewables
Underwriting Facility - T-CRUF for short. It provides patient affordable long-term
bond capital for community groups and is specifically intended to replace the
requirement for expensive short-term debt.
Community investors at the Burnham and Weston Energy CIC solar farm
The launch of the £10 million facility follows a
successful pilot in 2018 where £2.25m of T-CRUF funds were successfully used to
support two community led solar projects. Triodos helped community benefit
society Mendip Renewables Limited acquire a 5MW project by raising £1.8 million
through a 17-year 5% community bond and enabled Burnham & Weston Energy, a community interest
company, to raise £4 million through an 18-year 5% community bond. For more
information about both of these projects please read on here.
Dan Hird, head of
Corporate Finance at Triodos, said: “Our unique T-CRUF facility succeeds on
three levels because it provides certainty of affordable long-term funding, it eliminates
the refinancing risk for all parties, and it ensures higher retained profits which
can immediately be allocated to local community benefit initiatives. We are delighted
to be able to find solution that we hope will help more community energy groups
For more information
about T-CRUF please contact Dan Hird (firstname.lastname@example.org), Head of Corporate Finance.
(*NB Patient capital is also known as long term capital)