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Community Solarfarm Loan Model

The Model in Brief

  • An organisation (e.g. Local Council, Business or Community Organisation) agrees to host a community solarfarm
  • A community company is established to raise funds via a Private Investment Offer from community (impact) investors (maximum of 20 shareholders)
  • The funds raised are then lent to the host organisation to build the solarfarm
  • The host organisation repays the loan with interest
  • The community shareholders receive franked dividends over the term of the loan, and return of their initial funds at the end of the loan
  • The host organisation receives renewable energy, electricity and emission savings, community/stakeholder partnerships and a high public profile!

Please note, Lismore Community Solarfarm ambitiously and successfully utilised this model for two projects, being 2 x 99kW solarfarms at the Goonellabah Sports & Aquatic Centre, and the East Lismore Sewerage Treatment Plant.

The two established community companies for these projects are: Lismore Community Solarfarm (Goonellabah) Pty Ltd and Lismore Community Solarfarm (East) Pty Ltd.

 

The Model as Visual (Lismore)

Specific details for the Lismore Community Solarfarms

Two solarfarms have been funded by impact investors by way of two $180,000 loans to Lismore City Council.

Two proprietary companies were established as investment vehicles, one for each 99kW solarfarm. Each community company raised the capital for the loans through a private impact investment share offer.  These funds were raised from a maximum of twenty new shareholders drawn from the local area, and across Australia.

Council approved the loan to procure and construct each solarfarm, with any surplus funds to be applied to other projects identified under Council’s 2023 Renewable Energy Master Plan.

Council will repay the investors with interest to the community companies for a period of seven years followed by a ‘bullet’ repayment of capital in full at the end of the loan.

Simplicity is the key to this business model and loan-based structure being used. So too is transparency of the financial and legal arrangements: for both the prospective investors and for Lismore City Council.

The financial backing of Lismore City Council, the use of Class A solar power equipment with long-term maintenance agreements, made these impact investments sound and low risk.

It is important to note that Lismore City Council is not in financial partnership or joint venture with any of the Farming the Sun Project Partners.  Rather, Council is only the borrower of funds from the community company.  At no time did Council guarantee or provide any assurances with regard to the appropriateness of investing in the community companies, or provide any financial advice more generally.

Impact Investment Opportunity Overview (excerpt from Private Investment Offer)

Snap shot of the Investment (excerpt from Private Investment Offer)

This example is for Lismore Community Solarfarm (Goonellabah) Pty Ltd ~ one of the two established community companies.

Major Milestones, Agreements & Documentation

Below are the major milestones for the development of the community solarfarms (left column).

The major agreements and/or project documentation associated with each milestone is detailed in the right column. These various agreements and documents can be freely used under the terms of a Creative Commons License. Copies are available on request by contacting Adam Blakester.

Milestone Agreements & Documentation
Strategy Project Plan & Workplan (GANTT)
Partner recruitment (solar, legal) Proposals & Memoranda of Understanding
Communications Website, presentations
Host/site campaign & agreement to conduct feasibility assessment Memorandum of Understanding
Site feasibility assessment Power analysis
Financial modelling Financial model
Host agreement to formalise project Heads of Agreement
Investor pledge campaign Website
Incorporate community company Constitution, Director Handbook
Share offer Prospectus
Loan Agreement Loan Agreement
Procurement (by host) Tender

Creative Commons License