New Mills is a small town on the edge of the Peak District in Derbyshire. It is surrounded by beautiful countryside, intersected by fast-flowing small rivers, which were the source of power for the industrial revolution of the nineteenth century. The Torrs, a gorge where the River Sett joins the River Goyt, is the site of a weir that used to feed water to an old mill which burnt down in 1912. The weir is still intact and, in the view of local community activists, provided the perfect location for a small hydro-electric scheme.
With support from a specialist development company, H2OPE, a scheme was designed using a reverse Archimedean screw, capable of generating up to 70kw of electricity. Full planning permission was obtained in 2007, along with an extraction licence from the Environment Agency to use the river, and a lease from the landowner, the local town council. It was estimated that the whole scheme would cost £226,000 and that it would generate revenues of approximately £20,000 per annum. Pre-tax profits, after year three, are forecast to be in the region of £11,000 to £15,000.
To pay for the scheme, it was forecast that grants and loans totalling £100,000 could be obtained, leaving a shortfall of £126,000. In order to fill this gap, a community benefit society was registered in September 2007 and a share offer made to the public, seeking to raise £126,000 in share capital. Shares would be withdrawable on 180 days notice, but only after an initial period of three years in which they are non-withdrawable. The board also has the powers to write down the value of shares, if the liabilities of the society exceed the value of its assets.
The minimum investment was set at £250. It was forecast that the society would be able to pay a maximum of 7.5% interest per annum on share capital after an initial period of three years. They also received advanced assurance from HM Revenue and Customs that the share offer qualified for Enterprise Investment Scheme (EIS) tax relief, worth 20% of the cost of the shares, for members who invested the minimum qualifying amount for EIS of £500. The share offer opened on 23 November 2007 and was set to close on 31 January 2008. Despite early promises of support, share applications arrived slowly at first. There were worries too about rising costs, with the price of the equipment being purchased from Germany affected by the falling value of the pound against the euro. But as the deadline approached there was a rush of applications, with over £35,000 arriving in the final week. A little under £100,000 was received from just over 200 applicants. More than half the applicants lived in the local SK22 postcode, and another 15% lived within a 20 mile radius of New Mills, with just 30% of applicants living further away. The shortfall of £26,000 against the original target was met by additional grant funding and a small loan from the Co-operative Bank.
The voluntary board of directors described themselves as overwhelmed by the response, and were still catching up with the administrative task of processing all the share applications a couple of weeks after the offer closed. They put their success down to four things: a clear and obvious social purpose, a robust business model, an effective media campaign which got national radio and regional TV coverage, and the support of professional advisers, H2OPE.
