Westmill Wind Farm, in South Oxfordshire is built on land owned by Adam Twine, an organic farmer. The project consists of five 1.3MW turbines, capable of generating sufficient electricity for the equivalent of 2,500 homes. It is the largest 100% community-owned wind farm in the UK, taking over that title from Baywind Energy Co-op in Cumbria which has existed since 1996.
Adam Twine had wanted a wind farm (preferably community owned) on his land for many years and by the time it was finally built in 2008 he had invested a great deal of his own time, effort and money to bring his dream to fruition. The planning process dragged on for many years against some fierce opposition but eventually consent was given for the project to proceed, to the delight of the enthusiastic group of local activists who had campaigned for a local wind farm.
Unfortunately, Oxfordshire is not a particularly windy part of the country and during the development process no commercial developer was prepared to take on the project; profits were considered too low compared to other regions. Eventually Adam joined forces with Energy4All, the social enterprise established by the Baywind Co-op to help other communities get renewable energy schemes started, and the Westmill Wind Farm Co-op was established in 2004,Energy4All brought three crucial factors to the Westmill project:
1. A commitment to community ownership. Energy4All’s relatively low costs and acceptance of a rate of return for co-op members lower than that expected commercially, made the business plan viable for the first time.
2. Experience of renewable energy projects and of implementing public share offers under FSA regulation. This is a costly and slow process but it provides a degree of scrutiny and reassurance for potential members that increases confidence and makes it feasible to raise significant sums.
3. Credibility with financiers. Even before the recent financial turmoil, banks were unlikely to lend to unknown community groups without a strong trading record. The Co-operative Bank’s experience of dealing with Baywind and Energy4All for many years gave them the confidence to back the project with vital additional finance.
The initial public offer, made in November 2005, sought to raise £3.75m, with first preference given to applicants living within a 50 mile radius of the farm. Energy4All and the Westmill Co-op produced a prospectus, published in accordance with the UK Prospectus Regulations 2005. The Westmill prospectus forecast an initial interest rate on share capital of 5% pa gross, rising to an average of 12% pa over the 25 year life of the project. Members were required to invest a minimum of £250, up to the legal maximum of £20,000. If members wanted to qualify for Enterprise Investment Scheme (EIS) tax relief (20%), thereby raising the effective rate of return, the minimum investment was £500.
Shares in the co-op are transferable, although the shares are not traded on any market and any transfer in the early years could affect EIS tax relief. There is also provision in the Rules for members to redeem up to 5% of the total equity each year after the first 5 years, on a first-come, first-served basis and at the discretion of the board. Cash reserves will be accumulated in a depreciation fund to allow all remaining shares to be repaid in full after the twenty-fifth year.
The share launch was a huge success, and by the time the offer closed it was over-subscribed, with more than £4m sent in by 2,382 members. This made it necessary to scale back some applications, giving preference to local people. The costs of making the share offer, including all legal, accountancy and marketing costs came to around £150,000.
Even after the share issue the development was far from straightforward. In August 2006 the turbine suppliers withdrew their offer of turbines, forcing Energy4All to negotiate a deal with a new supplier (of smaller turbines) on behalf of the Westmill board. Some equity was returned to members under the terms of the share offer. Unfortunately this new turbine deal was also withdrawn just before signature, at which point the original supplier renewed an offer of turbines, but at a much higher cost. The drastically changed circumstances were placed before the membership of the co-op at the AGM, with members offered the choice of a return of their equity less expenses, or subscribing additional capital and accepting that the project might pay no return for some years. The response from the members was overwhelming; a further £1.25m was raised in just three weeks, clearly demonstrating the commitment of members to the project..
From that point on, the project progressed rapidly under the guidance of the Westmill board who gave their professional expertise freely to the co-op to ensure that the project was built smoothly and cost-effectively. Construction began in August 2007, the first turbine was erected in January 2008, and electricity was generated by mid-February 2008.
Westmill wind farm is now in full production and following the rise in power prices, members are hoping for their first share interest payment in 2009. Energy4All continues to adv ise the Co-op and to provide essential management services in exchange for a an annual fee which helps to fund Energy4All’s work in assisting other community groups. There are now seven community co-operatives with stakes in renewable energy projects that have run successful public share offers with the help of Energy4All.
