Agenda item

Report attached.

The Cabinet considered a report of Councillor Ethan Rawcliffe, Portfolio Holder for People and Communities, seeking approval to pay a grant of £20,000 to Prospects Community Energy Limited (“PCE”) to support the Solar Meadow Project at Coach Road in Oswaldtwistle, a community renewable energy project, to help achieve net zero in the Borough.

Councillor Rawcliffe provided a brief introduction to the report, in which he explained the background to and aims of the project.  Solar panels on the site would generate enough electricity to power about 550 houses, but it was anticipated that William Blythe Limited would enter into a formal agreement to purchase the electricity produced.

Phil Vincent-Barwood MBE, Chairman of the Prospects Foundation, was in attendance.  He provided additional information about the scheme.  Prospects had owned the site since 2005, but the original proposals for the site were no longer considered to be viable.  Accordingly, the site was now being developed as a solar meadow.

Councillor Khan asked what alternative funding sources had been considered prior to contacting the Council.  Mr Vincent-Barwood responded that initial funding had been secured from the Rural Community Energy Fund, but that further funding was required for legal and technical work, including negotiations with Network Rail.  The proposed end-user for the energy generated, William Blythe Limited, had not been approached about funding to help set up the scheme, but the purchase price of the electricity would take into account some of the set up costs.

Approval of the report was not considered to be a key decision.

Reasons for Decision

PCE intended that the solar meadow project would generate up to 2 megawatts of electricity, equivalent to the needs of about 550 houses, and would help to reduce carbon emissions by replacing fossil fuels with renewable energy.  PCE was an independent community benefit society set up by the Prospects Foundation to develop, own and run the solar meadow project on the Foundation’s 11-acre site at Coach Road in Oswaldtwistle.  The Foundation was a registered charity and company limited by guarantee and would lease the site to PCE.  It was understood that the lease would be completed shortly.

In January 2024, PCE had received an initial grant of £25,000 from the Net Zero Working Group to assist with the cost of a planning application for the proposed solar panels. Planning permission had been granted, subject to conditions, on 12^th June 2024 and project development activity had continued since then.  PCE had reached agreement with William Blythe Limited for the purchase of energy generated at the site, with any surplus being sold via the national energy network.

PCE had now requested a further grant of £20,000 from the Council to help them to progress delivery of the project.  The additional funding was intended to be used to:

• Meet PCE’s legal costs, technical costs and easement fees in respect of the lease of the Coach Road site;
• Meet development costs, such as costs and expenses relating to due diligence and statutory procedures.

PCE were trying to raise £1.9m million, 50% through a community share offer and 50% from ethical investors to cover the entire cost of construction of the project.  PCE had appointed a co-operative society called Sharenergy Co-operative Limited (specialists in supporting community energy schemes) who would be project managing the community share offer, hopefully this autumn, with construction of the solar panels planned for 2026 in respect of the Coach Road site.

The community shares would be offered widely (nationally) and PCE hoped there would be a substantial local take-up.  Community shares were a particular type of investment - a withdrawable, non-transferrable equity investment into a cooperative or community benefit society.  They were a form of equity because the investors received a share of the organisation and asset.  They were 'withdrawable' because the investor could take their money out of the organisation if they chose to.  So being not tradeable, they did not acquire a market value (though they might be sold back to the society) and delivered interest to the investor rather than a dividend. 

Any surpluses generated by the community benefit society would have to be used according to the rules of the society and strictly regulated by the Financial Conduct Authority.  Sharenergy were currently sending out invitations to tender to installers for up to date estimates of the capital cost of the project, to inform the business plan, share offer and loan funding.

Subsidy Control Act (SCA)

The proposed grant to PCE would qualify as a subsidy for the purpose of the Subsidy Control Act 2022 (“SCA”) as it met the definition of a subsidy, namely:

• The payment would be given directly or indirectly from public resources by a public authority
• It would confer an economic advantage on one or more enterprises, namely PCE
• Benefit would be gained by the enterprise receiving the grant over one or more other enterprises with respect to the provision of goods or services
• The grant would or was capable of having an effect on competition or investment within the UK.

Officers considered that PCE could be considered to provide “services of public economic interest” (“SPEI”) pursuant to section 38 SCA as its services were:

• provided for the benefit of the public; and
• would not be provided, or would not be provided on the terms required, under normal market conditions.

The Act essentially recognised that some enterprises had social value but were not usually financially viable without some form of public sector financial support.  The project was also considered to be a SPEI service.

The Act usually required a detailed assessment to be produced to demonstrate that the subsidy was compliant with the subsidy control principles set out in the legislation.  This could be a lengthy process and involve a detailed financial and economic assessment process.  However, s38 and s39 of the Act allowed subsidy of up to £725,000 to be paid to a SPEI enterprise over a rolling three-year period (looking at the current financial year and the two previous financial years) without the need for an assessment against the subsidy control principles, provided a number of procedural requirements were complied with.  In particular:

• the Council would have to serve notice on PCE stating the gross amount of the SPEI assistance and asking PCE to confirm that this would not cause PCE to exceed the £725k threshold; and
• the Council could not provide grant funding to PCE until it received confirmation from PCE that the threshold would not be exceeded; and
• the Council would have to serve a further notice on PCE after the grant had been paid to confirm that it was SPEI assistance, its gross value and the date it was given.

Alternative Options considered and Reasons for Rejection

Cabinet could decide not to agree to the grant, or could award a lesser amount.  However, if that approach was taken, the progress of the project might be delayed and the prospect of successful delivery of the project would be reduced unless alternative funding could be found from other sources.

Resolved                                    -    That Cabinet approves payment of a grant of £20,000 to Prospects Community Energy Limited to help support the development of the Coach Road Solar Meadow project, subject to compliance with the requirements of s39 Subsidy Control Act 2022 relating to the payment of SPEI subsidy (as further detailed in paragraph 3.7 of the report).