Community Investment FAQ

Most wind energy project developers will lease a small area from the landowner and make a token contribution to the local community- usually enforced as a “planning gain” agreement with the local borough or regional council.

Most in the immediate community will see no benefit at all.

At DistGen we are pioneering a truly unique and exciting community investment opportunity where we take all the development risk and then invite the local community to invest once the scheme is up and running. In addition, we’ll make a significant annual donation to the local Parish/Community council every year for the lifetime of the project.

Below are some common questions we get asked.

Why should I be interested?

The benefits of a community owned wind energy project such as this are many:

  • Clean, renewable & secure  source of energy – typically 20+ years
  • Helps communities who are seeking to become more self sufficient
  • Increases awareness and educates the community to the challenges of climate change
  • Equitably distributes income within the local community
  • Helps insulate members from gradual or sudden spikes in energy prices
  • Creation of the scheme itself forges and strengthens relationships within the community

How does the scheme work?

At each site, DistGen will setup a Local Generation Company (LGC) that owns and operates the wind turbine. An amount of the shares in the LGC may be purchased by the local community.

The local community creates a Community Investment Vehicle (CIV) of  their choice (eg co-op) using their own preference of share allocations. The CIV, as a single entity, purchases a number of shares in the TOC.

Distributions are made annually to the CIV based on a declared dividend from the LGC. That is to say the net profit after tax is returned to the company share holders. The CIV then passes on this income to its members.

What is a CIV?

A Community Investment Vehicle (or CIV) is simply a name we have given to a locally run entity that will purchase shares in the LGC on behalf of its investors. The exact form of the CIV is entirely up to the local community – it could be a co-op, investment trust, limited company or other. We envisage it will generate at least part time work for the post of treasurer.

The CIV is run by and on behalf of the local community

What will I earn?

At a typical site (average wind speed of 7m/s) a mid size wind turbine could generate annual income of over £120,000. Net profits are distributed based on share holding paid directly to the CIV. In turn, you will receive income based on your level of holding within the CIV. DistGen expects to most schemes will return in the range 1o to 15% per year.

If, as expected by many analysts, energy prices continue to increase significantly over time, income from generation will also rise yielding even higher rates of return.

What will it cost?

Shares offered to the CIV will be at a significant discount and are based on the total cost incurred to purchase and install the turbine rather than projected future earnings. As a result shares in the LGC will be available at a fraction of their true value.

First and foremost – we want to offer a truly equitable community investment.

How does DistGen make a profit?

In the event that not all the shares in the LGC are taken up, DistGen will earn income from its left over shares. In addition, DistGen will operate and maintain the turbine on behalf of the LGC for which it will charge an annual fee.

What are the risks?

The risks are very low, afterall share options in the LGC are reserved for the CIV until the turbine is installed and operating. Try Before You Buy!

Also, part of  DistGen’s operational fees are to cover the cost of spare parts and obsolescence. Should a part on the turbine break – DistGen will bear the cost of repair or replacement although if the turbine is non-operational for any length of time income returns that calender year will obviously be reduced.

The income stream from the turbine is based on the UK Governments Feed-In Tariff (FIT) scheme that guarantees set levels of income for 20 years and that are also index linked.

How long will the offer be held open?

Once the turbine has been installed and commissioned, the CIV will have the option of purchasing any number of shares up to its full allocation. The number of allocated shares will then reduce each year until they have either all been purchased or the number has reduced to zero.

The price of each share will remain constant throughout the offer period.

If I want to, can I sell my investment?

You will own a holding within the CIV (based on whatever form of investment is created, eg co-op, limited company, investment trust etc). It may be possible to sell your holding to other members within the CIV – remember the CIV is a community owned enterprise and YOU MAKE THE RULES!

What do I do next?

First you’ll need a good site. If you have this and a local group interested in forming a CIV please contact us to learn more.

Download details of the CCI in PDF form here.