Frequently Asked Questions

Egni Cooperative
What is Egni Cooperative?

Egni is a bona fide cooperative registered with the Financial Conduct Authority, Number: 32008R.

It was originally set up by Awel Aman Tawe with the support of Renew Wales, a lottery funded programme run by the Development Trusts Association of Wales. Renew Wales is a mentoring programme and it enabled Awel Aman Tawe to respond to the requests from local community buildings who wanted to install renewable energy. Renew provided a range of further support from within Wales including specialist cooperative advice from Sharenergy, EPCs from Rounded Developments, website development from Transition Town Llandeilo and Welsh translation from Menter Môn. Funding for legal costs of the leases and marketing was provided by the Coalfieids Regeneration Trust, Waterloo Foundation, Cooperative Membership Fund and Naturesave Trust.

How does Egni Cooperative make money?

Egni generates revenue via:

  1. FIT revenue from each of its sites, and
  2. Selling electricity.
Shares and Financial Returns
What are the financial returns?

Egni pays investors interest of 4% average per annum,  commencing a year after installation ends.

Do the financial returns increase over time?

Since the FIT increases annually in line with the Retail Price Index (RPI), we judge that the returns will increase over time. Note, however, that the 4% in the share offer is the average return expected over each of the 20 years of the lifetime of the scheme.

When and how can I take my money out?

Shares in Egni Co-op should be considered a long-term investment: they are not like a bank account or conventional shares.

Shares receive a projected 4% interest each year, and you may also qualify for a cash payment of 50% of your investment in Year 1 via the Seed Enterprise Investment Scheme.

Shares cannot be sold, however they can be withdrawn, subject to the consent of the board of the Society.

Members can withdraw their shares by applying to the Egni Board. The board will meet twice-yearly, unless an extraordinary meeting is convened.  Withdrawal requests will be considered on a “one-in-one-out” basis, unless in the event of a member’s death or an exceptional circumstance.

There is a limited amount of capital per annum in the Egni reserves. Therefore, withdrawal will be considered when there is a matching sum to replenish the amount being requested for withdrawal. If there are sufficient funds available withdrawal requests will be considered for cancellation.

For any further information, please contact us.

Does the value of the shares change?

No, the shares are always worth the same amount, unless the directors decide to write the value down (if the Society gets into financial trouble, for example). We use these type of shares because we are a bone fide cooperative (a form of Industrial and Provident Society) and thus regulated differently to a normal company.

How do I get involved in Egni Cooperative’s share invitation?

You become a member of Egni by purchasing shares during the Share Offer period. Each share is worth £1: the minimum you can buy is £250 and the maximum is £20,000. Owning shares means you can participate in Egni’s operation through the cooperative “one member, one vote” principle, regardless of how many shares you own. Members will elect the board of directors at the annual general meeting (AGM) on a three-year rotation. Existing Directors will stand down at the next AGM which is expected to be in 2018. All applications are subject to the terms set out in the Rules of the Society.

Do co-operatives work effectively to install renewables like this?
Yes. We have been in contact with a number of these co-operatives in order to learn lessons from them – Brighton Energy Coop, Brixton Energy Coop, Bath and West Energy Coop, Llangattock Green Valleys,  Bristol Energy Coop, Low Carbon West Oxford and Sheffield Renewables are just some of the examples. We’ve been mentored by Sharenergy via Renew Wales.

What happens to my shares if I die?
In the event of the death of a shareholder, the repaid value of the shares will normally be added to the estate for probate purposes. Our application form offers the option (if you so wish) to elect to nominate a recipient for the value of the shares in the event of your death.

Can I hold shares on behalf of children?

Shareholders must be at least 16 years old. You have the option of holding shares on behalf of someone who is under 16, which is set out in the application form.

We are a community or commercial organisation – is it possible to become a member as an organisation, or is membership only open to individuals?
Yes, it is possible to become a member as an organisation. Membership is open to any individual or organisation that supports the objects of the society.

The membership criteria for Egni are subject to a minimum shareholding investment of £250 and a maximum shareholding investment of £20,000.

As with all cooperatives it is run on a democratic basis, with one member having one vote irrespective of the total value of the shares they hold.

The maximum shareholding is currently £20,000 – can I invest more than this?
If you would like to invest more than the maximum £20,000 shareholding limit in Egni, it will be possible to agree terms and conditions for the additional investment to be put in as a loan.

What is the Feed-in-Tariff?
The Feed-in Tariff (FIT) is a government-guaranteed, index-linked subsidy for renewable energy that was introduced in the UK in April 2010, and covers photovoltaic (PV) schemes up to 5MW. It lasts for 20 years, and is made up of three elements:

  1. Generation tariff – this is a payment made for each unit of electricity generated. The amount depends on the size and date of the installation, but the rate is guaranteed for 20 years.
  2. Export tariff – this is a further 4.6p that is paid for each unit exported to the grid.
  3. Energy savings – As you can use the electricity generated by the PV in the property, you have to buy less from the grid.

The amount received is based on how much a renewable installation generates. Any electricity not used on site can be exported into the grid and sold. It does not matter if the electricity is used or put into the grid as the income is based on the amount of  electricity produced.

The FIT is paid for by energy companies, who then cover their costs by raising energy prices. It is easily available to those who have both property and capital available, excluding many people who still pay higher energy bills to fund the scheme.

Learn more about Feed-in Tariffs

Is my share purchase subject to SEIS tax relief?
Note: tax treatment depends on the individual circumstances of each member and may be subject to change in the future.

The Seed Enterprise Investment Scheme (EIS) provides UK taxpayers with attractive tax incentives when they invest in SEIS Qualifying Companies. The following gives a summary of some of the current tax reliefs available under SEIS, which may be applicable to members of Egni.

Income tax relief: an individual can invest in an  SEIS qualifying companies and benefit from 50% income tax relief in the year of investment. SEIS enables a 50% tax reduction from the investment. This means that if you make a £5,000 investment, for example, it will cost you £2,500.

The individual can only claim this relief if they are not an employee of the SEIS qualifying company and hold the shares for at least three years.

Loss relief: if the shares in an investee company were to be sold at a loss, the loss could be offset against income tax or capital gains tax of the investor.

Inheritance tax (IHT) exemption: shares in SEIS qualifying companies would generally be expected to attract business property relief at rates of up to 100%, provided the underlying investment has been held for at least two years.

Full details can be found on the HMRC website http://www.hmrc.gov.uk/seedeis

Egni has been approved as an SEIS qualifying company.  Egni issues application forms to members who then individually need to seek approval of their claims for tax relief.

Project Management & ongoing Maintenance
Who will manage the project?

Egni members own the solar panels and associated equipment. Egni Board of Directors manages the installation of the panels and will deal with ongoing maintenance. The Board is responsible for authorising payments to shareholders in accordance with the terms set out in the Share Offer document and in the Rules of the Society.

What will Egni’s revenue from the Feed-in Tariff be spent on?

The revenue from the generation and export of solar electricity  is used to:

  • pay any maintenance & repairs required for the panels and associated equipment
  • pay for the running costs of Egni
  • payments into a sinking fund for replacement of the inverters
  • fund annual interest payments to investors and capital repayments

How do we know how much sunshine there will be?

How much sunshine there is will have a bearing on the amount of electricity produced by the solar panels and therefore the revenue generated by the solar panels. We can estimate the likely electrical output of the solar panels, which depends upon latitude and the orientation of the panels, by using Government data on sunshine hours and intensity. This is what installers and developers use, and this is what we have used when making our calculations.

Solar panels’ performance also drops off over time, so in our financial projections we have used the guaranteed degradation rate, which guarantees that the output will be at least 85% of the nameplate figure in 25 years time. In fact, manufacturers expect the actual degradation to be less then 5%.

What happens if there is damage to the solar panels?

The panels are covered by insurance, which will cover the cost of replacement for the usual risks, including accidental damage, mechanical breakdown, loss of revenue from both material damage and mechanical breakdown and public liability.

What risks are there?

Egni is a limited liability organisation, and members’ liability is limited to the value of their shareholding. However, you may wish to speak to an Independent Financial Advisor before you become a member and purchase shares, and you should read the Share Offer Document carefully.

The directors have identified the following key risks, which may impact the value of shares. These are explained more fully in the Share Offer Document.

  • Egni is unable to raise sufficient capital to develop all the sites. In this case, all money raised will be returned if the financial models shows that the project does not make a similar return for investors as projected in the Share Offer Document.
  • Changes in Government legislation may reduce revenues generated from the Feed-in-Tariff scheme,
  • Local weather conditions may affect the amounts of electricity generated,
  • Projects may be delayed due to technical, financial or legal matters,
  • There may be interruptions to the generation of electricity caused by financial or legal matters which may reduce and/or delay revenues,
  • There may be interruptions to generation of electricity caused by mechanical/electrical failure of equipment which may reduce and/or delay revenues,
  • There may be a delay in Feed-in-Tariff registration which may delay cash inflow,
  • Overhead costs are estimates and may go up or down over time,
  • Egni may not be able to meet debt repayments due to risk factors above reducing available cash for repayments.

The directors seek to protect against these risks through implementing prudent management practices.

If you have any questions, please contact us.

What happens if the community group sells the property?
Egni has undertaken property title searches and negotiated a 20 year lease for use of the roof which will be signed and registered against the property title before the installation goes ahead. We expect most of the leases to be signed by the end of March.

There is an opt-out clause which gives the roof owner a right to buy the system at a defined price. If they decide to sell their property, they have the choice to sell it with the lease still in place, meaning that the new owner would enjoy the benefits of the same deal. Alternatively, the opt-out means that the solar panels can effectively be sold as a part of the property.

Our legal structure requires us to sell any assets for a full market consideration; and any profits that the Co-operative makes will be reinvested to meet our social and community objectives.

What happens after 20 years?
After 20 years, the coop will remove the panels if the community building committee wish. At this point we expect the system still to be fully functional and producing power so it may be that a new lease can be agreed. There will be some reduction in efficiency of the solar panels as they get older – but they are expected still to be producing at 85% of their original output.

What happens if the Cooperative is wound up or bought out?
Should the members of the co-operative decide to sell the activities of the society or to wind up the society, the assets will be sold for full market consideration and the residual assets will be transferred to another similar society with similar aims.

Who should I contact if I’m still unsure?

We’re more than happy to answer your questions. Please don’t hesitate to get in touch with us.