CBD Energy completes bond-funded solar installation in UK

ASX-listed renewables company, CBD Energy has completed its first UK solar installation funded through its secured energy mini-bond scheme – which it says is the first of its kind in the UK.

The 148kWp solar installation in south east England was developed through the Australian group’s wholly owned UK subsidiary, Secured Energy Bonds, which was set up to raise finance to install solar panels for chosen UK businesses at no upfront cost, but with income derived from feed-in tariffs.

The bond is secured against the assets of the company and has a corporate guarantee from the parent company, paying an annual interest rate of 6.5 per cent. The minimum investment into the bond is £2,000 for a three-year fixed term and, as the bond is non-transferable, it has to be held to maturity in late 2016.

The project – undertaken by CBD Energy’s UK solar business, eco-Kinetics – is the first to be funded by SEB’s soon to close mini-bond offering, which has already raised £5.5 million towards its £7.5 million target.

The solar installation will be commissioned at the end of this week, meaning it will start to earn revenue for investors before the mini bonds issue closes on 9 December 2013.

SEB projects are expected to number 40-45 in similar installations in the UK, with a life of 20 years, delivering returns to investors, and the CBD group though EPC margin, management and ongoing revenues generated by the 20 year UK Government feed-in tariff.

As Climate Bonds Initiative chair, Sean Kidney, noted last month, the retail bond market – as well as helping to fund solar development –  has “opened up as another option for retail investors to get involved in renewable energy projects.”

For example, another UK-based firm, Good Energy, set out to raise £5 million through a retail bond offering to finance investment in solar and wind energy generation. Within three weeks, says Kidney, “Good Energy easily met their target, closing the book at £15m three weeks ahead of schedule!”

It’s a promising sign, says Kidney, but he wonders, “will this trend continue to the larger utilities? When the big utilities start issuing asset-linked climate bonds to finance their renewable energy assets, that’s when we’ll see real capital shifts.”

Meanwhile, CBD Energy says it is looking to sell its interest in the $280 million Taralga wind farm project, but will soon announce another wind farm project for 2014.