As Community Energy Cumbria has been incorporated with limited liability, the liability of its Members will be limited to the amount paid for their shares. This means whatever happens, all you could possibly lose is the value of you shares. However, prior to making any decision to subscribe for shares in the Society, you should carefully consider, together with all other information contained in this document, the specific risk factors described below which are considered by the Directors to be material in relation to the Society and to the projects.

 

These risk factors are not set out in any particular order of priority and should not be regarded as exhaustive or a complete and comprehensive statement of all potential risks and uncertainties associated with the Society. Additional risks and uncertainties that are not presently known to the Directors, or which they currently deem immaterial, may also have an adverse effect on the Society’s operating results, financial condition and prospects.

 

Social, Environmental and Financial Investment

As an Industrial and Provident Society for the Benefit of the Community, investing in Community Energy Cumbria Ltd should be seen equally as a social, environmental and financial investment and is not established primarily as a means of enabling Members to make financial gain. We cannot guarantee a safe haven for your money or even that you will ever receive back all of your investment. However, the Board of Directors have taken significant steps to minimise risk and maximise the security of this investment, taking relevant advice from accountants, renewable energy experts, solicitors, investment companies and other community energy enterprises. Fortunately there are already at least 40 similar community renewable energy projects operating successfully in the UK from which we have been able to learn lessons and adopt best practice.

 

Your attention is drawn to the following risks:

General Risks of Investment:

  • The value of your income can fluctuate and you may not get all of the money that you invest back. Smaller companies and projects of this type are not generally viewed as ‘safe’ as the larger ‘blue chip’ companies listed on the stock market.
  • We have based the projections on an average annual inflation of 2% over a 20 year period and this may alter.
  • Shares are not traded on the stock market.
  • Shares are not withdrawable by Members ‘at will’. However, during the 20 year lifetime of the project, the Company will build up a fund from the income it generates and at the discretion of the Board allow its Members to withdraw shares or to reinvest them in similar projects managed by CEC. If the demand to withdraw shares exceeds the sum of cash reserves which the Board considers wise to retain in the company, then the Board reserves the right to delay withdrawal. Investment in these Shares should therefore be seen as a long term investment.
  • The Society reserves the right to make capital repayments to Members proportionate to their remaining share allocation in the Society at any time during the lifetime of the project. Members will be paid interest only on the capital (their shares) retained in the Society.
  • Good practice requires that interest payments should only be paid from current operating profits and not from forecast income.
  • There is no prospect of shares in this Industrial and Provident Society ever being worth more than their nominal value.
  • Whilst CEC has submitted an application to HMRC for Seed Enterprise Investment Scheme and Enterprise Investment Scheme tax relief, there is no guarantee that HMRC will accept the application.
  • The financial projections might not be accurate and projected solar and hydro output may not be realised.
  • Climate change could have unexpected consequences.

 

Renewable Energy Risks

  • Government policy towards renewable energy may change, including feed in tariffs and tax incentives.
  • New technologies and energy generation may render hydro and PV obsolete or comparatively inefficient.
  • Future electricity prices and business costs may not follow forecasted linear projections.
  • Generation levels of solar and hydro power may not be as projected due to climatic variables, interruptions in operation due to repair and maintenance. Hydro power projections are based on flow data at Killington going back 30 years and solar power is based on industry standard modelling for a grid reference of Kendal.
  • The Power Purchase Agreements obtained from the PV and hydro scheme may not always be as favourable as anticipated in the financial projections.

 

Installation and Operation Risks

  • Whilst the cost of installations are based on quotes and include contingency, and whilst the technologies come with time specific guarantees, unforeseen installation and operating costs could change projected income generation and therefore interest payments
  • Installation may take longer than projected and therefore delay the generation of income
  • We are awaiting planning permission for the PV on the HQ of the LDNPA, Murley Moss, though we are confident this will be granted, given that planning permission was previously granted in 2011 for a very similar 30kW solar array. This is not guaranteed.
  • The Abstraction License for Killington Overflow will be periodically reviewed by the Environment Agency. This could lead to a change in the license conditions.
  • The LDNPA may lease or sell its building, on which CEC’s PV is installed. The Lease agreement includes compensation to CEC in this event, but there may be unforeseen legal costs involved if this transpires.