Brighton Energy Coop share invitation

Share Invitation Brighton Energy Coop 2 - community solar for the South

www.brightonenergy.org.uk

Overview Chairman’s Introduction

By purchasing shares you will:

Community-owned renewable energy is now a proven model.

More than 150 energy coops have been registered in the last few years, with about a third launching share issues. So not only are these community projects generaing renewables on the ground, but there are plenty more in the pipeline too.

•Gain an equal vote with every other member in how the Society is managed and how your local energy resources are used • Ensure that you paricipate in the ownership of local renewable energy resources and benefit from the Government incenives • Be eligible for any interest paid to members. As set out below, we are aiming to pay members an annual return on their shares • Contribute to developing a local energy supply, which aims to offer protecion against fluctuaions in energy supply and costs •Help support further renewable energy and community energy efficiency programmes via our surplus income thus creaing a ‘double carbon dividend’.

• Contribute to the provision of renewable energy supplies for our area that, in turn, aims to retain benefits locally and strengthen the local economy • Support a scaleable model that can be replicated in other communiies • Help fight climate change and fossil fuel depleion • Contribute to saving more than 450 tonnes of CO2 over the course of our PV system's lifeime

The value of locally-owned energy schemes is also something that's increasingly recognised in government. That's the reason DECC minister Greg Barker came to visit our solar roof at St George's Church this year, and the reason that more and more policy work is being done to support co-operaive energy.

With more and more projects being realised, and increasing government support, this exciing movement can only get bigger.

Brighton Energy Co-op is part this dynamic upsurge of grass roots acion. As such it's with great pleasure that we present here our second scheme, a huge new PV project for the South Coast.

Renewable energy maters, and with our society set to treble in size, I hope you find what is set out here of interest - and that you join our growing movement.

Will Cotrell Chairman, Brighton Energy Co-op

To join visit www.brightonenergy.org.uk/join.

(L-R) DECC minister Greg Barker, Kemptown MP Simon Kirby and BEC Chairman Will Cotrell on a visit to a BEC solar roof at St George's Church in Kemptown, September 2013

Summary The project Brighton Energy Co-op 2 (BEC2) aims to capitalise on the success of our first solar project which raised £230,000 in July of 2012 and installed 132 kWp of Solar Photovoltaic (PV) in and around Brighton. With BEC2 we want to generate more low-carbon renewable electricity, enable more people to invest in clean energy and enjoy the financial benefits of the project. As well as enabling the community to work together in reducing its carbon emissions, investment in BEC2 allows you to take control of our energy producion.

This share invitaion, therefore, invites you to purchase a new class of ordinary share in Brighton Energy Ltd and thus help us raise the money to finance the development, markeing and capital costs of our new project.

This document details the opportunity to buy shares in Brighton Energy Co-op, the trading name of Brighton Energy Limited (BEL). We are a Community Benefit Society with the express purpose of developing more community-owned renewables for our area.

All investments and commercial aciviies carry risk. By buying shares members should weigh up financial risk and reward as they would with any other investment opportunity.

BEC2 aims to install a minimum of 200 kWp of solar PV on several buildings around the area which will require a minimum capital investment of £232,800.

You may purchase up to 20,000 shares, the minimum being 300.

Each share is worth £1.

Risks

Those considering an investment should do so only ater reading this document in full (including the secion on risks below), should regard this Invite as a long-term investment and should consult a financial advisor before invesing.

Our new Project Our new project is to install up to 565kWp of solar PV in Brighton and surrounding areas. This is broken down into three phases, as outlined below. See www.brightonenergy.org.uk/documents for our Profit and Loss projecions for Phase 1

Minimum target: £232,800, 200kWp of solar (Phase 1)

Maximum target: £616,050, 565kWp of solar (Phases 2 & 3)

Phase 1 is to install a large solar array of 200kWp on Shed 10 at Shoreham Port, cosing ￡232,800. This will be the biggest solar system in the city, composed of nearly 1000 panels. Electricity will be fed into the shed and a nearby office block as well as the naional grid. We aim to raise this money and complete this installaion before moving on to Phase 2.

Phase 2 involves a similar building at Shoreham Port: Shed 3a. Again this is a 200kWp building, so we will look to raise a further￡232,000 similar to Phase 1 before compleing installaion.

To this end we have secured a leter of intent from the Port, giving us the right to install 200kWp of rootop solar PV. Based on figures from DECC, we expect this will save around 450 tonnes of CO2 a year, typically the amount consumed by 300 domesic homes.

Phase 3 involves several other sites with whom we are currently in discussion. Working with these sites we esimate up to a further 165kWp will become available for our development in the next six months. This would require addiional capital in excess of £150,000 We may, therefore, extend this share offer to raise this money for phases 2 and 3, condiional on being able to pay all shareholders a 5% interest rate.

If minimum target is not acheived through selling shares we may apply for a loan to cover the balance. Note that we have not secured this loan and as such this provision is subject to future negoiaions. If we apply for a loan this is likely to reduce or remove shareholder dividends for 5 years or more.

If the minimum fundraising target is not acheived by a combinaion of shares and loans then we will then refund the enire BEC2 shareholder capital.

The offer period is for four weeks and ends at 5pm on the 25th November 2013, but may be extended at the discreion of the board.

Financial projections We expect that shareholdings will receive a projected return of 5% interest plus a tax break of 30% of the amount invested (see Enterprise Investment Scheme below). The first interest payment will be made on the 1st August 2015.

Please note that our figures are provisional. There remain several key risks around our assumpions, so it's important to read the risk factors below.

We have an offer to install the systems outlined above cosing £1050 per kWp of solar PV installed. In addiion to this cost we have also added provision for the development of the further projects outlined in our Maximum fund-raising scenario above.

You can see our Profit and Loss projecions for the Minimum fund-raising target here – brightonenergy.org.uk/documents Income We expect to generate and sell electricity that will be produced by solar PV renewable technology, so qualifying for the Feed-in Tariff (FiT).

This means there will be two income streams: one based on FiT (index-linked to the Retail Price Index) and one based on income through electricity sales to our host sites (also linked to RPI).

Outgoings The greatest costs will be interest payments and capital repayment. The projecions underlying this share offer are based on the assumpion that capital is returned to members as the assets are gradually writen off.

Other costs include maintenance, insurance, inverter replacement fund and BEL running expenses.

Assumptions In our projecions we have made the following assumpions: • Performance degradaion 0.8% pa. This is a normal degradaion rate. Panel manufacturers have different ways of expressing guaranteed performance levels, but these are normally based on degradaion in the panels at about this rate • Retail Price Index (RPI) 2.5%. This is based on recent experience, but may during the life of the project be much higher if medium–to long-term historic trends are followed

• Interest payments to Members start at 5%. This is based on a projecion of profit and reserves in hand when the Board first considers the mater • Insurance figures are based on the quotes from our exising insurer • Administraion costs and running costs are esimates, again based on BEL's experience but with an increase to approximately 200 members • Projecions are based on the project securing Feed in Tariffs appropriate to the different sizes of systems.

• Projecions are also based on the producion of our exising systems - 950 kWh per kWp.

Enterprise Investment Scheme

Investors in BEL may qualify for the Enterprise Investment Scheme (EIS) which provides tax payers with tax incenives when they invest in EIS Qualifying Companies: Income Tax Relief An individual can invest up to £500,000 per tax year in EIS Qualifying Companies and benefit from 30% income tax relief. The individual can only claim this relief if he holds less than 30% of the shares, is not an employee and holds the shares for at least 3 years. The minimum investment to qualify for EIS is £500.

Inheritance Tax Relief Shares would generally be expected to atract Business Property Relief at rates of up to 100% for IHT purposes, provided the shares have been held for at least 2 years.

Loss Relief This latest share offer has been given provisional acceptance of EIS Qualifying Company status (we can only obtain full acceptance ater we have installed our solar panels).

We received EIS acceptance for our two previous share issues in 2011 and 2012. Full details of the EIS scheme can be found at: htp://www.hmrc.gov.uk/eis/

Project background Coops and renewable energy Co-operaives and Community Benefit Socieies are democraic structures with the legal ability to raise money directly from the public. With a one-member one-vote system and a board elected from the membership, they offer a fair and transparent way to operate a community-owned renewable energy business. They also have the power to give priority to investment from the local area, ensuring that, as much as possible, local people enjoy the financial benefits of renewable energy.

Co-operaive ownership of renewable energy is not new. In 1997, Baywind in Cumbria became the first community-owned renewable installaion in the UK. It has been paying out annual interest to its members ever since. As a result, Baywind was inundated with quesions from other community groups waning to do the same thing and this led to the creaion of Energy4All in 2002.

Since then Energy4All has helped to set up seven wind energy co-operaives in the UK with over 6,000 members. This has led to communiies across the UK staring to set up wind, hydropower and solar co-operaives along similar lines to the original wind co-ops. The highest profile solar-based co-operaive, Westmill Solar Co-operaive (www.westmillsolar.coop), raised £16.5 million through a share issue and bond finance in summer 2012.

In Germany and Denmark renewable energy cooperaives have been instrumental in driving both renewable energy and government policy; in both countries individuals and civil society groups own more than 30% of the renewable energy infrastructure.

Our History Brighton Energy Limited formed in June 2010 when three locals met in a central Brighton cafe to discuss ways in which renewable energy might benefit the Brighton and Hove community.

In January 2011 BEL launched a start-up fund and raised £18K from eight Brightonians commited to BEL's development.

A month later BEL created its Advisory Commitee and invited Jeremy Legget to join. Talks began with various sites about hosting panels. Over the course of its gestaion BEL has talked to more than fity such building owners. Negoiaions coninued with potenial site partners, leading to an exclusivity agreement being signed by Shoreham Port Authority in mid 2011.

Our first share offer launched in June 2012, ulimately raising more than £230,000. We are now the proud owners of 132kwp of solar PV which has been generaing for over a year.

Community Benefits An ambiion within this share offer is to provide a community fund to support relevant schemes in our area.

This will be coningent on acheiving the target interest payments for members, however, and at the directors' discreion.

Since its incepion Brighton Energy Limited has worked on various projects that help promote energy efficiency and renewable energy in our city. In January 2012 BEL oversaw and delivered a survey of the energy efficiency of more than 50 homes; we are also acively supporing local schools to implement and fund raise for renewable power on their roofs.

Recently we received a ￡5,000 grant to invesigate the feasibility of anaerobic digesion in Brighton and Hove, and we coninually push for community involvement in other renewable schemes, such as the Rampion offshore wind farm.

As a high-profile community energy group, we have also been acive in consultaions on community energy policy; 6 DECC officials visited BEC in June 2013, to discuss how best to promote community energy throughout the country, and DECC Minister Greg Barker visited our St George’s Church array in September 2013. We are also a founding member of Community Energy South, a group formed topromote a community-based response to energy issues and climate change.

To join visit www.brightonenergy.org.uk/join.

A copy of our latest accounts is available here: www.brightonenergy.org.uk/documents

About Brighton Energy Coop Brighton Energy Co-op is the trading name of Brighton Energy Limited (BEL), a Community Benefit Society (CBS) formed in 2010. BEL has three PV systems in operaion. See www.brightonenergy.org.uk/documents for our latest accounts and current financial posiion.

Brighton Energy Limited Structure As a CBS, Brighton Energy Co-op is democraically owned. Each member has one vote, regardless of the number of shares they hold. Unlike a limited company, which is designed to benefit shareholders, a CBS is designed to benefit the community whether they are members or not.

For our new share offering we are offering a new class of share.

We also aim to increase returns to our BEC1 shareholders, so that all shareholders receive the same returns and payback schedule.

BEL is bound by its Rules, and the powers of members and Directors are set out within those Rules. The Directors run BEL in line with the Objects set out in the rules on behalf of the members. The members have the right to elect and remove Directors. A copy of our rules is available for download via our website.

Board practices Directors serve in accordance with the rules of Brighton Energy Ltd. There are no service contracts for them or the Secretary. BEL will manage the day-to-day operaions under the supervision of the Board. The Board will bear ulimate responsibility towards the members. As an Industrial and Provident Society, Brighton Energy Ltd complies with statutory requirements and the regulaion of the Financial Conduct Authority. As its shares will not be listed on any exchange, the BEL is not obliged to comply with the Combined Code on Corporate Governance

Right: our existing systems from space. Top to bottom: St George’s Church, Hove Enterprise Centre, City Coast Church

Meet the team Will Cottrell, Chairman Will began his business career in Barcelona, publishing a monthly, 20,000-copy English magazine. Later he established Yoga Travel, a holiday company operaing in Egypt, Thailand and Morocco. In 2009 he bought a website traffic provider, Yogaholidays.net; that same year he established Brighton Energy Co-op ater paricipaing in the Copenhagen COP15 Climate Conference. In 2012 he steered Brighton Energy Limited through a successful fund-raising to raise more than £200,000 for PV in the Brighton area.

Damian Tow, Director Having originally read Business Studies at Hull University, Damian completed a Masters in Leadership for Sustainable Development at Forum for the Future in 2009. Prior to that he had 14 years experience as a project and programme manager at Cable & Wireless and BT and was a Director of a small sotware company.

He has Prince 2, MSP and APMP project management qualificaions and has been working with BEL since August 2010.

In 2012 Damian oversaw the project development and installaion of 132Kw of PV at our Brighton sites.

Ross Gilbert, Director Ross, who has a Masters in Sustainability of the Built Environment from the University of Brighton, is a Director of QED Capital Assets, a Sussex-based property development and investment company. Ross, who joined the BEL team in May 2012 has completed a number of renewable energy projects in the UK and Germany and brings knowledge of property and renewable energy development to the BEC team.

John Smith, Director John is the Director of Cityzen which specialises in Architectural Technology, Low Carbon Consultancy and Sustainability. As a CIBSE-accredited Consultant he advises on the design of renewables and carbon modelling.

Danni Craker, Advisory Committee Danni is a chartered accountant who spent nearly 8 years working with PricewaterhouseCoopers in their London and Tokyo offices. In late 2009 Danni set up Craker Business Soluions, a Hove-based environmentally- conscious accountancy pracice. She started working with Brighton Energy Limited in August 2010.

Disclosure None of the Directors of Brighton Energy Ltd have, for at least the past five years, received any convicions (for any fraudulent offence or otherwise), or been involved in any bankruptcies or receiverships, or received any public recriminaion or sancion by a statutory or regulatory authority or designated professional body, or been disqualified from any funcion by any court.

Conflicts of interest The directors are not aware of any other potenial conflicts of interest. The rules of BEL include provisions relaing to potenial conflicts of interest; related party aciviies are disclosed and dealt with according to the rules.

Remuneration BEL pays remuneraion to its Directors to develop new projects.

We cost these payments at a market rate and what has been spent by comparable organisaions, either via paid directors or our independent consultancies. DECC also recently recognised that £20K is required to start energy co-ops with the Rural Community Energy fund, which awards a grant of £20k to start rural energy co-ops. The directors are elected each year at our AGM. See our Management Accounts summary at www.brightonenergy.org.uk/documents for details of directors' pay.

When the project is generaing electricity each Director will be enitled to claim expenses. BEC2 also provisions a fund of £6,292 each year to pay for the running of the coop. Directors’ share applicaions will be met in full, but there are no pension schemes or share opion schemes.

Risks Not securing sites The Maximum fund-raising Target (above) depends upon obtaining contracts with several further sites. Without contracts we are obviously unable to proceed further. It is therefore a risk that the money we spend on developing these projects may be spent without a result.

Mitigation: The Minimum fund-raising target is able to offer investors a 5% return, including a fund for developing these future sites. Any future installaion will not proceed unless they are able to deliver 5% Raising insufficient funds It is possible that, once the main BEC2 share launch is under way, not all the required capital can be raised.

Mitigation: Should subscripion be incomplete, we may apply for a bridging loan pending the issue of a future share offer or share offers. If that happens, the loan provider is likely to charge a 5% annual interest rate. This would effecively neutralise any effect on members’ returns.

The Board is confident that all subscripion targets set are realisic and achievable, however, and considers it unlikely that there will be any significant deficit 12 months ater commissioning.

If the required Minimum fund-raising target is not met by this date we will refund the enire shareholder capital invested.

Feed in Tariff Reductions Previously changes in government policy have provided an insecure foothold for start up solar schemes.

Mitigation: DECC have since introduced the opportunity for Community Energy Projects to lock in a feed in tariff rate for up to 12 months to allow project delivery based on a given tariff. BEL has already locked in tariffs on 2 of our sites prior to reducions. Community lock in of tariffs is available up to the change of tariff date, announcements of tariff changes generally come 2 months prior to the change date. With rates currently fixed unil 1 Jan 2014 and the next announcement due on or around November 1 2013 we have ime to lock in our projects at present FiT rates.

General investment risks The value of shares can fluctuate according to the value of the underlying business. The Offer shares will never rise in value but may fall.

Offer shares will not be transferable or traded on a recognised stock exchange, but only buyable back by BEL. Risks associated with the assumptions The RPI and cost increase rates are variable and unpredictable.

FiT is linked to the RPI but so directly and indirectly are some of the costs, therefore variance within recent RPI ranges will not have a major impact on profit.

Energy cost inflaion may prove to be more volaile; it is expected to rise ahead of inflaion on average but will probably do so in an irregular fashion. Revenue may surge ahead of projecions in the short term but fall back to trend later, or vice versa; alternaive energy sources might in the long run reduce energy cost in real terms and so reverse recent inflaionary trends and erode profit. The Board will need to review actual revenue and developing trends before making interest payments or allocaing funds to the grant fund.

Risks specific to Brighton Energy Ltd Warranies and insurance will be in place in the event of mechanical breakdown of the equipment. Complete failure and loss of revenue through mechanical breakdown is reduced through the use of muliple inverters and the system will be monitored and managed to minimise interrupions to supply.

Accidental and malicious damage will also be covered under insurance and public liability insurance of up to ￡2m. BEL’s equipment is presently insured.

Renewable energy industry risks Government policy towards renewable energy may change, although long-term commitments relaing to the FiT make this unlikely, since FiTs are part of primary legislaion and thus difficult to change. Throughout the operaion of the FiT the Government has maintained the commitment to the process of ‘grandfathering’ which ensures that whatever tariff a project is registered for at the commencement of operaion, the tariff will remain the same for the duraion of the FiT period, (20 years in the case of this project). This payment is also linked to the Retail Price Index.

Projecions are based on current FIT rates on the assumpion that we are able to comply with preliminary registraion through Ofgem ROO-FIT regulaions. The Board is unable to guarantee that this will be possible so a lower FiT rate may apply.

Any changes to the FiT that occur before the end of the share issue could result in the Co-operaive returning funds received from prospecive members at the end of the Share Offer Period.

Membership and Shareholding Share Withdrawals Shares are withdrawable up to a maximum of 5% per annum of issued share capital in issue at the start of the financial year. The Board may resolve to require any proporion of its share capital to be withdrawn, in which case it shall treat as agreed to be withdrawn on behalf of every member (and not some only) that proporion of the shares held by them (with such rounding to the nearest whole number of that Proporion which is a fracion as the Board may determine). All members are deemed to give any consents required to the withdrawal of their shares in this manner.

The withdrawal of shares is currently suspended for 3 years. The scope for being able to withdraw shares in the future will be dependent upon the Society developing a successful business and hence cash flows to pay out share withdrawals or coningent on the Society raising addiional capital for the purpose of paying out share withdrawals.

In the case of joint investments, all investors concerned must agree to a withdrawal. Shares will be repaid at the original price (subject to comments hereater).

The Directors of the Society have the right to change the withdrawal facility, or to suspend withdrawals. Similarly the Directors have the right to write down the value of shares, if the liabiliies of the Society (and its share capital) should exceed the value of its assets. Members who then withdraw their shares will only receive the writen down value of their shares.

The value of your shares may fall and their value will not exceed the £1 per share. Although shares are withdrawable, you may not be able to withdraw the full price you pay for them if the Society does not have funds available at the ime you want to withdraw your shares. In some circumstances, the Directors may be compelled to write down the value of your shares. Should you then wish to withdraw your shares, you should expect to receive only their writen down value.

Returns to Members The Society will pay only a sufficient rate of interest on money paid for its shares and may pay no interest at all. A sufficient rate is determined by the Directors as the rate necessary to obtain and retain the capital required to carry out the Objects of the Society as set out within its Rules.

Voting Each member has one vote regardless of the size and value of their shareholding. Members are kept informed of developments through the Brighton Energy Co-op website, by e-mails where the member so wishes, by occasional newsleters, annual reports and Annual General Meeings.

Legal Information This document is issued by Brighton Energy Limited, registered number 31107 R, as a Community Benefit Society incorporated in England and Wales on the 10 November 2010 under the Industrial and Provident Socieies Act 1965.

This offer of shares is not regulated by the Financial Services and Markets Act 2000 or subsidiary regulaions. The money you pay for your shares is not safeguarded by any depositor protecion scheme or dispute resoluion scheme. The Society, unlike banks and building socieies, is not subject to prudenial supervision by the Financial Conduct Authority, nor has it been approved by an ‘approved person’ under secion 21 of the above act.

This document does not consitute a prospectus within the meaning of the Prospectus Regulaions 2005. These regulaions do not apply because there is a specific exempion for community benefit socieies that conduct their business for the benefit of the community.

As a member and shareholder of the Society you own the Society. If the Society is unable to meet its debts and other liabiliies, you will lose the whole amount held in shares. This may make it inappropriate as a place to invest savings.

Your investment in your share account receives interest but does not enjoy any capital growth. It is primarily for the purpose of supporing the society rather than making an investment. As a Society, the maximum return offered to investors will always be limited.

Nomination option In the event of the death of a member, the repaid value of the shares will normally be added to the estate for probate purposes. You may elect to nominate a recipient for the value of the shares (but only up to the amount set out in law) and thus (under current legislaion) remove the value of the shares (up to the amount set out in law) from your estate for probate purposes i.e. the shares may pass to the nominee outside the Will of the deceased). The nominated property will nevertheless form part of the deceased’s estate for Inheritance Tax Purposes, unless the estate is an excepted estate.

Documents The Rules of Brighton Energy Limited, applicaion form, latest financial statements and financial projecions are available on our website: see www.brightonenergy.org.uk/documents.

Appendix: Current performance of Brighton Energy Ltd Brighton Energy Ltd has been operaing for more than a year. Below is the current perfomance of the Society over the period 1 Sept 2012 to 31 Aug 2013.

Income Feed in Tariffs Site Electricity Sales Total Income

£18.802 £3.925 £22,727

Expenditure Admin Membership Maintenance Accounts Total Expenditure

£1,420 £169 £1,050 £1000 £3,939

Debt Repayments Interest Capital Total

£1,832 £9,218 £11,050

Sinking Fund Inverter sinking fund Total

£1,000 £1,000

Net Available Cashflow

£7,037

Debt We have paid back a porion of the loan issued to us by PURE/BRE at the ime of our first installaions; we are on schedule to pay back the debt in full by 2017.

Ongoing projects fund Our iniial share launch provided for a £20,000 fund to launch our next project. So far we have spent or allocated £19,458 of this to implement the new project.

Money spent to date Will Cotrell salary Damian Tow Salary Expenses Payroll, HMRC, Misc Markeing Total

£3,607 £2,080 £894 £2,597 £618 £9,798

Money allocated Addiional salaries, HMRC etc Share launch markeing Total

£4,750 £5,000 £9,750