Frequently Asked Questions

Humshaugh Community Solar Project was founded in 2024 to develop the Humshaugh Community Solar Project.

HCSL will be run by a group of people with significant experience of renewable energy, local knowledge and business management. The initial board comprises founding members from Humshaugh Net Zero and will be in place for the first year. After that, members of HCSL will elect directors on the basis of one member one vote.

The Society is governed by Rules approved by the Financial Conduct Authority. The financial returns will be independently audited and published to members with full transparency on financial performance and ongoing viability of the business. An AGM will be held every year to review performance and for members to vote on resolutions proposed, including the (re-)election of non-executive directors.

Each director is a member and will receive interest on any investment in exactly the same way as other members. No directors are paid by HCSL.

  The income from exporting electricity to the grid will be used to pay the operating costs of HCSL 

· commercial loan interest and capital repayment

· insurance 

· maintenance, performance monitoring, troubleshooting

· bookkeeping

· CCTV monitoring

· member/shareholder interest (and investment repayment in later years)

· contribution to a community fund

The solar farm will export electricity to the local grid, thereby contributing to the process of de-carbonising the grid and resulting in a significant reduction in carbon emissions equivalent to 217 tonnes of CO2 per year. The solar farm is expected to have an annual yield of 1,000,000 kWh per year, enough to supply the equivalent of half the domestic electricity in the Parish (on average clearly, there will be an excess exported from the Parish during the day and other electricity will be imported at night and on low sun days).

In addition the Community Fund will also aim to support further local community projects that reduce carbon emissions and address fuel poverty, for example energy efficiency improvements.

Previously the field was uncultivated due to being poor quality farmland which provided some seeds from weeds for birds and small mammals. The plan is to enhance the opportunities for wildlife on the site with the introduction of wildflowers, the planting more hedging and other measures. Local ecologists will advise and supervise these activities. Our aim is for this to be a Nature Positive Development, one where the site is better for wildlife after construction than before.

The site was selected primarily as it is of low farming quality, not taking land out of food production. It also faces south, is near a three-phase grid line and is not too visible from Hadrian's Wall.

HCSL’s financial year ends on 31st December. When annual accounts have been prepared, these will be reviewed to assess whether there are sufficient funds to pay the members return and if so, to make a proposal to do so to the Board. Once a proposal has been approved interest payments can be made.

The return to investors is reliant on the Power Purchase Agreement (PPA) for the output and the performance of the system. The initial PPA will last for three years. Before this period is up the market for low-carbon electricity will be reviewed and negotiations held for a new contract. This will also allow the project to set up a local electricity trading arrangement if the regulations have been changed.

For solar projects, the performance of the system is sunshine dependent. The output will therefore vary a little year by year but should continue over the expected 20 plus year lifetime of the solar farm. We have received projections of efficiency of solar panels based on manufacturer projections, including degradation in performance over the expected 25 year lifetime. The project is covered by leases with the landowners and by operations and maintenance contracts with the installer and insured against damage and loss of income.

No. As a Community Benefit Society, HCSL does not need to be authorised by the Financial Conduct Authority to issue withdrawable shares which are non-transferable. This exempts the share offering from the requirements of an approved share offering required by section 85(1) of Financial Services and Markets Act 2000 (FSMA). Therefore, your investment is not protected by any investor compensation or dispute resolution scheme. The shares are not specified investments for the purposes of section 22 of FSMA pursuant to paragraph 76 of FSMA (Regulated Activities) Order 2001. Therefore you do not have the protection that you would otherwise be offered under FSMA. In particular, the share offer documents do not need approval by an authorised person under FSMA. 

Our project has however undergone due diligence checks from both legal and financial experts connected to the debt finance already secured. Further, if debt finance is required to provide the balance of the total project costs, the loan provider may have security over the project and in the event of a default on the loan, may have the ability to take ownership of the project.

HCSL could go into administration if it was unable to meet its financial obligations, which would primarily be the repayment of debt. The debt finance secured for this project is on terms such that the projected revenue under conservative assumptions, would cover the repayments and still allow HCSL to pay the projected return to members and contribute to the community fund.’

In the event that revenue was significantly below expectations, the order in which payments to stakeholders would be made would be: first, debt repayments; then member interest; and finally the Community Fund. There is only a risk of insolvency if revenue fell so dramatically that HCSL had insufficient cash to meet debt repayments, which would require a significant fall from our financial projections. In the event that HCSL did become insolvent, it would be wound up. The debt provider would have a first claim over assets (i.e. the installed energy generation equipment) and any surplus assets would have to be transferred to another Community Benefit Society with similar rules and this would be agreed by members at the time.

Shares in HCSL cannot be sold or traded. You may withdraw some or all of your shares after the first four years of subscription on 90 days’ notice, at the sole discretion of the Directors. Assuming that there are sufficient funds at that time, the shares will be refunded at face value.

This will depend on your particular circumstances and HCSL cannot advise. You should seek advice from a suitable financial advisor.

If you wish, you can prepare for this eventuality by nominating another person to whom the shares would be transferred in the event of your death or by holding shares on behalf of children under the age of 16. In both cases the share value will count towards your shareholding limit and you will receive the interest paid. Should neither of these possibilities be in place, the executors of your will would need to apply to HCSL for the shares either to be repaid or transferred to another person.

Once we have covered our operating costs, paid members interest on their shareholding then our rules state that any surplus can be used to benefit the local community. We will channel such funds into the community fund. HCSL anticipates it will be able to pay around £10,000 a year to the community fund starting three years after the project starts selling electricity.

We have detailed comparison of quotes from 4 providers with fixed price contracts. A ground investigation was carried out to inform foundation design.

A comparison of output predictions by potential contractors and other sources has been carried out and we are using the conservative output predicted to be exceeded 90% of the time rather than the average output (level exceeded 50% of time) in financial modelling. A warranty will be provided by suppliers of solar panels and power electronics.

Our lender review will carry out a due diligence review. After installation there will be a regular maintenance programme.

We will secure a contract for the first few years. There will be many options for future contracts.

Regular reports will be submitted to the Board and to lenders, The management can be sacked by the Board. 

The loan rates are fixed and not related to inflation. Electricity sale contracts are also linked to inflation to compensate. However there are different inflation indices and which ones are used in the various contracts will need to be monitored and managed. 

We will install CCTV monitoring and ensure suitable insurance cover is in place.

 The local  grid company, Northern Powergrid, will not compensate for any problems on the grid which stop us generating. The connection is to the line to the main grid substation at Fourstones and this line also supplies a lot of the Parish. The short distance and importance of keeping supply to the villages should mean that this line is only ever out for a short time. This link was not affected in Storm Arwen. As a partial protection against wind damage, the link from the main line to the solar farm will be underground.

Support for low carbon technologies is part of the current (early 2024) government’s policy and they set up a department with Net Zero delivery as a major activity. If the current opposition is elected in the next election, it has indicated that support of low-carbon technologies would increase. In either case low carbon electricity should continue to attract a premium. There is, of course, nothing HCSL can do to mitigate this risk.