5% from solar energy: would you invest?

Voyager2002

I have just been looking at this, see http://www.ecoe.org.uk/

In short, it is an offering to buy shares in a solar energy cooperative. They promise to pay interest at an average rate of 5 per cent p.a.; your original investment will eventually be returned to you; the revenue stream arises from the sale of solar electricity generated on the roofs of various public buildings in Exeter. The shares cannot be sold.

This looks like a fairly safe investment, giving a return comparable to the dividend yield of a basket of FTSE 100 companies. There is no scope for capital growth, but the tax relief (available only until tomorrow) should compensate for this -- not that the FTSE 100 has delivered much capital growth recently either!

I was going to invest 5,000 but after reading that there was no market for the shares I scaled this back to 1,000. Is that what you would do?

jimjames

Shares with no market would put me off and I'm guessing there's a risk to capital too. If I invest in FTSE I can sell at any time. FTSE has nearly doubled since 2009 even without dividends but you wouldn't just invest in that for a balanced portfolio and other investments have done better.

Biggles

I'd scale it back to £0, considering that I can get a firm 5% (not a 'projected' or 'targeted' 5%) in a safe (not 'fairly safe') bank account protected by the FSCS.

colsten

It wouldn't be the first alternative energy company that promised good returns and then folds, leaving their investors with a 100% loss. There was mention of such a company on the forum just recently.

I am with Biggles and will invest £0.

richy999

This bit sets alarm bells ringing...

"390,000 ordinary shares of £1 are offered. These are ‘withdrawable’ shares that can only be bought
back by ECOE upon the agreement of the directors"

You may get your principal investment back... if the directors are feeling generous.

Malthusian

Unregulated, significant risk of capital loss, zero liquidity, projected returns lower than could be obtained with a much much lower risk investment in a diversified portfolio of listed shares.

But it's green and a co-op and a social enterprise, so investing in it will make you a morally better person than Mr Jones with his tracker fund portfolio. In fact if it goes completely tits up you'll have the warm fuzzy glow of knowing you sacrificed mere material wealth for the sake of love for Mother Earth, and our children, and [acoustic guitar / pan pipe music swells] our children's children, and well-connected people in the subsidy farming business, and [whalesong reaches deafening crescendo]

The FTSE 100 has delivered returns just over 5% per annum over the last 10 years despite that being one of the worst decades for the stockmarket in history.

dunstonh

i would prefer 5% for regulated investments. Even your medium risk bog standard investments have returned in excess of 5% p.a. through multiple negative periods. So, going with a high risk unregulated investment offering 5% doesnt seem that attractive (what you have detailed is not fairly low risk - it is higher risk due to guaranteed inflation loss, illiquid, being an unregulated investment and 100% loss of capital possible).

Voyager2002

Malthusian wrote: »

Unregulated, significant risk of capital loss, zero liquidity, projected returns lower than could be obtained with a much much lower risk investment in a diversified portfolio of listed shares.

But it's green and a co-op and a social enterprise, so investing in it will make you a morally better person than Mr Jones with his tracker fund portfolio. In fact if it goes completely tits up you'll have the warm fuzzy glow of knowing you sacrificed mere material wealth for the sake of love for Mother Earth, and our children, and [acoustic guitar / pan pipe music swells] our children's children, and well-connected people in the subsidy farming business, and [whalesong reaches deafening crescendo]

The FTSE 100 has delivered returns just over 5% per annum over the last 10 years despite that being one of the worst decades for the stockmarket in history.

If it goes completely tits up then no solar energy will be delivered, no carbon will be saved, and so the only benefit would be to sub-contractors -- if they manage to get paid first! Not something that would make me feel good, nor morally better.

If it is reasonably successful then the fact that only half of the surplus gets returned to shareholders, with an equal amount being used for charitable purposes, would mean that I could feel comfortable about saying 'no' to requests.

In terms of risks, the nature of the business activity and the fact that contracts are in place for both inputs and products convinces me that it is lower risk than (say) my IT of UK smaller companies. Of course, the up-side is a good deal more limited as well.

TheTracker

I recently invested a small amount in a local community alternative energy EIS scheme. I see it more as an investment in my community than financial investment, though the projects returns of 8% would be nice. In other words, you should be doing it for multi faceted reasons not just to make money.

verybigchris

I like community share schemes, but I'm reluctant to say so in this sub-forum. That's because I would never use the word "investment" when discussing them.

I see them as a novel way for a charity to raise capital and engage with their community. For example, the charity I work with has been considering a scheme where we sell shares in a new project for only around £10; getting the local community to feel they have a sense of ownership in what we're doing is just as important to us as the cash.

Comparisons with bank accounts, shares, FTSE performance, and other regulated (or even unregulated) investments are really inappropriate. IMHO you should only [STRIKE]invest[/STRIKE] part with as much money as you're willing to permanently donate.

gadgetmind

Why not buy shares in something like The Renewables Infrastructure Group Limited (TRIG) instead? Higher yield, chance of capital growth, and sell at any time.