Frequently asked questions
What about Euro impact – now is a good time but what about later?
Prices from Belgian supplier split into Euro and GPB components, both for capital cost and for maintenance cost later. This mitigates currency risk.
Does site have capacity for a second turbine?
Jim Dickinson of Longley Farm advised that when original turbine planning application was submitted in 1985/6, Longley Farm were asked by the Council if they wanted 3 turbines; Longley responded that they preferred just 1. This is still the case. It is also unlikely now that Kirklees would accept a second turbine on the site.
What is life of turbine?
Planned project life is 20 years, similar to FiT period, although turbine may work for longer mechanically.
What is impact of not meeting FiT deadline (23rd September 2015 for operation of turbine)
The projected FiT income may not be available, as the government may reduce the guaranteed tariff (digression) after this date. This reduction in project income would mean less to community fund and possible lower interest to shareholders, or the project not proceeding as a community energy scheme. The Directors would hold a meeting with Members to advise on these options and recommend a way forward. If the project does not to proceed as a Community scheme, Members subscribing in this main share offer would have all their money returned.
What happens to his/her shares if a Member dies within 5 years?
If a Member has registered a transfer nomination form with the Society, on his/her death, up to £5,000 can be transferred to the nominated qualifying person who then takes over their shares. Members who do not do this, or for shares above £5,000, the pay out of their share value to their estate will have to wait 5 years or until the Society is financially able to pay out. The Society can issue these transfer nomination forms to Members on request. Noted that the pay out of higher share values may have to be spread over several years for the Society to manage this within its planned payback of Member shareholdings. Noted that the £5,000 limit is the statutory maximum for transfers at the present time.
What is better for personal tax relief – to split a main share offer subscription between two partners or for one partner to make a single subscription
Tax relief is per share holder and is by reduction in his/her personal income tax liability to HMRC in the tax year in which the shares are issued. The value of this reduction is 30% of the value of the shares allocated, however a person cannot claim a reduction more than his/her own personal income tax liability hence any split between partners is dependent on their individual personal tax liability. Noted that all or part of this relief can be carried back to the previous tax year. Noted that two partners investing become two Members with one vote each, which is more than if just one partner invests.
What is contingency plan in the event of not raising the £400,000?
In the event that community fund raising does not reach £400,000 then this would mean either no community scheme or the scheme proceeding but with reduced returns. The HoTTWind@Longley Directors would hold a meeting with Subscribers to present and review the available options. If the scheme did not go ahead as a community scheme, then monies raised in this main share offer would be returned in full to subscribers.
What happens to existing turbine?
The existing turbine will be demolished and removed from site by the new wind turbine contractor. The old turbine then becomes his property for disposal.
What were the criteria for the invitations to the Pioneer share offer?
We invited applications from HoTT members, Longley Farm employees, local Hade Edge residents and others who had previously expressed interest in a community energy scheme.
Can the existing access track at the rear of the turbine site be improved?
Longley Farm are planning to repair this track.
Can the scheme be expanded in future e.g. to include a 2nd turbine or to run for longer than 20 years?
There are no plans for a second wind turbine to be installed on the site in future. It is thought unlikely that Planning approval could be obtained for further turbines on the site. The Longley wind turbine project ends after 20 years with the ending of its FiT income, with handback of the site to Longley Farm. The Partnership Agreement with Longley Farm requires the turbine to be removed after 20 years, although by mutual agreement, it could remain in place and continue in operation longer.
Will the Community Benefit Society take on other energy schemes e.g. the hydro scheme?
There are no plans for other schemes to be included and run by the HoTTWind@Longley Community Benefit Society – this company is dedicated to the Wind Turbine scheme at Longley. Inclusion of other schemes would change the financial projections and may dilute the Member returns. Any other schemes would be managed under a different new Community Benefit Society.
How did you arrive at the Longley Farm electricity price of 4.5p per KWh?
The starting point for the electricity tariff for the power sold to Longley Farm was the export tariff for the power sold to the national grid. This is currently 4.5p per kilowatt hour.
Will the wind turbine mast be lit up at Christmas as the old one used to be?
Longley Farm requested this of HoTT to maintain this local tradition; however the planning permission currently does not permit the mast to be lit up at night. There is provision in the scheme for this lighting and it is included in the capital cost.
What are the criteria for how share are allocated to subscribers in the event there is more money raised that needed i.e. the share offer is oversubscribed?
Once the £400,000 target for the share offer is reached on a ‘first come first served’ basis, the Directors will endeavour to ensure that any local resident who subscribes before the closure date will still get a share allocation. In the event the share offer is oversubscribed the Directors will reduce the higher value and out-of-area share allocations.
How will the surplus profits from the wind turbine be used – will they be all transferred to the community fund or used to build up reserves?
An operational contingency reserve will be established, from the initial operating profits. The appropriate level will depend on the operational experience and on the remaining construction reserve once the turbine has been commissioned and put into operation. Surplus profits will then be transferred into the community fund.
What determined the Members interest payment of 7.5%?
The interest payment to Members on their shares was set at a market value reflecting similar community share offerings and the risk profile of such investments. This was done in consultation with Cooperatives UK and our advisers on community share offers, Sharenergy. The Directors consider 7.5% pa is a good return on risk for this particular wind turbine project, given the wind data from the previous turbine and the significant development work to date, paid for by Longley Farm.
Are there times when the wind is too strong and the turbine has to be shut down?
The maximum operating wind speed is 25m/s or 56mph; the turbine will shut down automatically if the wind speed exceeds this level. The turbine is designed to withstand a wind gust speed of 133mph.
What happens to the shares when a Member dies?
A Member’s shares can be transferred to another person, up to the legal maximum of £5,000, providing this person is suitable (e.g. over 16) and is nominated by the Member whilst he/she is still alive and this is recorded in the share register. Nomination forms can be obtained from the Company Secretary. Where a Member’s shareholding is above £5,000, or no transfer nomination is in place, the residue will go to his/her estate and be paid out by the Society. Noted that the £5,000 limit is the statutory maximum for transfers at the present time.
If when a shareholder dies, he wishes to split his/her shareholding between a number of nominees (e.g. four sons) is that OK?
Yes this is likely to be within the Rules, subject to the shareholding of each transfer nominee not falling below the £100 minimum, the total shares transferred not exceeding £5,000.
How will the £400,000+ share be allocated?
The share offer is planned to run until the end of May with the first £400,000 shares allocated on a “first come first served basis”. If the share offer is oversubscribed, the Directors may close the share offer early, but will endeavour to ensure that all local residents who have applied will receive a share allocation.
Are the shares being marketed outside the Holme Valley?
Marketing of the share offer has been focused on Holme Valley to encourage local residents to apply. Advertising has been via the Huddersfield Examiner and Yorkshire Post, as well as local leafleting and emailing. National marketing will depend on share offer take up locally.
What is the current Feed-in-Tariff tariff (FiT)?
The current FiT tariff is 15.5 pence per Kilowatt hour (£0.155 per kWh).
What are the delay problems if you miss the FiT window?
If the wind turbine is not operational before the 23rd September, the FiT tariff is not guaranteed at the current rate and may be lowered by the government. A worst case scenario is this case is that the project is not viable as a community scheme and Members have their monies returned. Alternatively the scheme may be viable but with a reduced return to Members and/or to the community fund. In such cases, the Directors will call a meeting of Members to present and recommend options for the Membership to decide.
If a family puts in several share applications what happens?
Each suitable person can putting in a share application can become a Member. A couple’s shareholding can be split between them if they each put in a share application – they become two Members each with a vote. However, their individual entitlement to EIS tax relief on their shareholding, depends on their individual personal income tax status; Members who have a personal tax liability to HMRC are entitled to set the 30% tax relief against their income tax liability in the year when the share are issued (FY15-16) or the previous tax year (FY14-15).
How strong is the wind turbine, given the long term prognosis of climate change effects, one of which is it being windier?
The wind turbine is designed and tested to IEC Class IIA for medium wind and higher turbulence sites. The maximum wind gust design for this class of turbine is 133mph.
Do you have SEIS / EIS tax relief assurance in writing from HMRC?
Yes, we have a letter from HMRC confirming preliminary assurance of SEIS and EIS tax relief for Members who hold shares in HoTTWind@Longley.
Is the Charitable Trust Board separate from the Community Benefit Society Board?
Yes, the Charitable Trust is to be set up as an independent body with its own Board of Trustees. These Trustees will administer and be accountable for the disbursement of the community fund. As a charity, the Trust will be regulated by the Charity Commission and its constitution is proposed to be based on their model rules for a Charitable Interest Organisation (CIO). At the present time, a terms of reference document for the Trust has been agreed between HoTT and Longley Farm and included in their Partnership Agreement.
Will the Share Offer document be available in electronic format?
Yes, a PDF electronic copy of the Main Offer Document is available for download from the HoTT website (www.hott.org.uk) and is available for download from the HoTTWind@Longley website (www.hottwindlongley.co.uk). A PDF copy can also be requested from the Company Secretary by email on shareoffer@hottwindlongley.co.uk.
What could losses be?
Members individual losses are limited to their invested capital in the HoTTWind@Longley business. The financial projections for this business, and the assumptions and risks behind these, are set out in the Share Offer brochure. The Directors consider these projections are prudent, and that the risks are reasonable given the benefits available from this wind turbine project.
Who is the turbine gearbox supplier?
Hansen.
What if miss FiT deadline of 23rd September 2015 for being operational?
The projected FiT income may not be available, as the government may reduce the guaranteed tariff (digression) after this date. This reduction in project income would mean less to community fund and possible lower interest to shareholders, or the project not proceeding as a community energy scheme. The Directors would hold a meeting with Members to advise on these options and recommend a way forward. If the project does not proceed as a Community scheme, Members subscribing in this main share offer would have all their money returned.
Why is project life only 20 years? Surely turbine will last longer?
Project life is determined by the duration of the feed-in-tariff subsidy which is 20 years from accreditation. The income revenue drops at this point to just the electricity sales.
Can shares be bought in joint names?
No, couples must decide whether to buy shares in one or both persons names individually.
Do you get all your [investment] money back at the end?
Yes, all Members will be paid out their original investment value when they leave or by the end of the project i.e. by year 20. The financial projections in the share offer document show the Members shares being paid back over the period from year 6 to year 20.
Can the Directors of the Society pay the surplus profits into another fund, other than the Community Trust?
The stated objective in the HoTTWInd@Longley Community Benefit Society rules is that it shall benefit the community from the building and operation of the wind turbine. The intent of the Directors is that this objective is met by surplus profits from HoTTWind@Longley being paid into a community trust fund – the Bright Green Community Trust, and this trust then supports green low-carbon projects in the local community area.
What is the area covered by the Community Trust fund?
The terms of reference for the Community Trust included in the Partnership Agreement define the Community Trust fund benefit area as the Holme Valley Civil Parish boundary extended to include the Graveship of Holme.
What if Longley Farm does not want electricity?
Electricity will be exported to the national grid and a Power Purchase Agreement (PPA) negotiated to sell the electricity on the open market.
What do other operators of the Turbowinds wind turbine say about the turbine performance?
As part of her due diligence on the wind turbine and its supplier Turbowinds, Rachel Lee the Project Manager, has spoken by telephone with a Belgian operator of the turbine, who says that in 10 years of operation the turbine has operated reliably with good availability.
What are the load factors anticipated for the wind turbine operation?
About 26% average kW generated over a year compared to design kW of wind turbine. The large turbines at Hazlehead near the Foxhouse pub, are operating with a load factor of 37%, indicating this is a windy area.
