Overdue repayment of £23m loan to Peterborough council extended for 15 more years
A £23 million loan from Peterborough City Council for a pioneering solar panel scheme which should have been repaid in 2017 will now be paid off over another 15 years.
The Conservative-run Cabinet agreed on Monday to amend the terms of the loan arrangement with Empower Community Management LLP after coronavirus scuppered efforts for the loan to be repaid this year.
The money was lent by the council to social enterprise Empower in December 2014 to install solar panels on more than 7,700 rooftops of housing association homes across the country, including 426 in Peterborough.
At the time the scheme was lauded as being the first of its type in the country, with residents and the council expected to enjoy large financial benefits.
It was also anticipated that Empower would find a buyer to take on the scheme and repay the loan to the council, but despite being granted several extensions this has yet to happen.
There was optimism earlier this year that Global Tower Solutions - an investor in renewable energy assets across the globe - would finally take over the scheme and pay the £23 million back, but this has been halted by the Covid-19 pandemic.
Instead, Empower will now be given another 15 years to repay the loan, although this could be brought forward.
Cabinet member for finance Cllr David Seaton said at Monday’s Cabinet meeting that the council has received £3.2 million over the past five years from its investment.
He added: “The Empower project has delivered solar power for nearly 8,000 houses, making Peterborough the leader in the country for residential solar power.
“The loan facility was originally approved to provide the construction finance for the project, after which it was always the case the Empower team would look for a new, long-term re-financing partner.
“This was nearly complete – and then came the Covid-19 pandemic.”
Corporate director for resources Peter Carpenter said: “What this does is allow us to make sure on a yearly basis that there is a capital repayment and also from year one we will make a margin over that which we are lending out to Empower.
“This puts both ourselves and Empower on a much better footing because when we do eventually come out of the Covid-19 situation there will be potential buyers which means we can make enhancements to the portfolio which will then allow us to claim potential carbon-offsets.
“We can’t do it at the moment because the portfolio has been there for five years, however, if we do things like adding batteries or put things on roofs that collect data for other sorts of sources, that will generate additional income on the scheme and allow us to claim other types of offset and enhanced returns.”
He added: “We’ve structured the deal in a way that our interests are protected, that the capital is repaid as quickly as possible, but at the same time there is the possibility that things could be accelerated.
“Further to that, as we come out of Covid-19, because we’ve put the deal and the process on a more long-term footing than the commercial start-up process that we were originally in, it makes it more feasible that there will be more interested buyers as finance becomes available.”
By re-modelling the loan and interest rate payable, loan repayments will be able to be made from the income the project receives.
The amended loan facility will be for a period of 15 years and interest and loan repayments made on a six-monthly basis, although the figures are not being disclosed.
Members of the Cabinet approved the recommendations unanimously.