Repayment of £23m solar panel loan from Peterborough City Council delayed for eighth time
The repayment of a £23 million loan from Peterborough City Council for a pioneering solar panel scheme has been delayed yet again.
The loan should have been paid back more than two years ago, but the deadline for the repayment has now been extended for an eighth time.
The money was lent by the council to social enterprise Empower Community Management LLP 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 so far this has yet to happen despite several parties expressing an interest.
The Conservative run council is currently negotiating with a preferred bidder (Global Tower Solutions) and has agreed a two month extension to the deadline for the loan to be repaid to complete terms. However, it has also agreed a further six month extension to negotiate with a different bidder should talks with Global Tower Solutions break down.
A failure to extend the loan repayment deadline would force the council to take ownership of the solar panel scheme - a situation it is desperate to avoid as it has acknowledged it lacks the expertise to do so.
Global Tower Solutions is an investor in renewable energy assets across the globe.
A council report outlining the current situation states: “Legal documentation has been progressing, however, this has not yet fully completed so a further small two month extension is required.
“The council is still confident that the loan will be re-financed in this further period, however, if completion does not take place within this further period a further extension of six months will be required in order to progress the refinancing with an alternative long term investor.”
The decision to extend the loan yet again was made by the council by removing any right of opposition councillors to call-in (formally challenge) the decision.
Leader of the council’s Labour group Cllr Shaz Nawaz has previously described the delayed repayment as a “huge cause for concern” and said it should “get alarm bells ringing”.
However, cabinet member for finance Cllr David Seaton has repeatedly talked up the partnership with Empower, calling it a “real success story for the council and for the thousands of residents who have benefited from the installation of solar panels at no cost to themselves and free energy which will continue in the future”.
He has also insisted that the scheme has “generated a hefty regular income for the council and, of course, our taxpayers” at a time of unprecedented financial pressure due to government cutbacks.
Dates and figures:
£23m - Loan from Peterborough City Council to Empower to supply solar panels on thousands of roofs
December 2014 - The month the partnership began
October 2017 - The repayment of the loan is first extended
8 - Times the deadline for the repayment of the loan has been extended
£2.6m - Received so far from the council as a return on its loan
£10,000 - Monthly fee from Empower to the council, on top of interest on the loan
7,763 - Rooftop installations from the loan
426 - The number of installations in Peterborough
What has been said:
. December 2014: Then council leader Cllr Marco Cereste - “The partnership that we want to enter into with Empower Community is a win/win for our residents, the council and the wider city.
“It also bolsters our ever growing environmental credentials by reducing the carbon footprint of our residents and the city as a whole.”
. December 2018: Cllr Shaz Nawaz, leader of the council’s Labour group - “This should get alarm bells ringing. Clearly there is a problem somewhere, hence the loan has not been repaid.”
. September 2019: Cllr David Seaton, council cabinet member for finance - “This partnership has been a real success story for the council and for the thousands of residents who have benefited from the installation of solar panels at no cost to themselves and free energy, which will continue in the future. It has also generated a hefty regular income for the council and, of course, our taxpayers.”
The partnership agreed by Peterborough City Council and Empower Community Management LLP in December 2014 was heralded as the first of its kind in the country.
Under the agreement it was hoped solar panels would eventually be installed on the roof of every property in the city.
The scheme would have seen property owners benefit from around £200 worth of free energy each year generated by the solar panels and a one-off payment of £100 every five years for their participation in the scheme. There would not have been any costs to the owner of the property.
A community fund was also established out of a percentage of the money the scheme generated, while the council expected to receive around £1 million over a 20 year period.
The scheme ran into difficulties when the Government announced in August 2015 it was looking to cut subsidies available for electricity generated from rooftop solar panels by nearly 90 per cent.
The decision to bring the partnership to a halt was made in January 2016. At the time, a council spokesman said: “We installed free solar panels on over 95 per cent of those households that had the necessary permissions in place ahead of the change to the feed-In tariff.
“This could represent a financial benefit to residents and the council of approximately £1.25 million over the next 20 years.”