Shared ownership is a hot topic right now, with government currently consulting on how we can accelerate its uptake. So if you’re curious what all the fuss is about, here’s how it works, who it benefits and where to get started.
What is shared ownership?
Shared ownership involves a community group taking a financial stake in a commercially owned renewable energy project, alongside the developer. This allows communities to benefit directly from the project's revenue and contribute to the local energy transition. It's a model that has the potential to promote a faster and fairer rollout of clean power by giving local people a real say in renewable energy projects developed in their neighbourhood.
How it works in practice
There is no one size fits all approach to shared ownership. Models will vary depending on the circumstances and objectives of each project. Things to consider include the project finance strategy, developer objectives and the needs of the community itself. Typical arrangements may include:
- Joint ventures – usually this involves both the developer/owner and the community groups owning shares in the project.
- Split sites – where one project is divided into two parts, one owned by the community and one by the developer.
- Shared revenue – the project is usually owned wholly by the developer, but community groups buy into the profit participation.
- Purchasing a project – the developer sells the whole project to the community group at an agreed price.
- Project loans – community groups provide loans or bond investment to the project, which is then repaid with interest.
What’s in it for developers?
In order to develop a successful partnership, both sides need to see tangible benefits. By offering shared ownership, developers can ensure local people benefit directly and increase local support. It’s also an innovative way to access capital – bringing finance together from different sources to get projects over the line faster, whilst widening the benefits. Developers who choose to partner with communities potentially get to access a diverse group of investors: citizen cooperatives, local authorities, local investors, local companies, educational institutions, corporates and national governments.
What’s in it for communities?
Shared ownership provides communities with access to local energy projects that are expertly developed and ready to go. These projects can provide a new revenue stream that boosts the local economy, whilst making communities agents of change in the energy transition. It means community groups have the chance to take a stake in larger projects which can have better economies of scale than smaller developments. Depending on the size of their stake, communities may even have the opportunity to influence how a project operates within the community.
What are the challenges
Building a long-term, mutually beneficial relationship between the developer or project owner and the community group is absolutely critical. It is important for the community group to have the right technical and commercial support to ensure they enter into agreements knowingly and get the best deal they can.
Often the developer will expect the community to respond quickly to an offer and have funds available, which can be challenging. In order to secure finance, and ultimately provide the revenue the community needs, the project will need to stack up economically just like any other commercial project.
How is it funded?
At Thrive, we work flexibly with community groups to structure finance in the best way that works for their specific project – using our decades worth of experience working with community energy groups to navigate and overcome the complexities of each project. Our flexible bridging loans enable groups to take advantage of shared ownership opportunities as they arise with developers, and then refinance longer-term if they choose with their own share and bond offers for local people.
We help communities take a stake in clean energy projects through shared ownership via our Community Energy Catalyst. This joint venture with Better Society Capital has mobilised up to £40 million for us to invest in community-owned wind and solar projects across the UK. Using our 30 years of experience financing, building and operating clean energy projects we’ll provide the flexibility, speed and expertise that communities need to ensure a fair deal. We have a proud history of shared ownership in the projects we own and will make at least 10% of our new projects available for shared ownership – like our new 14MW solar farm in Essex.
For more information or to contact the team visit our website here.