Spirit of Lanarkshire Wind Co-operative
Under an innovative agreement between commercial developer Falck Renewables Wind Limited and not-for-profit company Energy4All, Scottish wind farms developed by the former allow local energy co-operatives set up by Energy4all to buy an economic stake in the developments. Spirit of Lanarkshire is the fifth project under this agreement but the first to have stakes in two separate wind farms near Strathaven: Six 2.5MW turbines are located at Nutberry Hill and twelve 2.5MW turbines at West Browncastle.
Legal structure & set-up
Energy4All has established Spirit of Lanarkshire as a Co-operative Society, and bought a combined stake of £2.7 million (€3.4 million) in the developments. This means Spirit of Lanarkshire does not own a percentage of the physical asset but rather that it is entitled to a percentage of financial earnings, appropriate to its investment.
The operation and management of the sites is handled by Falck subsidiaries NWEL at Nutberry Wind Farm and WBWEL at West Browncastle Wind Farm. Energy4All monitors Falck’s performance which has a good track-record of providing returns for members of other co-operatives under its agreement with Energy4All. The co-operative itself is governed by a Board of Directors under rules approved by the Financial Conduct Authority (FCA).
Through investment in shares individuals or other co-operatives become members of Spirit of Lanarkshire and thereby own it. Legally, members are protected by limited liability and allowed to make decisions through a ‘one member one vote’ system in Annual General Meetings. Energy4All will carry out administrative services on behalf of Spirit of Lanarkshire for which it will be compensated by Falck.
Nutberry Wind Farm became operational in August 2013 and West Browncastle started generating electricity in April 2014. The Spirit of Lanarkshire co-operative started trading with the purchase of a stake in the Nutberry Wind Farm in September 2013.
Spirit of Lanarkshire was required to raise a minimum of £250,000 (€316,000) for each wind farm to be entitled to purchase a stake in the developments and the ‘right to revenue’. The maximum investment was £1 million (€1.3 million) for Nutberry and £1.7 million (€2.1 million) for West Browncastle.
To achieve its target the co-operative launched a share offer that allowed members of the public to buy between 250 and 20,000 shares with a £1 value each. Local investors take priority over regional investors and members of other Energy4All co-operatives.
Falck has guaranteed that the return on investment excluding expenses incurred by the co-operative does not to drop below 6.5% per annum. It is however estimated that the annual return is likely to average at 9.92% over the project’s 25 year lifespan. After 25 years the full investment will be returned to shareholders.
South Lanarkshire Council strongly encourages wind farm developers to commit to payment into its Renewable Energy Fund. South Lanarkshire Council then takes control of community benefit payments from local wind developments. Spirit of Lanarkshire will pay £2,500 (€3.200) per annum into this fund.
- Prevalent perception in Scotland that energy co-operatives, particularly ones that do not own the physical assets and draw on a wide community of interest, are seen as capitalist as opposed to projects with 100% local ownership
- Falck carries the costs and risks to develop the sites including launch of share offer document
- Annual interest payments to members of the co-operative and active participation in the renewable energy transition
- Ultimate return of investment
- £2,500 per annum into South Lanarkshire Council’s Renewable Energy Fund
Size of Community
607 co-operative members
Type of Energy Project
Stage of Development
In the UK, we have a long way to go to match what has already happened in Germany and in some parts of the United States but the Spirit of Lanarkshire is a very welcome step in the right direction.
Tom Greatrex - Shadow UK Energy Minister
Initial planning proposal for Nutberry submitted
Nutberry planning application granted
Initial planning proposal for West Browncastle submitted
West Browncastle application granted
Start of on-site work at Nutberry
Start of on-site work at West Browncastle
Spirit of Lanarkshire is incorporated
Nutberry becomes operational
Shareoffer for Nutberry closes
West Browncastle becomes operational
West Browncastle share offer closes
Spirit of Lanarkshire buys stake in West Browncastle
Spirit of Lanarkshire buys stake in Nutberry at which point trading commences
Planned return of investment/ decommissioning of wind farm