UK council has finance decisions removed after splurge on solar projects

The local authority in Thurrock, England, has had control of its financial decisions passed to neighboring Essex County Council after racking up debts of more than GBP 1 billion ($1.1 billion) over four years, including more than GBP 800 million invested in solar bonds.

A local council in the United Kingdom that invested GBP 803 million in solar-linked bonds has had control over its finances removed by the government.

Greg Clark, a local government secretary, last week asked Essex County Council to take over the financial functions of unitary authority Thurrock, in Essex, after the latter council borrowed more than GBP 1 billion in short-term loans from neighboring authorities – investing the majority of it in solar finance.

In July, the Local Government Chronicle reported that Thurrock had invested GBP 655 million over four years into bonds issued by the now-dissolved Rockfire Investment Finance, and connected companies. The bonds were used to buy solar parks such as the 60.9 MW project near Swindon, England acquired by Rockfire Capital from WeLink Energy in September 2016. Reporting on that sale at the time, pv magazine said the “clean-tech bonds” which had financed the deal had attracted cash from Thurrock and fellow English local councils in Warrington and Newham.

Rockfire Capital founder Liam Kavanagh, a shareholder in the Toucan Group, said in September 2016 that the investments offered 6% returns. In July, the news outlet reported that the bonds Thurrock Council bought were used to buy 53 solar farms and added £12.5 million due to the local authority since February – in interest linked to the investments – had not been paid by that point.

The same media outlet reported in August that London-based Camdor Global Advisors, which specializes in advising councils on investment, had assessed the solar farms as worth up to GBP 200 million – less than the value ascribed to them in connection with sale of the bonds.

“The interest on the council’s investment is paid out of the income generated by the solar farms. The income generated by the solar farms is also a key factor in the ability to repay any bonds,” Kavanagh told the LGC in July. The solar farms, as confirmed by Toucan, continue to perform exceptionally well and the bonds are not due for repayment for another four years.”

The website of London-based Toucan Energy says that the company owns more than 500 MW of renewables assets.

This post appeared first on PV Magazine.

Share This Post