Frequently asked questions – updated October 2017
Below you’ll find answers to the most frequently asked questions,
but please email us, email@example.com, if you can’t find the answer to a specific query.
LGV is a Community Interest Company (CIC) limited by membership. As such, it seeks to abide by the rules of Companies House (to see our information at Companies House click here, type in Llangattock Green Valleys and click the search icon) and the Regulator of Community Interest Companies. These are very different from those of The Charity Commission, which has no role in the governance of LGV. Membership is free and available to anyone who registers and is approved by the LGV board and to date, no membership request has been rejected. Members get monthly communication on plans, an annual report, receive some privileged access to various projects and the ability to participate and vote at formal meetings. We currently have over 500 members. You can sign up for our newsletters without being a member.
In November 2009, Llangattock Green Valleys (LGV) was chosen to take part in the British Gas Green Streets competition, a year-long project aimed at encouraging communities across the UK to find ways to save energy and generate renewable energy.
LGV secured £137,000 of funding for a raft of projects (see page 30 of the LGVMH2 Share Offer Document), including feasibility studies for five potential micro hydro schemes in Llangattock and the surrounding area.
In July 2011, LGV was named winner of the Green Streets competition and awarded £100,000 by British Gas specifically to develop community micro hydro schemes as part of a broader plan to make Llangattock a carbon-negative community by the end of 2015.
In autumn 2013, LGV’s trading arm, LGV Ventures, launched its first co-operative share offer, with Llangattock Green Valleys Micro Hydro (1) Co-operative Ltd (LGVMH1) successfully raising the full £270,000 needed to install two micro hydro schemes. Construction of these schemes was due to start in spring 2014.
Meanwhile, further feasibility work commissioned by LGV Ventures pinpointed a number of other viable schemes, four of which became the focus of LGVMH2 Co-operative Ltd. when its share offer document was launched in February 2014.
There are other linked entities which are colloquially referred to as the Llangattock Green Valleys Family. These include a trading arm, LGV Ventures, which is a Community Interest Company limited by shares and wholly owned by the membership-based Community Interest Company, Llangattock Green Valleys, and two Industrial Provident Societies, otherwise known as Co-operatives, which are independent entities which have been financed by public subscription to build six micro-hydro schemes between them. In time, these Co-operatives are projected to generate a financial surplus over that needed to repay the subscribers and this will be remitted back to the membership CIC to help further its aims to support carbon reduction and the local community. Over the next twenty years this is expected to be a substantial amount of money.
There are three very good reasons why we have chosen
micro hydro technology:
1. The Brecon Beacons National Park is an area with good annual rainfall and plenty of steep mountain streams, making micro hydro the natural choice for generating renewable energy.
2. Micro hydro is small-scale, so it has a very low visual and environmental impact – essential in the National Park.
3. Micro hydro uses tried-and-tested technology, proven over many years.
The five sites are located on:
- Cwm Gu stream, just outside Crickhowell
- Blaen Dyar, near Llanelli Hill, above the Clydach Gorge
- Nant yr Hafod, above the Clydach Gorge
- Cwm Saerbren, in partnership with Welcome To Our Woods, in the Upper Rhondda Fawr, South Wales Valleys
- Abernant, near Builth Wells
All five schemes are now fully operational.
To date, this development work has been funded wholly by LGV Ventures, using risk capital comprising grants from the Welsh Government’s Ynni’r Fro programme, the Brecon Beacons Trust and the Brecon Beacons National Park Sustainable Development Fund, along with some of the £100,000 prize money awarded to LGV in 2011 as winner of the British Gas Green Streets competition. This money was awarded specifically for the development of community micro hydro projects.
LGV Ventures will continue to underwrite the development costs (and thereby accept all risk), until the schemes receive all the necessary consents.
The total cost of the project was £690,000, based on capital cost quotes from TGV Hydro with 5% contingency built in.
The share capital is being used to fund the construction works and repay the development costs to LGV Ventures. This will enable LGV Ventures to re-use its risk capital to develop additional micro hydro schemes in Llangattock and the surrounding area.
The majority of the electricity will be exported to the local grid and the Co-operatives will seek the best commercial price available.
On the Blaen Dyar and Nant yr Hafod schemes a small proportion (5% and 15% respectively) will be used by nearby dwellings, with the remainder exported to the grid.
On the commissioning of each scheme, the Co-operatives will generate income by selling the electricity to a supply company and securing Feed-in Tariff (FIT) payments (the Government incentive for generating renewable electricity).
The income will enable the Co-operatives to pay for the ongoing operation and maintenance of the schemes. Any surplus will be divided equally between Members. It should also enable the gradual return of share capital to Members over the life of the projects, which is 20 years, based on the duration of the FIT. A small portion of the income will also be used to set up a special Community Fund managed by LGV Ventures to further the aims of the CIC.
This is the duration of the FIT. After 20 years, income will drop significantly because Feed-in Tariff payments will end, the equipment will be fully depreciated and the landowner leases will terminate.
Ownership of the turbines will be transferred to the landowners and the Co-operative may choose to continue in business or close down, as appropriate.
The Enterprise Investment Scheme (EIS) is a Government-backed scheme designed to help smaller companies raise finance by offering a range of tax reliefs to individuals who buy new shares in those companies.
The Seed Enterprise Investment Scheme is a Government-backed scheme designed to help small, early-stage companies raise equity finance by offering a range of tax reliefs to individuals who buy new shares in those companies. It complements the existing Enterprise Investment Scheme (EIS) and is intended to recognise the particular difficulties that very early stage companies face in attracting investment by offering tax relief at a higher rate than that offered by EIS.
If any scheme fails to obtain the necessary permits, the Board reserves the right to substitute a different scheme.
Shares in the Co-operatives cannot be traded on a recognised stock exchange and are not transferable. Members can apply to withdraw Shares after the end of the third year of trading but Share withdrawal is at the discretion of the Board.
In accordance with the Co-operative Rules, if a Member dies their Shares can be left as part of their estate. The person who inherits the Shares can either keep them, apply to the Board to cash them in, or transfer them to any other person who qualifies to be a Member of the Co-operative.
The Co-operatives intend to repay Members’ share capital (i.e. buy back shares) gradually throughout the 20-year life of the projects, subject to financial performance and available funds.
Please note that the distribution of surplus to Members and the Community Fund will take priority over buying back Shares. Share buy back will take place only when there are sufficient reserves in the bank, with the rate of buy back being set to maintain just a comfortable level of reserves. To comply with SEIS and EIS requirements, there will be no repayment of share capital until the end of the third year of trading.
Five per cent of the income received by the Community Fund will go to support TGV Hydro’s peat bog restoration work and other carbon reduction projects. The remaining 95% will be used to support projects that build local resilience and aid the community’s transition to sustainability.
Since its inception, LGV has been involved with a variety of local groups, acting as a channel for grants from both public bodies and private funders. These have included Llangattock Litter Pickers, Llangattock Allotments (LACAS), Llangattock Community Woodlands group, Llangattock School and Llangattock Community Hall. These are all entirely separate and independent legal entities with their own governance arrangements, although LGV enables these groups to use its website and communication channels to circulate announcements and articles if they want to do so. LGV is willing to work with any organised group that is interested in activities which further the aims of the Community Interest Company. This includes local Community and Town Councils in the 5 councils’ area. The CIC is not limited by public sector rules and is therefore able to be quite flexible in what it does compared to other public sector sources of funds.
The objective was to improve the energy efficiency of Llangattock Community Hall and Llangattock School. To do this, LGV worked with Centrica, which is a Public Limited Company, and Brecon Beacons National Park Authority, via its Sustainable Development Fund (SDF).
The Community Fund will be managed by LGV Ventures. Support through the Fund may take many forms, including direct grants, loans, joint working, and research and development with other local community groups. In time, LGV will be consulting with Members on the best way of doing this, to ensure the fund does not simply replicate existing sources of funding.
Co-operative societies are democratic structures with the legal ability to raise money directly from members of the public. With a one-member, one-vote system and a board elected from the membership, they offer a fair and transparent way to operate a community-owned renewable energy business. They are registered with the Financial Conduct Authority (FCA).
Co-operative ownership of renewable energy has grown rapidly in the UK and Europe over the past 20 years. The UK’s first renewable energy co-operative was Baywind Energy, established in Cumbria in 1997, its first share offer raised £1.2 million to buy two wind turbines, and the following year it raised another £670,000 for a third turbine.
Ten years later, Torrs Hydro in Derbyshire became the UK’s first hydropower co-operative, and there is now a thriving network of co-operatives across the UK using solar, wind, micro hydro and biomass technologies to generate renewable energy and provide income to fund community projects and pay members a fair return on their investment.
The LGVMH1 Co-operative was incorporated and registered with the FCA as an Industrial and Provident Society (number 32183R) on 23 August 2013.
The LGVMH2 Co-operative was incorporated and registered with the FCA as an Industrial and Provident Society (number 32276R) on 20 December 2013.
Both co-operatives are domiciled in Wales and the registered office is the Crickhowell Resource & Information Centre (CRiC), Beaufort Street, Crickhowell, Powys NP8 1BN.
The LGVMH1 Co-operative currently has six directors, whilst LGVMH2 has five. These Boards are transitional boards for the purposes of setting up the Co-operatives, running the share offers and overseeing the installation of the micro hydro schemes. Board elections are held annually at their AGMs in June of each year.
When the schemes are generating electricity, each Director will be entitled to claim fees and/or expenses not exceeding £50 per annum, in addition to travel expenses. Directors’ Share applications will be met in full, but there are no pension schemes or Share option schemes and, except for the reimbursement of expenses, there are no other benefits for Directors of the Co-operatives.
The Directors subscribed no more than £1,000 each in Shares. This does not reflect lack of confidence in the schemes: rather it was to ensure that as many other people as possible were able to buy Shares and benefit from the projects.
These projects and the Co-operatives are the result of the inspiration and effort of LGV Ventures, which is a trading subsidiary of Llangattock Green Valleys (LGV). Both of these organisations are community interest companies (CICs), dedicated to reducing carbon emissions and building sustainability in Llangattock and the surrounding area.
LGV and LGV Ventures have developed these projects in partnership with three other organisations:
• Sharenergy (sharenergy.coop) – a Shrewsbury-based co-operative that specialises in helping community groups set up renewable energy co-operatives. Sharenergy has provided development support for the Co-operative, is managing the administration of the Share Offer and will provide ongoing Member administration once Shares are issued.
• TGV Hydro (tgvhydro.co.uk) – a Brecon-Beacons based micro hydro supplier. The company has pioneered and championed the emerging micro hydro market in Wales and has built and run numerous similar schemes in the Brecon Beacons and other parts of Wales.
• Welcome to Our Woods (Facebook) – a community in the Upper Rhondda Fawr, South Wales Valleys, created to make local woodland more useful & relevant to the community and region. WTOW LTD is a not for profit social venture. The company has been created by the Cwm Saebren steering group to develop microhydro projects.
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