Share InvitationBrighton Energy Coop 2 - community solar for the South

www.brightonenergy.org.uk

OverviewChairman’s Introduction

Community-owned renewable energy is now a proven model.

More than 150 energy coops have been registered in the last few

years, with about a third launching share issues. So not only are

these community projects generaing renewables on the ground,

but there are plenty more in the pipeline too.

The value of locally-owned energy schemes is also something

that's increasingly recognised in government. That's the reason

DECC minister Greg Barker came to visit our solar roof at St

George's Church this year, and the reason that more and more

policy work is being done to support co-operaive energy.

With more and more projects being realised, and increasing

government support, this exciing movement can only get bigger.

Brighton Energy Co-op is part this dynamic upsurge of grass roots

acion. As such it's with great pleasure that we present here our

second scheme, a huge new PV project for the South Coast.

Renewable energy maters, and with our society set to treble in

size, I hope you find what is set out here of interest - and that you

join our growing movement.

Will Cotrell

Chairman, Brighton Energy Co-op

(L-R) DECC minister Greg Barker, Kemptown MP Simon Kirby and BEC Chairman Will

Cotrell on a visit to a BEC solar roof at St George's Church in Kemptown,

September 2013

By purchasing shares you will:

•Gain an equal vote with every other member in how the

Society is managed and how your local energy resources

are used

• Ensure that you paricipate in the ownership of local

renewable energy resources and benefit from the

Government incenives

• Be eligible for any interest paid to members. As set out

below, we are aiming to pay members an annual return on

their shares

• Contribute to developing a local energy supply, which

aims to offer protecion against fluctuaions in energy

supply and costs

•Help support further renewable energy and community

energy efficiency programmes via our surplus income thus

creaing a ‘double carbon dividend’.

• Contribute to the provision of renewable energy

supplies for our area that, in turn, aims to retain benefits

locally and strengthen the local economy

• Support a scaleable model that can be replicated in

other communiies

• Help fight climate change and fossil fuel depleion

• Contribute to saving more than 450 tonnes of CO2 over

the course of our PV system's lifeime

To join visit www.brightonenergy.org.uk/join.

Summary

Brighton Energy Co-op 2 (BEC2) aims to capitalise on the success

of our first solar project which raised £230,000 in July of 2012

and installed 132 kWp of Solar Photovoltaic (PV) in and around

Brighton. With BEC2 we want to generate more low-carbon

renewable electricity, enable more people to invest in clean

energy and enjoy the financial benefits of the project. As well as

enabling the community to work together in reducing its carbon

emissions, investment in BEC2 allows you to take control of our

energy producion.

This document details the opportunity to buy shares in Brighton

Energy Co-op, the trading name of Brighton Energy Limited

(BEL). We are a Community Benefit Society with the express

purpose of developing more community-owned renewables

for our area.

BEC2 aims to install a minimum of 200 kWp of solar PV on

several buildings around the area which will require a minimum

capital investment of £232,800.

This share invitaion, therefore, invites you to purchase a new

class of ordinary share in Brighton Energy Ltd and thus help us

raise the money to finance the development, markeing and

capital costs of our new project.

You may purchase up to 20,000 shares, the minimum being 300.

Each share is worth £1.

Risks

All investments and commercial aciviies carry risk. By buying

shares members should weigh up financial risk and reward as

they would with any other investment opportunity.

Those considering an investment should do so only ater reading

this document in full (including the secion on risks below),

should regard this Invite as a long-term investment and should

consult a financial advisor before invesing.

The project

Our new ProjectOur new project is to install up to 565kWp of solar PV in Brighton and surrounding areas. This is broken down into three phases, as

outlined below. See www.brightonenergy.org.uk/documents for our Profit and Loss projecions for Phase 1

Minimum target:

£232,800, 200kWp of

solar (Phase 1)

Phase 1 is to install a large solar array of 200kWp on Shed

10 at Shoreham Port, cosing ￡232,800. This will be the

biggest solar system in the city, composed of nearly 1000

panels. Electricity will be fed into the shed and a nearby

office block as well as the naional grid.

To this end we have secured a leter of intent from the

Port, giving us the right to install 200kWp of rootop solar

PV. Based on figures from DECC, we expect this will save

around 450 tonnes of CO2 a year, typically the amount

consumed by 300 domesic homes.

Maximum target:

£616,050, 565kWp of

solar (Phases 2 & 3)

Phase 2 involves a similar building at Shoreham Port: Shed

3a. Again this is a 200kWp building, so we will look to raise

a further￡232,000 similar to Phase 1 before compleing

installaion.

Phase 3 involves several other sites with whom we are

currently in discussion. Working with these sites we

esimate up to a further 165kWp will become available for

our development in the next six months. This would

require addiional capital in excess of £150,000

We may, therefore, extend this share offer to raise this

money for phases 2 and 3, condiional on being able to

pay all shareholders a 5% interest rate.

If the minimum fundraising target is not acheived then we will then refund the enire BEC2 shareholder capital.

The offer period is open unil 1st February 2013, but may be extended at the discreion of the board.

Financial projectionsWe expect that shareholdings will receive a projected return of

5% interest plus a tax break of 30% of the amount invested (see

Enterprise Investment Scheme below). The first interest payment

will be made on the 1st August 2015.

Please note that our figures are provisional. There remain

several key risks around our assumpions, so it's important to

read the risk factors below.

We have an offer to install the systems outlined above cosing

£1050 per kWp of solar PV installed. In addiion to this cost we

have also added provision for the development of the further

projects outlined in our Maximum fund-raising scenario above.

You can see our Profit and Loss projecions for the Minimum

fund-raising target here – brightonenergy.org.uk/documents

Income

We expect to generate and sell electricity that will be produced

by solar PV renewable technology, so qualifying for the Feed-in

Tariff (FiT).

This means there will be two income streams: one based on FiT

(index-linked to the Retail Price Index) and one based on income

through electricity sales to our host sites (also linked to RPI).

Outgoings

The greatest costs will be interest payments and capital

repayment. The projecions underlying this share offer are based

on the assumpion that capital is returned to members as the

assets are gradually writen off.

Other costs include maintenance, insurance, inverter

replacement fund and BEL running expenses.

Assumptions

In our projecions we have made the following assumpions:

• Performance degradaion 0.8% pa. This is a normal

degradaion rate. Panel manufacturers have different ways of

expressing guaranteed performance levels, but these are

normally based on degradaion in the panels at about this rate

• Retail Price Index (RPI) 2.5%. This is based on recent

experience, but may during the life of the project be much

higher if medium–to long-term historic trends are followed

• Interest payments to Members start at 5%. This is based on a

projecion of profit and reserves in hand when the Board first

considers the mater

• Insurance figures are based on the quotes from our exising

insurer

• Administraion costs and running costs are esimates, again

based on BEL's experience but with an increase to approximately

200 members

• Projecions are based on the project securing Feed in Tariffs

appropriate to the different sizes of systems.

• Projecions are also based on the producion of our exising

systems - 950 kWh per kWp.

Enterprise InvestmentSchemeInvestors in BEL may qualify for the Enterprise Investment

Scheme (EIS) which provides tax payers

with tax incenives when they invest in EIS Qualifying

Companies:

Income Tax Relief

An individual can invest up to £500,000 per tax year in EIS

Qualifying Companies and benefit from 30%

income tax relief. The individual can only claim this relief if

he holds less than 30% of the shares, is not an employee

and holds the shares for at least 3 years. The minimum

investment to qualify for EIS is £500.

Inheritance Tax Relief

Shares would generally be expected to atract Business

Property Relief at rates of up to 100% for IHT

purposes, provided the shares have been held for at least 2

years.

Loss Relief

This latest share offer has been given provisional accept-

ance of EIS Qualifying Company status (we can only obtain

full acceptance ater we have installed our solar panels).

We received EIS acceptance for our two previous share

issues in 2011 and 2012. Full details of the EIS scheme can

be found at: htp://www.hmrc.gov.uk/eis/

Coops and renewable energy

Co-operaives and Community Benefit Socieies are democraic

structures with the legal ability to raise money directly from 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

also have the power to give priority to investment from the local

area, ensuring that, as much as possible, local people enjoy the

financial benefits of renewable energy.

Co-operaive ownership of renewable energy is not new. In 1997,

Baywind in Cumbria became the first community-owned

renewable installaion in the UK. It has been paying out annual

interest to its members ever since. As a result, Baywind was in-

undated with quesions from other community groups waning

to do the same thing and this led to the creaion of Energy4All in

2002.

Since then Energy4All has helped to set up seven wind energy

co-operaives in the UK with over 6,000 members. This has led to

communiies across the UK staring to set up wind, hydropower

and solar co-operaives along similar lines to the original wind

co-ops. The highest profile solar-based co-operaive, Westmill

Solar Co-operaive (www.westmillsolar.coop), raised £16.5

million through a share issue and bond finance in summer 2012.

In Germany and Denmark renewable energy cooperaives have

been instrumental in driving both renewable energy and

government policy; in both countries individuals and civil society

groups own more than 30% of the renewable energy

infrastructure.

Our History

Brighton Energy Limited formed in June 2010 when three locals

met in a central Brighton cafe to discuss ways in which

renewable energy might benefit the Brighton and Hove

community.

In January 2011 BEL launched a start-up fund and raised £18K

from eight Brightonians commited to BEL's development.

A month later BEL created its Advisory Commitee and invited

Jeremy Legget to join. Talks began with various sites about host-

ing panels. Over the course of its gestaion BEL has talked to

more than fity such building owners. Negoiaions coninued

with

potenial site partners, leading to an exclusivity agreement being

signed by Shoreham Port Authority in mid 2011.

Our first share offer launched in June 2012, ulimately raising

more than £230,000. We are now the proud owners of 132kwp

of solar PV which has been generaing for over a year.

A copy of our latest accounts is available here:

www.brightonenergy.org.uk/documents

Community Benefits

An ambiion within this share offer is to provide a

community fund to support relevant schemes in our area.

This will be coningent on acheiving the target interest

payments for members, however, and at the directors'

discreion.

Since its incepion Brighton Energy Limited has worked on

various projects that help promote energy efficiency and

renewable energy in our city. In January 2012 BEL oversaw

and delivered a survey of the energy efficiency of more

than 50 homes; we are also acively supporing local

schools to implement and fund raise for renewable power

on their roofs.

Recently we received a ￡5,000 grant to invesigate the

feasibility of anaerobic digesion in Brighton and

Hove, and we coninually push for community

involvement in other renewable schemes, such as the

Rampion offshore wind farm.

As a high-profile community energy group, we have also

been acive in consultaions on community energy policy;

6 DECC officials visited BEC in June 2013, to discuss how

best to promote community energy throughout the

country, and DECC Minister Greg Barker visited our St

George’s Church array in September 2013. We are also a

founding member of Community Energy South, a group

formed topromote a community-based response to

energy issues and climate change.

To join visit www.brightonenergy.org.uk/join.

Project background

About Brighton Energy CoopBrighton Energy Co-op is the trading name of Brighton Energy

Limited (BEL), a Community Benefit Society (CBS) formed in

2010. BEL has three PV systems in operaion. See

www.brightonenergy.org.uk/documents for our latest accounts

and current financial posiion.

Brighton Energy Limited Structure

As a CBS, Brighton Energy Co-op is democraically owned. Each

member has one vote, regardless of the number of shares they

hold. Unlike a limited company, which is designed to benefit

shareholders, a CBS is designed to benefit the community

whether they are members or not.

For our new share offering we are offering a new class of share.

We also aim to increase returns to our BEC1 shareholders, so

that all shareholders receive the same returns and payback

schedule.

BEL is bound by its Rules, and the powers of members and

Directors are set out within those Rules. The Directors run BEL in

line with the Objects set out in the rules on behalf of the

members. The members have the right to elect and remove

Directors. A copy of our rules is available for download via our

website.

Board practices

Directors serve in accordance with the rules of Brighton Energy

Ltd. There are no service contracts for them or the Secretary. BEL

will manage the day-to-day operaions under the supervision of

the Board. The Board will bear ulimate responsibility towards

the members. As an Industrial and Provident Society, Brighton

Energy Ltd complies with statutory requirements and the

regulaion of the Financial Conduct Authority. As its shares will

not be listed on any exchange, the BEL is not obliged to comply

with the Combined Code on Corporate Governance

Right: our existing systems from space. Top to bottom: St

George’s Church, Hove Enterprise Centre, City Coast Church

Meet the teamWill Cottrell, Chairman

Will began his business career in Barcelona, publishing a

monthly, 20,000-copy English magazine. Later he established

Yoga Travel, a holiday company operaing in Egypt, Thailand and

Morocco. In 2009 he bought a website traffic provider, Yogaholi-

days.net; that same year he established Brighton Energy Co-op

ater paricipaing in the Copenhagen COP15 Climate Confer-

ence. In 2012 he steered Brighton Energy Limited through a

successful fund-raising to raise more than £200,000 for PV in the

Brighton area.

Damian Tow, Director

Having originally read Business Studies at Hull University, Damian

completed a Masters in Leadership for Sustainable Development

at Forum for the Future in 2009. Prior to that he had 14 years

experience as a project and programme manager at Cable &

Wireless and BT and was a Director of a small sotware company.

He has Prince 2, MSP and APMP project management

qualificaions and has been working with BEL since August 2010.

In 2012 Damian oversaw the project development and

installaion of 132Kw of PV at our Brighton sites.

Ross Gilbert, Director

Ross, who has a Masters in Sustainability of the Built

Environment from the University of Brighton, is a Director of

QED Capital Assets, a Sussex-based property development and

investment company. Ross, who joined the BEL team in May

2012 has completed a number of renewable energy projects in

the UK and Germany and brings knowledge of property and

renewable energy development to the BEC team.

John Smith, Director

John is the Director of Cityzen which specialises in Architectural

Technology, Low Carbon Consultancy and Sustainability. As a

CIBSE-accredited Consultant he advises on the design of

renewables and carbon modelling.

Danni Craker, Advisory Committee

Danni is a chartered accountant who spent nearly 8 years

working with PricewaterhouseCoopers in their London and

Tokyo offices. In late 2009 Danni set up Craker Business

Soluions, a Hove-based environmentally- conscious accountancy

pracice. She started working with Brighton Energy Limited in

August 2010.

Disclosure

None of the Directors of Brighton Energy Ltd have, for at least

the past five years, received any convicions (for any fraudulent

offence or otherwise), or been involved in any bankruptcies or

receiverships, or received any public recriminaion or sancion by

a statutory or regulatory authority or designated professional

body, or been disqualified from any funcion by any court.

Conflicts of interest

The directors are not aware of any other potenial conflicts of

interest. The rules of BEL include provisions relaing to potenial

conflicts of interest; related party aciviies are disclosed and

dealt with according to the rules.

Remuneration

BEL pays remuneraion to its Directors to develop new projects.

We cost these payments at a market rate and what has been

spent by comparable organisaions, either via paid directors or

our independent consultancies. DECC also recently recognised

that £20K is required to start energy co-ops with the Rural

Community Energy fund, which awards a grant of £20k to start

rural energy co-ops. The directors are elected each year at our

AGM. See our Management Accounts summary at

www.brightonenergy.org.uk/documents for details of directors'

pay.

When the project is generaing electricity each Director will be

enitled to claim expenses. BEC2 also provisions a fund of £6,292

each year to pay for the running of the coop. Directors’ share

applicaions will be met in full, but there are no pension schemes

or share opion schemes.

Risks

Not securing sites

The Maximum fund-raising Target (above) depends upon

obtaining contracts with several further sites. Without contracts

we are obviously unable to proceed further. It is therefore a risk

that the money we spend on developing these projects may be

spent without a result.

Mitigation:

The Minimum fund-raising target is able to offer investors a 5%

return, including a fund for developing these future sites. Any

future installaion will not proceed unless they are able to

deliver 5%

Raising insufficient funds

It is possible that, once the main BEC2 share launch is under way,

not all the required capital can be raised.

Mitigation:

Should subscripion be incomplete, we may apply for a bridging

loan pending the issue of a future share offer or share offers. If

that happens, the loan provider is likely to charge a 5% annual

interest rate. This would effecively neutralise any effect on

members’ returns.

The Board is confident that all subscripion targets set are

realisic and achievable, however, and considers it unlikely that

there will be any significant deficit 12 months ater

commissioning.

If the required Minimum fund-raising target is not met by this

date we will refund the enire shareholder capital invested.

Feed in Tariff Reductions

Previously changes in government policy have provided an

insecure foothold for start up solar schemes.

Mitigation:

DECC have since introduced the opportunity for Community

Energy Projects to lock in a feed in tariff rate for up to 12 months

to allow project delivery based on a given tariff. BEL has already

locked in tariffs on 2 of our sites prior to reducions. Community

lock in of tariffs is available up to the change of tariff date,

announcements of tariff changes generally come 2 months prior

to the change date. With rates currently fixed unil 1 Jan 2014

and the next announcement due on or around November 1 2013

we have ime to lock in our projects at present FiT rates.

General investment risks

The value of shares can fluctuate according to the value of the

underlying business. The Offer shares will never rise in value but

may fall.

Offer shares will not be transferable or traded on a recognised

stock exchange, but only buyable back by BEL.

Risks associated with the assumptions

The RPI and cost increase rates are variable and unpredictable.

FiT is linked to the RPI but so directly and indirectly are some of

the costs, therefore variance within recent RPI ranges will not

have a major impact on profit.

Energy cost inflaion may prove to be more volaile; it is ex-

pected to rise ahead of inflaion on average but will probably do

so in an irregular fashion. Revenue may surge ahead of

projecions in the short term but fall back to trend later, or vice

versa; alternaive energy sources might in the long run reduce

energy cost in real terms and so reverse recent inflaionary

trends and erode profit. The Board will need to review actual

revenue and developing trends before making interest payments

or allocaing funds to the grant fund.

Risks specific to Brighton Energy Ltd

Warranies and insurance will be in place in the event of

mechanical breakdown of the equipment. Complete failure and

loss of revenue through mechanical breakdown is reduced

through the use of muliple inverters and the system will be

monitored and managed to minimise interrupions to supply.

Accidental and malicious damage will also be covered under

insurance and public liability insurance of up to ￡2m. BEL’s

equipment is presently insured.

Renewable energy industry risks

Government policy towards renewable energy may change,

although long-term commitments relaing to the FiT make this

unlikely, since FiTs are part of primary legislaion and thus

difficult to change. Throughout the operaion of the FiT the

Government has maintained the commitment to the process of

‘grandfathering’ which ensures that whatever tariff a project is

registered for at the commencement of operaion, the tariff will

remain the same for the duraion of the FiT period, (20 years in

the case of this project). This payment is also linked to the Retail

Price Index.

Projecions are based on current FIT rates on the assumpion

that we are able to comply with preliminary registraion through

Ofgem ROO-FIT regulaions. The Board is unable to guarantee

that this will be possible so a lower FiT rate may apply.

Any changes to the FiT that occur before the end of the share

issue could result in the Co-operaive returning funds received

from prospecive members at the end of the Share Offer Period.

Membership and ShareholdingShare Withdrawals

Shares are withdrawable up to a maximum of 5% per annum of

issued share capital in issue at the start of the financial year. The

Board may resolve to require any proporion of its share capital

to be withdrawn, in which case it shall treat as agreed to be

withdrawn on behalf of every member (and not some only) that

proporion of the shares held by them (with such rounding to

the nearest whole number of that Proporion which is a fracion

as the Board may determine). All members are deemed to give

any consents required to the withdrawal of their shares in this

manner.

The withdrawal of shares is currently suspended for 3 years. The

scope for being able to withdraw shares in the future will be

dependent upon the Society developing a successful business

and hence cash flows to pay out share withdrawals or coningent

on the Society raising addiional capital for the purpose of paying

out share withdrawals.

In the case of joint investments, all investors concerned must

agree to a withdrawal. Shares will be repaid at the original price

(subject to comments hereater).

The Directors of the Society have the right to change the with-

drawal facility, or to suspend withdrawals. Similarly the Directors

have the right to write down the value of shares, if the liabiliies

of the Society (and its share capital) should exceed the value of

its assets. Members who then withdraw their shares will only

receive the writen down value of their shares.

The value of your shares may fall and their value will not exceed

the £1 per share. Although shares are withdrawable, you may

not be able to withdraw the full price you pay for them if the So-

ciety does not have funds available at the ime you want to

withdraw your shares. In some circumstances, the Directors may

be compelled to write down the value of your shares. Should you

then wish to withdraw your shares, you should expect to receive

only their writen down value.

Returns to Members

The Society will pay only a sufficient rate of interest on money

paid for its shares and may pay no interest at all. A sufficient rate

is determined by the Directors as the rate necessary to obtain

and retain the capital required to carry out the Objects of the

Society as set out within its Rules.

Voting

Each member has one vote regardless of the size and value of

their shareholding. Members are kept informed of developments

through the Brighton Energy Co-op website, by e-mails where

the member so wishes, by occasional newsleters, annual

reports and Annual General Meeings.

Legal Information

This document is issued by Brighton Energy Limited, registered

number 31107 R, as a Community Benefit Society incorporated

in England and Wales on the 10 November 2010 under the

Industrial and Provident Socieies Act 1965.

This offer of shares is not regulated by the Financial Services and

Markets Act 2000 or subsidiary regulaions. The money you pay

for your shares is not safeguarded by any depositor protecion

scheme or dispute resoluion scheme. The Society, unlike banks

and building socieies, is not subject to prudenial supervision by

the Financial Conduct Authority, nor has it been approved by an

‘approved person’ under secion 21 of the above act.

This document does not consitute a prospectus within the

meaning of the Prospectus Regulaions 2005. These regulaions

do not apply because there is a specific exempion for

community benefit socieies that conduct their business for the

benefit of the community.

As a member and shareholder of the Society you own the

Society. If the Society is unable to meet its debts and other

liabiliies, you will lose the whole amount held in shares. This

may make it inappropriate as a place to invest savings.

Your investment in your share account receives interest but does

not enjoy any capital growth. It is primarily for the purpose of

supporing the society rather than making an investment. As a

Society, the maximum return offered to investors will always be

limited.

Nomination option

In the event of the death of a member, the repaid value of the

shares will normally be added to the estate for probate pur-

poses. You may elect to nominate a recipient for the value of the

shares (but only up to the amount set out in law) and thus

(under current legislaion) remove the value of the shares (up to

the amount set out in law) from your estate for probate

purposes i.e. the shares may pass to the nominee outside the

Will of the deceased). The nominated property will nevertheless

form part of the deceased’s estate for Inheritance Tax Purposes,

unless the estate is an excepted estate.

Documents

The Rules of Brighton Energy Limited, applicaion form, latest

financial statements and financial projecions are available on

our website: see www.brightonenergy.org.uk/documents.

Appendix: Current performance of Brighton Energy Ltd

Brighton Energy Ltd has been operaing for more than a year. Below is the current perfomance of the Society over the period 1 Sept

2012 to 31 Aug 2013.

Income

Feed in Tariffs £18.802

Site Electricity Sales £3.925

Total Income £22,727

Expenditure

Admin £1,420

Membership £169

Maintenance £1,050

Accounts £1000

Total Expenditure £3,939

Debt Repayments

Interest £1,832

Capital £9,218

Total £11,050

Sinking Fund

Inverter sinking fund £1,000

Total £1,000

Net Available Cashflow £7,037

Debt

We have paid back a porion of the loan issued to us by PURE/BRE at the ime of our first installaions; we are on schedule to pay

back the debt in full by 2017.

Ongoing projects fund

Our iniial share launch provided for a £20,000 fund to launch our next project. So far we have spent or allocated £19,458 of this to

implement the new project.

Money spent to date

Will Cotrell salary £3,607

Damian Tow Salary £2,080

Expenses £894

Payroll, HMRC, Misc £2,597

Markeing £618

Total £9,798

Money allocated

Addiional salaries, HMRC etc £4,750

Share launch markeing £5,000

Total £9,750