Investors reach early milestone for UK's first commercial geothermal power plant
A bond that encourages investors to back the first commercial geothermal electricity power station in the UK has raised more than £1m in the 48 hours since it was launched.
Peer-to-peer finance platform Abundance Investment launched the United Downs Geothermal bond on Saturday (22 July), in an attempt to raise £5m to help construct the UK’s first commercial geothermal plant near Redruth in Cornwall. As of Monday (24 Jul), Abundance has confirmed that the bond has raised more than £1.6m.
Abundance’s co-founder Bruce Davis said: “Our customers have demonstrated a strong appetite for investing in the next wave of renewable technologies which offer a win for the planet and a win for their financial aspirations too, so we are very pleased to offer this chance to help build the UK’s first geothermal power station in Cornwall.
“Geothermal technology is proven to work in Italy and Iceland but hasn’t so far been used in the UK to generate electricity. This is a ground-breaking project, which is backed by EU grants and the Local Authority, and offers a chance for ordinary people to take a stake in something with the potential to deliver significant carbon reductions in the future.”
The geothermal project was recently awarded a £10.6m grant from the European Regional Development Fund and £2.4m of public funding from Cornwall County Council. The project captures heat held in rocks and pressurised water below the earth’s surface to create a low-carbon electricity supply.
Over the next 18 months a production well and an injection well will be drilled and tested before the power plant is constructed above ground, provided the funding goal is reached. The plant will have a capacity of 3MW and will likely generate enough power to supply 5,500 homes annually.
Abundance’s bond will pay 12% AER for an 18-month term and is eligible to be held in Abundance’s tax-free Innovative Finance ISA.
A study from 2012 suggests that geothermal energy in the UK has the potential to provide up to 20% of the UK’s electricity needs, by utilising a zero-emissions renewable source.
Lead developer for the United Downs project, Geothermal Engineering’s managing director Ryan Law added: “The geothermal resource beneath our feet is extensive, and, if properly managed, inexhaustible. The granite rocks of Cornwall have the highest heat flow in the UK and are the best place for the development of geothermal power.
“The United Downs project is at the cutting edge of geothermal technology and we want to give the local community the chance to be involved in this project.”
Art of the deal
The United Downs Geothermal bond follows on from successful offers from Abundance to encourage investment into tidal energy and the relaunch of the Green Deal.
Infrastructure investor Equitix will allocate more than £100m to Scottish tidal power, and will work with leading developer Atlantis to aid the development of the world's largest tidal stream project. The developer is hoping to raise funds to expand on its tidal stream projects through a partnership Abundance. Individuals can now invest directly into tidal power through the five-year Debenture, which will pay 8% a year, issued by subsidiary Atlantis Ocean Energy.
Abundance is also assisting the Green Deal Finance Company (GDFC) to relaunch financing streams for households to improve the energy efficiency of a building through a number of providers and installers, for the first time since July 2015.