Warrington Borough Council has bought two more solar farms to raise an estimated £150m in revenue over the next 30 years.
The council, which has previously bought another solar farm and launched a solar bond, this week approved £58.7m of Public Works Loan Board borrowing to build the two farms – near York and Hull – through separate special purchase vehicles.
The business plan for the developments predicts rates of return of 8.21% and 11% respectively from selling energy to the National Grid.
Danny Mather, head of corporate finance at the council said: “We are doing this because of the green credentials but have now come up with a model that works really well and generates an excellent financial return for the council.”
A report to the council’s executive board earlier this week said that the purchases will mean that the council will also save £1m on its annual electricity bill and that it will become the first council to be fully powered by green electricity.
Warrington will own 100% of the share capital in the new SPVs, and commission sustainable energy firm Gridserve to build the two facilities, which are due to be completed by October next year.
Both the 53ha Hull solar farm and the 80ha York facility will be built on low-grade agricultural land.
The sites identified already have full development rights and grid connection permissions are also in place, according to the council.
Commercial returns could be boosted further by the potential co-location of battery storage and electric vehicle charging infrastructure, it added.
The annual return on investment from the York solar farm could rise to more than 16% if energy is sold directly to another organisation rather than the National Grid, Mather said.
In 2015 the council led on the structuring of a solar bond investment with Thurrock and Newham councils, which involved the purchase of the UK’s second largest solar farm (60Mw) in Swindon.
Last year, Warrington joined forces with London Borough of Newham and London Borough of Bexley to invest £12m in a bond secured against two solar farms in Wales and Shropshire.
According to the council report, the new purchases follow a delay to proposed deal to buy a solar farm in Cirencester due to changes to the grid connection in the area making that scheme less viable.
However, the council said that work is still continuing on this scheme.
The council says that the structure of the deals could allow it to build out facilities on behalf of other councils in future.
Russ Bowden, deputy leader and executive board member for corporate finance at the council, said: “Warrington has experienced government cuts of more than £122m since 2010 and we must save an additional £46m by 2020.
“Austerity isn’t over and if we are to continue to deliver essential services we have to explore different ways of funding them.”
