If you fancy investing in Abundance Generation's latest renewable energy project, do it now to grab a better rate.
The early bird bonus on green energy crowdfunding investment platform Abundance Generation's latest project is about to close.
The Engynious Schools project aims to offer cheap electricity to primary and secondary schools via solar panels. You can invest in it by buying debentures via the Abundance Generation website. It's offering a projected return of up to 6.7%, but if you invest by 16th June you'll get an early bird bonus of an extra 0.1% per year.
With about a month to go before the funding period closes, the project has hit 93% of its minimum threshold to go ahead.
How the Engynious Schools project works
The schools pay nothing to have the panels installed and the project aims to offer them a 30% discount on electricity.
The project earns revenue both from the schools paying for their electricity and from the Government’s feed-in tariff. The latter pays energy-generating individuals and companies for any electricity they sell to the National Grid.
The project is looking to raise between £300,000 and £1 million to repay a loan to its parent company, which will in turn develop more systems at other schools.
How the debentures work
You can buy debentures via Abundance Generation from just £5 to up to £50,000.
The life of the project is 19 years. Over the course of that period, you should receive some of the initial money you invested (the capital) back each year, plus a return currently forecast to be 6.7%, providing the project hits its revenue targets.
[SPOTLIGHT]The debentures are meant to be held for the life of the investment, ie 19 years, although they can potentially be sold off sooner to other investers via a bulletin board on the Abundance Generation website.
Risks
Any money you deposit into your Abundance Generation account to buy debentures in a project is covered by the Financial Services Compensation Scheme, up to a maximum of £85,000. However, once you buy debentures it is no longer protected.
You may get a lower real rate of return if the project doesn’t hit its targets, and there is a risk that you’ll lose all your money if the project goes under.
Tax treatment
The returns on your investment, beyond the repayment of your capital, are treated as dividends for tax purposes. So you will have to pay Income Tax on them as you would interest from a normal savings account.
However, as Corporation Tax has already been paid on the return, higher- and additional-rate taxpayers can claim a tax credit of 10% against their tax charges.
You may be able to hold your debentures within a self-invested personal pension (SIPP), depending on your provider. Debentures can't be held in an ISA.
Other projects
Abundance Generation has two other projects currently open for investment. There's the REG High Down wind project we wrote about back in February, predicting returns of up to 9.3%, and the inflation-linked solar power project BNRG Gorse, forecasting 7.35%. So if you think the future is bright for green energy, you might want to put your money into these projects.
Find out more about the Engynious Schools project on the Abundance Generation website
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