Innovative ISA will enable peer-to-peer lending

Mongoose Energy has launched a new crowdfunding platform to secure financing for community energy projects.

The company hopes the platform will widen the pool of potential investors, bring down the cost of capital and enable greater innovation in funding.  

“More people want a bigger say in where their power comes from, where their investments go, and in improving their own communities,” said former energy secretary and chairman of Mongoose Energy, Sir Ed Davey.

“Launching our own crowdfunding platform means we can dispatch better energy, better financial returns and better social dividends to UK community investors.”

Mongoose Crowd will offer people the first ever opportunity to invest up to £20,000 per year in community energy schemes via the Innovative Finance ISA (IFISA) for peer-to-peer lending which the government launched in April last year.

Mongoose Energy will “work closely” with community energy groups to help them to formulate and present their offers to investors and ensure they are compliant with FCA regulations. Chief executive Mark Kenber told Utility Week because the returns are tax-free, they should be able to secure financing at a lower cost than they would through other routes.

“Any impact you have on reducing the cost of capital has a direct impact on increasing the community funds that can then become available over time to be invested in local projects,” he added.

Kenber said the platform would also enable Mongoose Energy to experiment with novel forms of funding. “We think there are going to be lots of opportunity to innovate with new financial products to enable people, for example, to not be locked into a bond for three to five years. We’re exploring how we might be able to offer more liquidity on the platform.

“Having something that we manage and control, enables us to innovate in a way we wouldn’t be able to do with a third party.”

In addition to renewable energy schemes, the platform will also be used to finance other energy assets such as battery storage. Kenber said they are even looking at using it to fund local energy suppliers and grids: “Those are all speculative at the moment but they are areas we think we will expand into over time.”

The initial offerings on Mongoose Crowd will go live to investors during Community Energy Fortnight (24 June – 8 July). They will cover £1.5 million of bond sales supporting the refinancing of a portfolio of solar projects near Bath and Bristol.

Kenber said following the “shock” of the feed-in tariff rate cuts last year, the renewable sector is now seeing a “rebound”.

Sebastian Foot, head of product development at Mongoose Energy, added: “There’s still certainly more opportunity to do rooftop solar and increasingly we’re seeing solar projects that are based entirely on a private wire PPA-like structure where there isn’t a subsidy at all.

“I think what’s quite exciting is that as subsidies are retracted you’ve got more and more innovation coming in to work out ways to make these projects work economically”.

Mongoose Energy is majority owned by ten by community energy groups around the UK. The company currently owns or operates around 60MW of renewable generation schemes, most of them solar projects.

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