Cabinet, at its meeting on 16 June 2021, delegated authority to the Head of Corporate Strategy in consultation with the Cabinet Member for Zero Carbon Oxford to enter into a loan agreement with Low Carbon Hub on terms to be agreed by the Head of Financial Services / Section 151 Officer and the Council’s Monitoring Officer.

Cabinet, at its meeting on 10 November 2021, delegated authority to the Head of Financial Services/Section 151 Officer in consultation with the Head of Law & Governance and the Cabinet Member for Finance and Asset Management to enter into a loan agreement with Low Carbon Hub to undertake the necessary due diligence and approve the terms of the loan facility agreement and, thereafter, enter into any associated legal agreements that are necessary to give effect to the recommendations within this report.

The report to Cabinet on 16 June 2021 sought agreement to invest £3.4 million of government funding in the Low Carbon Hub’s Ray Valley Solar Farm which would in turn result in an annual payment to the Council of £177,000 as well as promote community owned energy. The amount was subsequently revised down to £2.055 million, to be fully funded by the Public Sector Decarbonisation Scheme grant awarded to the council by Salix Finance Ltd a wholly owned Government department funded by the Business Energy and Industrial Strategy Department (BEIS) to finance the project costs of a solar farm project at Ray Valley.

The report to Cabinet on 10 November 2021 outlined a further loan investment to be made to Low Carbon Hub to support the Ray Valley Solar project of £2 million.

Two loan agreements, for the amount of £4.055 million, are in the process of being drawn up and associated documentation will include: 

a)    An intercreditor deed which details the terms of the investment and security of money lent to Low Carbon Hub IPS Ltd, by the council in connection with other parties that have an interest in the development i.e Low Carbon Hub IPS Ltd (a parent company of Ray Valley Solar Ltd), Ray Valley Solar Limited, Low Carbon UK Solar Investment Company Ltd and Triodos Bank UK Limited. The Council will be subordinate to all other parties named with the Senior Debt holder being Triodos Bank UK Ltd;

b)    A debentures between the Council and Ray Valley Solar Limited; and

c)    Any other associated agreements

Both loans totalling £4.055 million will have the same terms and conditions and repayments will be on an annuity basis attracting an interest rate of 2.85% for an anticipated 22.5 years. Once agreed a single transaction will see the advancement of £4.055 million to Low Carbon Hub IPS Ltd and the repayment back to the Council by the same organisation of the amount previously advanced to them on 6 August 2021 of £2.3 million with interest. Salix Bank Ltd will at the same time pay grant monies to the Council of £2.055 million in connection with the Councils previously approved grant application to part fund the transaction.

Two decisions are being made:

1)      The decision being made by the Head of Financial Services is to agree the terms of both loans as set out above, and to agree to enter into the second loan in accordance with the delegation of Cabinet on 10 November 2021.

2)      The decision being made by the Head of Corporate Strategy is to agree to enter into the first loan on the terms agreed by the Head of Financial Services in accordance with the delegation of Cabinet on 16 June 2021.

Ray Valley Solar is a 19MW ground mounted solar farm near the village of Arncott with potential for battery storage to be installed in the future. The site itself neighbours an MOD logistics site, HMP Bullingdon, and two existing solar parks, and is expected to comprise c.45,000 solar panels across an 80 acre site. .It will be the largest community-owned solar park in the UK, generating enough energy to power the equivalent of over 6,000 homes per year.

It is expected that RVS will keep £2.6m of additional clean energy spend in the local economy every year, and provide £13m of community benefit funding over the lifetime of the project (22.5 years).

Not to proceed with any advancement of money to LCH – Likelihood of innovative project not moving forward, which would negatively impact the delivery of OCC’s work towards key corporate objectives. Also reputational damage to the Council and LCH, including financial issues to LCH.

Decision to agree the terms of both loans as set out above, and to agree to enter into the second loan in accordance with the delegation of Cabinet on 10^th November 2021, taken by Nigel Kennedy, Head of Financial Services (Section 151 Officer) in consultation with Susan Sale, Head of Law & Governance and Councillor Ed Tuner, Cabinet Member for Finance and Asset Management.

Decision to agree to enter into the first loan on the terms agreed by the Head of Financial Services in accordance with the delegation of Cabinet on 16^th June 2021, taken by Mish Tullar, Head of Corporate Strategy in consultation with Councillor Tom Hayes, Cabinet Member for Zero Carbon Oxford.