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29 responses to “Ecobonds – Funding the Gap”

    • Damon Hart-Davis

      Good job!

      Looking forward to EB2: please see if you can make it widely available via ISAs and SIPPs since it is a longer-term sort of investment and returns would be boosted for individuals…

      Rgds

      Damon

        • Damon Hart-Davis

          Ooooo, I’ve just noticed that I have a nicely low-numbered cert, do I win a prize? (Other then helping Ecotricity make the world a kinder and happier place, arrrrrrrh!)

          Rgds

          Damon

        • Dale Vince

          Hi Damon, we did look at this and it appears the rules of ISAs’ themselves wouldn’t allow our Ecobond to qualify.

          Not sure (left it to the lawyers) but it may have been the non listed nature of them, that got in the way.

          It’s a shame because that would have been a good boost for bond holders.

          For next time we’ll look at what the LSE offers for listed/tradable bonds – though I suspect cost and complexity for such a small issue may rule it out.

          Cheers.

            • Damon Hart-Davis

              I believe I heard that EB1 *was* wrapped up for some people for their ISAs or SIPPs. I’m no financial engineer but possibly you create a OEIC/mutual fund to buy the bonds on behalf of the investors and make the OEIC units available through the ISA/SIPP/etc to achieve the right level of transparency and so on to keep the Revenue happy.

              Or use an alternative (cheaper) market than LSE.

              But what do I know? B^>

              Rgds

              Damon

                • Jeffrey Lam

                  Damon
                  are you referring to AIM by any chance?

                  I don’t know about bonds and funds, but AIM shares aren’t allowed in ISAs either…

                  Regards
                  Jeff

                    • Damon Hart-Davis

                      Something like that: but I certainly do not know the detailed rules for what’s allowed in such wrappers. I have had thoughts in the past of creating somesuch and even briefly spoken to the FSA, but never got a round tuit… %-P

                      Rgds

                      Damon

    • Brian Gooch

      Great project and awesome outcome. I’m just hoping that we’ve moved before EB2 so that we know what our financial position is and if we have anything to invest!

        • Dale Vince

          Thanks Brian,

          Just in case it helps – the current thinking is for a Sept launch.

          That could change, but it’s the current best guess.

          Cheers.

    • Chris Vernon

      Sounds great! I’ve one question though, presumably in four years time Ecotricity will have to return the £10m plus ~7.5% to the investors? This ‘liability’ wouldn’t exist if the funding gap had been filled by Ecotricity profits as it had in the past. What happens in four years time when presumably Ecotricity will still want to be building infrastructure at a faster rate than cash flow allows yet the bonds will be due?

        • Alex Heighton

          The liability will still exist, yes, but it will only be payable to the customers who want their capital back and apply for it. If nobody does a thing, the capital just rolls over. I, for one, won’t be taking my money out unless it all goes wrong for me personally!

            • Damon Hart-Davis

              Very much my view too. This is structured to make it easy to leave money in; I’m regarding it more like a long-term share investment than a savings issue.

              Rgds

              Damon

        • Dale Vince

          Hi Chris, good question and Alex and Damon offer a good answer here – the money (or much of it) can and will (i’m sure) be rolled over.

          But there’s more to know.

          As part of the compliance process for getting these bonds away our ‘advisors’ produced a financial model which showed that the interest and the capital could be repaid from Ecotricity profits in the four year period. It was a crucial part of the process, without which we couldn’t make the offer.

          So the worst case is covered.

          And it was a rather conservative forecast used IMO….:)

          Cheers.

            • Jeffrey Lam

              Hi Dale, I’ve been eagerly awaiting this post.

              Your reply (and the post as a whole) does go some way to answering the questions I had earlier.

              But there are still questions I’d like to know the answer to:

              - does your spending on capital return 7-7.5%? i.e. for every £1 you spend, do you get 7-7.5p of net profit per year? My study of the company accounts suggests not, but am I wrong?

              - but if I am right and you don’t get a return that high, will some of the interest and the capital you pay back after four years be funded by your existing profits?
              Extrapolating your net profit figures for the next four years does not make £10million + 4*£750,000.

              So my study suggests future profits from spending the bond money won’t pay for the interest (and repay the capital) by itself, and existing profits won’t pay it all either. But perhaps a combination of the two might.

              Anyway, if your ‘advisors’ produced a financial model that showed everything can be repaid, then that is reassuring, and I don’t have to worry about either not getting my money back or about ecotricity being dragged back in a few years time by a debt millstone and not being able to build.

              But alas, I was not able to get my application in on time. However, I’ll be investing in EB2 when it comes

              Regards
              Jeff

                • Dale Vince

                  Hi Jeff, Thanks for waiting patiently…:)

                  I think your main question is does our ‘spending on capital returns 7%’

                  My guess is that you mean our spending on new green energy projects (capital equipment perhaps). It makes sense because that is what we’ve primarily raised the bond for.

                  The answer is yes, actually we get more than that from our projects.

                  If you’re trying to judge that by looking at our accounts, you’ll be hindered by the impact of the all the other things we do, across the group. It would be very hard to isolate/ identify project rates of return from our accounts, but they are typically over 7%.

                  So the projects we invest the Ecobond money into will pay all of the interest and some of the capital over four years.

                  Other capital (repayments)will come from Ecotricity’s general trading.

                  I hope this helps. There def is no need to worry for us….:)

                  I hope EB2 will work better for you.

                  Cheers.

                    • Jeffrey Lam

                      Hi Dale,
                      thanks for that. There is something in the accounts called “Capital expenditure”, but I realise that doesn’t necessarily mean building sources of green energy.

                      Quite possibly I’ve been using the word “capital” incorrectly. Maybe I should just stick to using it in sentences like “London is the capital of the UK” :)

                      Cheers

    • Jonny Holt

      Hello Dale,

      Very interesting to read the backstory. I wish I had been in the position of being able to participate this time around but circumstances conspired against me. I just hope I can get involved in EB2 – although a lower price (£250 – £300 perhaps?) would make it easier. Any chance of this happening or is £500 as low as you can go?

      Best regards,

      Jonny.

        • Dale Vince

          Hi Jonny,

          We can go as low as we like in theory, I think the main disadvantage is an increased admin cost/burden if we have a great number of small amounts.

          That’s the dynamic in the decision – access to all versus admin cost. Remembering that we pay (raise cheques and post them) interest twice a year for example.

          That said, I’m not adverse to looking at a lower threshold if it would help.

          Thanks for the suggestion.

          Cheers.

    • Paul Verbinnen

      Rather than post out cheques twice yearly, would it be cheaper to pay directly to accounts as companies with shares do for their dividends?

        • sam marshall

          I think they’re doing that – iirc there was a space on the form to put your bank account number, but it’s an option, so they still have to send cheques to anyone who didn’t choose that route.

          (Personally, cheques are a bit annoying for me as my bank has no branches near me, I have to send them off by post – the refund for the bit of the bond I didn’t get is the first time I’ve had to do this in years – shame they couldn’t have made that a bank transfer as well.)

          I put about half my savings into this. Don’t particularly need those savings for anything at the moment, so if it all goes tits up, not really a problem, it’s only money. Hope it works though – I don’t mean just in a financial sense of getting my interest payments and ecotricity not going bust, I mean, actually building more wind turbines :) I’m sure the money will help but obviously can’t fix the planning system…

          –sam

    • Jonny Holt

      Hello Dale et al,

      I couldn’t find the right blog category for this so you will just have to accept that I am going off-topic.

      The economist is running an on-line debate entitled “This house believes that natural gas will do more than renewables to limit the world’s carbon emissions.” The debate is due to end on Wednesday 4th February.

      At present 36% of those who have voted have supported the motion, with 64% opposing.

      To vote – opposing the motion, I hope – go to http://www.economist.com/debate/days/view/645.

      Best regards,

      Jonny.

    • Moneybags

      I just found a fiver in my jacket – can i invest?

      On a side note, a cracking opportunity for people to invest in somthing GOOD.

      Cant wait for number 2!

      MB

    • Dave

      I think this is a great idea, I have only just come across it but am really impressed by your post and how invovled people have been in comments. I think these ideas are what make the difference. Looking forward to reading more about ecobond2 and hoping to get involved

        • Jeffrey Lam

          Hello Dave,
          seeing as no-one else has responded to you, I thought I’d just say it’s nice to hear your comments. Please do join in any conversations that may pop up in future.

          Regards
          Jeff

    • glen andersson

      Hi Dale

      Do you have any plans to expand your model beyond Britain ? In Australia we have (mainly) very cheap, extremely dirty coal-fired power and excellent wind, solar and geothermal resources.

      kind regards
      Glen

    • Jeffrey Lam

      So… how is it looking for EB2? Will there be one this Summer? Will it possibly be delayed, in light of the proposed FiT changes? I can see that there is still plenty of building to do.

      Jeff

    • Dale Vince

      Hi Jeffrey – sorry for the slow reply. We’re currently looking at the project pipeline and rate of spend of Ecobond one – to judge the right time to go for Ecobond 2. it’s only a matter of when not if.

      Now that the government have definitely killed big solar, things are a little clearer.

      My best guess is that we’ll launch our second bond either Sept/Oct this year or Jan/Feb next year. We’ll know for sure in a few weeks time.

      Hope this helps.

      Cheers.

        • Alex Heighton

          “When and not if” is the answer I was hoping for! I had better start setting aside more for issue 2 then, especially if we’re provisionally looking at September. Please keep us all posted.
          Cheers
          Alex