The Council Solar Bond will also pay out an early bird bonus of 0.5% for the first five years to those investing during the initial six-week offer period.
Investors can access the product with a minimum investment of £5 and can sell their units on to other investors during the 20-year life of the product.
The bond will be used to finance construction of the Swindon community solar farm with £3m ($4.2m, €3.8m) fronted by the council and £1.8m by small private investors.
Councillor Dale Heenan, Swindon Borough Council cabinet member for Transport and Sustainability, said: “For years, companies have been trying to find ways to make investing more accessible and understandable.
“Swindon’s solar bonds provide an opportunity for people to invest as little as £5 or more than £5,000, and enjoy better returns than their bank provides as they invest for their children’s future, their own retirement or just a rainy day.”
Capital returns will come from the cash earned by a combination of electricity sold to the grid and payments under the government’s Feed in Tariff scheme – where you are paid for units of self-generated electricity through alternative means, such as solar or wind energy.
Returns are paid biennially in cash, with the stability of co-investing alongside Swindon Borough Council.
Meet energy demand
The council will then become the sole shareholder of the Swindon Common Farm Solar CIC. It hopes the bond launch will help meet its objective of being able to build enough renewable energy capacity by 2020 to generate enough electricity to meet the demand of all homes in the area.
Abundance managing director Bruce Davis said: “This first ever Council Solar Bond is exciting and important as it is further proof that ‘win/win investment’ is not only possible, but can play a crucial role in providing the public with a better return, while creating innovative new ways for local community infrastructure to be improved without increasing costs to the taxpayer.
“This is great news for people struggling to live off their savings or wanting to invest for their future without stock market risks, and to councils across the UK trying to maintain and improve local services.”