Dear Heart of England Community Energy Shareholders and Bondholders We hope you are keeping well and coping with the difficult times we are all sharing and enjoying the sun and wildlife when you can. Energy Generation Following a wet and stormy winter, the spring has been one of the driest on record, with April and May both breaking records. Whilst this adds to the ringing of climate alarm bells, generation in April and May were 18% and 29% respectively above the long-term average. February and March also exceeded projections leaving the year to date 20% ahead of the long-term average. This upside in generation is countered by a substantial drop in electricity prices due to the lockdown and the global oil price crash which started before the lockdown. Two of our solar farms (Poplars and Willows) benefit from a guaranteed price for electricity under the FiT Export Tariff. The other, (Leys) does not receive the Export Tariff. Instead, it sells power at market prices which are currently roughly half what they were a year ago. Since power sales provide approximately half its revenue (the rest coming from the Renewables Obligation subsidy), the impact of the reduced prices is less than first appears. Bondholder and shareholder payments The Board has approved the payment of 2020 bondholder and shareholder payments in accordance with the 2018 share and bond offer documents. Bondholder interest was paid on 31st May for the period 1st May 2019 to 30th April 2020 at 5%. Shareholder interest will be paid by 31st July for the period 1st January 2019 to 31st December 2019 at 6%. Queries relating to your share or bond holding Heart of England Community Energy’s Shareholder and Bondholder Register is administered by Ethex Registry. For any queries relating to certificates, interest and capital payments, holdings, probate matters or withdrawals, please contact Ethex Registry directly: registry@ethex.org.uk or phone 01865 403304 AGM Heart of England Community Energy’s AGM will be held at 19:30 on Weds 24th June via a Zoom online meeting to discuss the agenda below: 1. Welcome 2. Heart of England Community Energy update: a. Performance of our solar farms b. Payment of share and bond interest c. Community projects supported d. Future bond offer plans 3. Resolutions/ Extraordinary Resolutions: a. To present Heart of England Community Energy accounts for the year ending 31st December 2019. b. To delegate to the directors the authority to appoint auditors c. To elect the board of directors 4. Guest speaker Beth Nicholson of Citizens Advice South Warwickshire will give a short presentation about their work. 5. AOB 6. Close Heart of England Community Energy’s consolidated audited accounts will be available on our website shortly: www.hecommunityenergy.org/resources If you would like to attend the AGM please register via the Eventbrite link below. Once registered you will be emailed a link to the Zoom meeting. CLICK HERE TO REGISTER FOR HECE'S 2020 AGM Helping to alleviate hardship caused by the Covid 19 emergency Heart of England Community Energy learned that Citizens Advice South Warwickshire has experienced a big increase in demand from people in difficult circumstances caused by the Covid 19 lockdown. Citizens Advice South Warwickshire was limited in its ability to help reduce this hardship by a shortage of Administrator time. The Board therefore allocated funds to pay for an extra day per week of administrator time so that help can be given to more people who find themselves in hardship The expectation is that many more food parcels will be made available as a result of the funding provided and assistance can also include provision of bed linen for people coming out of hospital and washing machines for new single parents. We’ll be letting you know what this funding has achieved in a later newsletter. Local News Despite the Corona virus lock-down, activity on solving the ”Climate Problem” continues amongst Stratford local pressure groups such as Friends of the Earth and Stratford Climate Action. Two of HECE’s directors are members of these groups. Two very interesting discussions were held using the online Zoom meetings app - not quite as good as being in the same room but not bad. The discussions focused on a book “The Case for the Green New Deal by Anne Pettifor”. In the book Pettifor says that we can and must change what we do in the short period of time we have left to avert Climate Breakdown. Such a change sounds impossible, but the book points out that rapid change has happened before so it can happen again. Examples of rapid change mentioned are the large reduction in smoking despite opposition from the tobacco companies and the explosion of the internet as a radical change in the way we communicate. Also, the “New Deal” in 1930’s USA which, by means of massive government spending, brought about recovery from the depression. The discussion group concluded that the Covid 19 pandemic emergency has shown that the government can find the money to tackle emergencies. If there is any bigger emergency than this it is the climate emergency. To quote Anne Pettifor, “But how is this extraordinary programme to be achieved? A first in the many steps that must be taken if we are to harness the latent power of people is to spread public understanding. People cannot act to transform that which they do not understand.”

We hope you are keeping well and coping with the difficult times we are all sharing. Our community solar farm continues to generate electricity from the sun and our operations contractors are continuing near-normal operations. We are still planning to launch a new community bond offer later this year and will be posting updates once things get moving.

A good year for energy generation and re-financing ------------------------------------------------------------ As 2019 comes to a close, we look back at a successful year for Heart of England Community Energy. We exceeded generation targets despite low sunshine in the normally good month of June. Across Heart of England Community Energy's solar sites, we generated around 15,200 MWh in the year to December 2019. This exceeded long-term average projections by 695 MWh. In September we completed a 9 month-long process to replace the short-term loans from Close Brothers with new long-term lower cost loans from Triodos Bank UK. Social and Sustainable Capital have also extended their loans and reduced the interest rate at which they lend to us. The £16.3 million refinancing has significantly reduced our annual interest costs. A further community bond offer will follow next year. Read More about the refinancing here (you can also download this newsletter as a pdf here) . We’ve had some data discrepancies with one the pyranometers (light meters), so HECE’s Chair John Stott got on-site with his sextant to work out if it is something to do with winter shading from that tree. Supporting people in fuel poverty ------------------------------------------------------------ As winter settles in, a recent statistic from National Energy Action points out that on average 11,400 people die in the UK every winter as a result of an unsuitably heated home. Heart of England Community Energy continues to provide funding to Warsickshire-based energy advice charity Act on Energy . Act on Energy provides impartial advice on energy conservation, as well as providing information on grants available for improving the energy performance of homes. HECE attends first ever Stratford Town eco market ------------------------------------------------------------ In late November, Heart of England Community Energy was represented at an eco market run by one of our investors, namely the Stratford Town Trust whom we also partner to fund Act on Energy in their fuel poverty alleviation work. Chairman John Stott manned a full size solar panel with a control box which allowed live demonstration of the panel’s power curve. The panel attracted visitors and provided opportunities to tell people about Heart of England Community Energy. On 29th November, FOUNDATION House which is owned by the Town Trust, welcomed the local community to its first ever eco market. Twenty stalls offering environmentally friendly products attended, enabling people to swap their usual shopping basket contents for more sustainable and ethical alternatives. Stalls included environmentally friendly soap, make up, cleaning products, reusable nappies and delicious vegan cakes. Also present were local campaign groups including Friends of the Earth and Extinction Rebellion. Fran Donnelly, Community Hub Manager said: “We are so pleased with the success of the eco market. It’s a great way for people to try out products that have less impact on the environment and support local businesses too. The response has been really positive and as a result, we plan to hold eco markets regularly in 2020.” In May, bondholders were paid 5% interest plus the 1% first year bonus for early investors. Shareholders were paid 6% interest in July. The June AGM minutes and presentations are available on the Resources page of our website. Performance ------------------------------------------------------------ Across Heart of England Community Energy's solar sites, we generated around 15.2 GWh in the year to the end of November 2019. This exceeded projections by 695 MWh. This generation figure amounts to the equivalent of the electricity used by about 3,800 homes and was achieved despite June being less sunny than expected. Change of address or bank details? If you have recently moved or need to update contact or bank details then you can do this via the Ethex Registry Portal. Simply log in, using your email address and password and click the grey pencil icon next to your Heart of England investment on the Main dashboard. From here you can amend your contact information, home address and bank account details for future repayments. If you have any questions or have any trouble using the portal then you can email Ethex at registry@ethex.org.uk (mailto:registry@ethex.org.uk) , call them on 01865 403304 or write to them at The Old Music Hall, 106-108 Cowley Road, Oxford, OX4 1JE, UK.

In late November, Heart of England Community Energy was represented at an eco market run by one of our investors, namely the Stratford Town Trust whom we also partner to fund Act on Energy in their fuel poverty alleviation work. Chairman John Stott manned a full size solar panel with a control box which allowed live demonstration of the panel’s power curve. The panel attracted visitors and provided opportunities to tell people about Heart of England Community Energy. On 29th November, FOUNDATION House which is owned by the Town Trust, welcomed the local community to its first ever eco market. Twenty stalls offering environmentally friendly products attended, enabling people to swap their usual shopping basket contents for more sustainable and ethical alternatives. Stalls included environmentally friendly soap, make up, cleaning products, reusable nappies and delicious vegan cakes. Also present were local campaign groups including Friends of the Earth and Extinction Rebellion. Fran Donnelly, Community Hub Manager said: “We are so pleased with the success of the eco market. It’s a great way for people to try out products that have less impact on the environment and support local businesses too. The response has been really positive and as a result, we plan to hold eco markets regularly in 2020.”

Domestic energy efficiency should be designated a national infrastructure priority for any new government, claim groups combating fuel poverty. Following political parties’ launching their political manifestos, National Energy Action has launched its own. According to the government, a household is in fuel poverty if spending on required fuel cots is above average and meeting those costs would leave the household below the poverty line. Figures from the government show that between 2003 and 2017 there has not been much progress on tackling the issue as the number of households in fuel poverty has remained stable between 10% and 12% of English homes. Heart of England Community Energy's community fund has given funds to the Act on Energy charity to combat local fuel poverty. Act on Energy staff do outreach sessions and support to save money on energy, home assessments, and are running a pilot to work with GPs to identify people whose poor health is partly down to fuel poverty. Maria Wardrobe, Director of Communications at National Energy Action, said: “This winter, thousands of people will fall victim to the cold. It’s invading our homes and causing breathing problems, strokes and heart attacks. It’s making people’s lives stressful and miserable, and preventing our children from thriving. ‘‘But we can cure this. A Government-funded, national heating and insulation scheme would vaccinate our homes against the cold. Giving incomes a boost would also mean that people could afford to switch on their heating and stay warm and healthy.” The full Manifesto for Warmth can be found here.

The Directors of Heart of England Community Energy ltd are very pleased to announce we have completed a £16.3million refinance. We have replaced the short-term loans from Close Brothers and Social and Sustainable Capital (SASC) with new long-term lower cost loans from Triodos Bank UK and SASC. The transaction was managed by CfR CIC. The transaction was undertaken to secure long-term, lower-cost finance for our solar projects, with reduced loan repayments allowing more money to be used to support community projects. The total package of £16.3 million combines senior loans of around £12 million from Triodos Bank UK with junior loans from SASC of around £4.3 million. SASC provided capital to fund the community acquisition of the solar farm in 2016. A community bond offer will be launched next year to raise around £1.5million to repay some of the SASC junior debt and complete the long-term finance package. Heart of England Community Energy uses profits from the solar farm to support a fuel poverty advice service run by local charity Act on Energy and a community grant fund. The community grant fund has so far provided funding to Harbury e-Wheels, a Warwickshire-based community transport charity, and SolarAid, a charity working in Africa to provide solar lights. Heart of England Community Energy Chairman: "I am delighted that we have reached a new stage of maturity for Heart of England Community Energy. Together with our partners we have been able to secure more favourable financing that will allow us to contribute more to our community fund." CfR Director Jake Burnyeat said: “CfR and the Heart of England Community Energy board are very pleased to have reached this milestone. The loans from Triodos Bank and Social and Sustainable Capital provide a long-term lower cost finance solution which will help increase surplus income generated by the community solar farm to support local projects. It is also important that the funders share our values. Look out for the community bond offer which will launch next year and give an opportunity for people from the local and wider community to get involved!” Philip Bazin, Environment Team Manager at Triodos Bank UK, said: “This transaction proves that community energy schemes can be delivered and financed at scale. It also demonstrates our expertise at financing solar projects co-located with batteries, and at combining different tranches of finance. Such schemes have multiple positive impacts, not only do they help the clean energy transition, but their profits also benefit local people. By driving down the cost of finance, we have helped Heart of England solar to operate more profitably and increase its financial contribution to the community.” Krishna Chokshi, Investment Manager at SASC, said: “We are delighted to renew our investment in HECE, whose performance has significantly exceeded our expectations since coming into community ownership two years ago. This is a great community-owned project with an outstanding local board of trustees who are overseeing its governance and performance. HECE is providing real financial benefits for individuals and families living in fuel poverty in the region through the distribution of community benefit. Work done by HECE unlocks significant additional grants for fuel efficiency, leveraging in as much as seven times the amount of funding generated by the project.” “Community energy projects like this are essential as communities look to provider greener energy solutions and surpluses for the benefit of their local area. It is fantastic to see social investment providing finance that is enabling projects like this to thrive.” Legal counsels on the transaction were TLT, CMS, Michelmores and Lux Nova. Technical due diligence on the transaction was provided by Green Cat Renewables. The solar farm was built by Anesco who provide ongoing service and maintenance services. The co-located batteries are owned and operated by Zenobe. About Communities for Renewables CIC Communities for Renewables (CfR) CIC is a mission-led community interest company which helps communities to set up local energy enterprises and works with them to develop, finance and manage their own renewable energy generation. CfR has managed the development and financing of around £56million of community solar projects and manages 50MW of community solar projects for 7 different community energy enterprises, including Heart of England Community Energy. www.cfrcic.co.uk About Social and Sustainable Capital SASC provides simple finance for extraordinary charities and social enterprises. We believe greater access to the right kind of investment makes charities and social enterprises better able to tackle society's most pressing challenges. Our funds provide flexible capital to enable social sector organisations to grow their social impact, improving the lives of disadvantaged people across the UK. SASC is a social enterprise. About Triodos Bank Founded in 1980, Triodos Bank has become a frontrunner in sustainable banking globally. As an independent bank that promotes responsible and transparent banking, it does not see any conflict between a focus on people and the planet and a good financial return. Instead it believes that they reinforce each other in the long-term. Triodos Bank has banking activities in the Netherlands, Belgium, the UK, Spain, Germany and France as well as Investment Management activities based in the Netherlands and active globally. Triodos Bank co-founded the Global Alliance for Banking on Values (GABV), a network of 54 sustainable banks. Together these banks want to grow sustainable banking and its impact on the real economy substantially.

Investment in renewable technologies around the globe quadrupled installed generation capacity in the decade to 2019. In total $2.6 trillion was invested in renewables since 2009, of which the UK accounted for $122 billion, According to the Global Trends in Renewable Energy Investment 2019 report. Solar capacity saw the biggest growth in that period – a 26-fold increase in 10 years – and accounted for half of the total investment. This shift to renewable investment has resulted in renewables accounting for 12.9% of global generation, and avoided an estimated 2 billion tonnes of carbon dioxide. “Investing in renewable energy is investing in a sustainable and profitable future, as the last decade of incredible growth in renewables has shown,” said Inger Andersen, Executive Director of the UN Environment Programme. Renewable’s potential to combine profitability and reduce carbon emissions was highlighted by the University of California (UC) as it announced divestment from fossil fuels. UC announced that its endowment fund of £13.4 billion would be fossil free by the end of September, with its £70 billion pension fund following shortly.

The organisation that manages the UK seabed has announced a new auction for wind farm leases with capacity for 7GW. The Crown Estate, which last ran an auction in late 2010, has placed 4 areas up for auction. When developed, they could generate enough electricity to power six million homes. The four areas are the Eastern Regions together with Dogger Bank, the South East, Northern Wales and the Irish Sea. Huub den Rooijen, director of energy, minerals and infrastructure at the Crown Estate, said: "The UK is home to the world's largest offshore wind market, attracting global investment, meeting UK electricity needs, and playing a crucial role in the transition to a net zero economy.” RenewableUK, the industry trade body, welcomed the news and estimated that the auction would bring £21 billion in new investment to the UK and create 9,000 jobs. Hugh McNeal, chief executive of RenewableUK, said, “These powerhouses of the future will create thousands of highly skilled jobs, continuing the rapid regeneration of our coastal communities, as well as benefiting our UK-wide supply chain.”

Zero carbon energy sources are set to overtake fossil fuels as the source of Britain’s electricity this year. According to the National Grid, 2019 will mark the tipping point where solar, wind, nuclear and hydropower combine to produce more electricity for Britain than carbon intensive sources. This year has already seen the longest spell of coal-free energy in the UK, as the dependence on carbon intensive sources decreases in line to meet the goals of a zero carbon energy system by 2050. As well as the increase in domestic renewable energy production, the National Grid believes that it will be able to achieve the clean energy commitment in part by importing cleaner energy from countries including France, Norway, Denmark and Belgium. This is possible via undersea interconnectors which make overseas renewable sources available to the UK, such as Norway’s vast hydropower capacity. While 35% of those imports will still come from carbon intensive sources in 2020, National Grid predicts that this will drop to 9% by 2050 at which point over 90% of imported energy will come from zero carbon sources. John Pettigrew, CEO of National Grid, said: “The incredible progress that Britain has made in the past ten years means we can now say 2019 will be the year net zero power beats fossil fuel fired generation for the first time. Having reached this landmark tipping point, the question is what are we doing today to get to net zero as quickly as possible?” This trend is also happening overseas. In April of 2019 renewable energy production accounted for more energy in the US than cloak. There were 68.5 megawatts of renewable energy generated compared with 60 million from coal according to the Energy Information Administration.

Community energy companies faced by reductions in subsidy support and an uncertain government strategy are looking for other ways to continue to combat climate change and create local benefits for their community. In its State of the Sector 2019 report, Community Energy England, highlights that between 2016 and 2018 there was a decrease of 79% in investment and an 84% reduction in new electricity generation capacity in the sector. This marked the toughest year yet for community energy, evidenced further by the 81% drop in the creation of new community energy companies. Practitioners in the sector reported that the end of the feed-in-tariff and lack of government vision for the sector was to blame for these drops and called on the government to acknowledge the important role community energy plays. Despite the setbacks on securing new investment, the 275 community energy organisations in the sector continued to deliver value for communities, including £978,000 in community benefit funding. According to Community Energy England, 2019 will be another tough year, with many practitioners reporting a negative outlook. At the same time, there is space for optimism as the transition to a smarter more dynamic and integrated energy system offers opportunities to organisations. Among the three quarters of community energy organisations have plans for 2019, many include non-generation projects ranging from energy efficiency and sustainable transport to peer-to-peer energy trading. Referring to these developments, one practitioner told Community Energy England, “There appears to be a revival in the sector as groups innovate solutions to post subsidy generation, grid innovation, aggregation and demand management are starting to be taken up by some groups.” Read the full report

Heart of England Community Energy Limited Annual General Meeting 2019 Agenda 1. Welcome 2. Heart of England Community Energy update: a. Performance of solar farms. b. Payment of share and bond interest. c. Community projects supported. d. Refinance of the current Close Brothers loan with a long-term loan from Triodos Bank. e. Future bond offer plans. 3. Resolutions/ Extraordinary Resolutions: a. To present Heart of England Community Energy accounts for the year ending 31st December 2018. Note these will be the draft unaudited accounts. Audited accounts will be circulated following the AGM. b. To delegate to the directors the authority to appoint auditors c. To elect the board of directors 4. Guest speakers: Richard Milward, Act on Energy. Bob Sherman, Harbury E-Wheels. 5. AOB 6. Close Tea, coffee and soft drinks will be served at the meeting from arrival. If you have not already, please RSVP to info@hecommunityenergy.org Authorised by the Heart of England Community Energy board

The UK has beaten its previous record for longest spell of generating electricity without relying on burning coal. Over the Easter weekend, the UK enjoyed coal free electricity for the longest spell since 1882 - 192 hours. But since then, the National Grid Electricity System Operator has confirmed another longer streak. The new record has stretched beyond 300 hours now. As of this afternoon, the coal-free streak had extended 13 days! Julian Leslie, head of national control at National Grid Electricity System Operator (NGESO). “We believe that by 2025 we will be able to fully operate Great Britain’s electricity system with zero carbon.”