thumbnail of Orbital Marine Power (Orkney) Debenture 2

Orbital Marine Power (Orkney) Debenture 2

Return 6.0% IRR
Term 12 years
Total Invested £4m
1263  investors
Maturity date 30 Jun 2034
thumbnail of Orbital Marine Power (Orkney) Debenture 2

What does the company do?

Orbital Marine Power Limited (“Orbital”), is a developer of floating tidal stream turbines with offices in Orkney and Edinburgh. The company has been testing and scaling up its ambitions since starting in 2002, with increasingly larger floating turbines being installed at the European Marine Energy Centre (EMEC) in Orkney’s fast flowing tidal stream. The company aims to drive down the cost of tidal energy as it scales its technology and installs additional tidal turbines.

The company’s turbine is a novel floating technology designed to reduce the costs of installing and maintaining the turbines, and therefore make tidal energy a competitive source of low carbon electricity for our energy mix. The turbine design allows it to be installed and maintained using small, low cost workboats and designed so that the majority of all maintenance work can be carried out quickly and cost effectively while the turbine remains on site. Floating systems can also be deployed over a greater range of tidal sites and sit within the most energetic part of a tidal stream. These factors all contribute to driving down the cost of the energy it produces while offering greater versatility.

Orbital is the ultimate owner of Orbital Marine Power (Orkney) plc which was set up to own and operate the Orbital O2 2MW turbine and associated project assets - the company’s first production scale turbine installed in 2021 with the aim of further driving down the cost of tidal energy.

The O2 turbine has a 74m long hull structure with twin 1MW power generating nacelles at the end of retractable leg structures designed to give low cost access to all major components for servicing. Ten metre blades give the O2 more than 600m2 of ‘swept area’ to capture flowing tidal energy. The floating structure is held on station with a four-point mooring system where each mooring chain has the capacity to lift over 50 double decker buses. The O2 has been designed so that installation of the turbine, and all its associated moorings, can be carried out by small work vessels and servicing can be carried out by RIB (rigid inflatable boat) vessels – minimising downtime and lowering construction and operational costs. Electricity is transferred from the turbine via a ‘dynamic cable’ to the seabed and a ‘static cable’ along the seabed to the local onshore electricity network.

The O2 turbine is expected to operate in the waters off Orkney for 15 years. It has the capacity to meet the annual electricity demand of around 2,000 UK homes with clean, predictable power from the fast flowing waters and offset approximately 2,200 tonnes of CO2 production per year. In a further ground-breaking element of the project, the O2 is to provide power to EMEC’s onshore electrolyser to generate green hydrogen that will be used to demonstrate decarbonisation of wider energy requirements. The company earns revenues from the sale of electricity generated by the O2 turbine, and also receives 5 renewable obligation certificates (ROCs) - a form of subsidy - for each unit of electricity generated.

Why did the company raise money?

The construction of the O2 turbine was part funded by a £7 million investment through Abundance in 2019, with it successfully launching and generating power in 2021. This second investment through Abundance provided some of the funds to repay the construction finance for the O2 turbine and support the future growth of the Orbital business.

How does the company expect to repay the investment?

The company expects to repay investors from the operational revenues it earns from selling electricity and its renewable obligation certificates.

How is the company making an impact?

Tidal stream energy harnesses the energy from moving water generated by the tides using turbines to generate renewable electricity. It is one of the newest entrants into the renewable energy market and as costs continue to fall it could make a significant contribution to the UK’s energy security and net zero targets, as well as a wider global market.

As a form of renewable energy, tidal energy has some particular advantages. Driven by the measurable tides, the energy produced is highly predictable and can compliment more intermittent renewables like wind and solar.

The O2 turbine was installed in 2021 off the coast of Orkney
The O2 turbine was installed in 2021 off the coast of Orkney

Key terms

Issuer Orbital Marine Power (Orkney)
Return 6.0% IRR
Term period 12 years
Start date 1 July 2022
Maturity date 30 June 2034
Capital repayment Regular instalments
Amount raised £4,000,000.00
Return structure

The interest and capital is paid in equal instalments every 6 months the life of the investment.

Secured or unsecured Secured It is important to understand that security does not guarantee repayment of your investment or returns.
Security package

This investment has first ranking floating charge security over all of the assets of Orbital Marine Power (Orkney) plc under a package of security documents including:

  • a bond and floating charge over all of the assets of Orbital Marine Power (Orkney) plc
  • a share pledge over the shares of Orbital Marine Power (Orkney) plc
  • an assignation in security of the rights in certain key contracts with Orbital Marine Power (Orkney) plc
  • an assignation in security of the Orbital Marine Power (Orkney) plc'ss debt service reserve account
  • various direct agreements, which provide the Security Trustee with certain rights such as being notified of a termination event or, in some cases, stepping into the company'ss shoes upon a termination event under certain project contracts.

An institutional investor is also a lender to Orbital and has a floating charge over all of the assets and undertaking of Orbital Marine Power (Orkney) plc and a floating charge over all of the assets and undertaking of Orbital Projects (Holdings) Limited. Abundance investors's security over the assets of Orbital Marine Power (Orkney) plc and the shares of Orbital Marine Power (Orkney) plc will rank ahead of the security held by the institutional investor. The interaction between the funders's respective security arrangements is governed by an intercreditor agreement entered into between Abundance, Orbital Projects (Holdings) Limited, Orbital and the institutional investor.

Early repayment options

The company has the option to repay the investment at any point from 1 July 2027 onwards subject to paying an amount of additional interest such that investors receive the originally indicated rate of return, plus an early redemption fee (equivalent to the next 6 months's interest payment) and by giving 20 business days's notice.

The company can also make an early repayment in certain circumstances, such as a change of control of the company (for example, if some or all of the company was sold to a new owner) or a regulatory/tax requirement.

See the Debenture Deed for details of all circumstances in which the option for early repayment may be exercised.

Documents

Debenture Deed
Download PDF The debenture deed sets out the legal agreement and terms for this investment.

Payment schedule

This table gives a breakdown of what is due to be paid back on this investment, based on an example investment of £1,000.

Payment schedule table
Payment date Capital repayment Interest Total
30 December 2022 £41.67 £17.12 £58.79
30 June 2023 £41.67 £17.12 £58.79
29 December 2023 £41.67 £17.12 £58.79
28 June 2024 £41.67 £17.12 £58.79
31 December 2024 £41.67 £17.12 £58.79
30 June 2025 £41.67 £17.12 £58.79
31 December 2025 £41.67 £17.12 £58.79
30 June 2026 £41.67 £17.12 £58.79
31 December 2026 £41.67 £17.12 £58.79
30 June 2027 £41.67 £17.12 £58.79
31 December 2027 £41.67 £17.12 £58.79
30 June 2028 £41.67 £17.12 £58.79
29 December 2028 £41.67 £17.12 £58.79
29 June 2029 £41.67 £17.12 £58.79
31 December 2029 £41.67 £17.12 £58.79
28 June 2030 £41.67 £17.12 £58.79
31 December 2030 £41.67 £17.12 £58.79
30 June 2031 £41.67 £17.12 £58.79
31 December 2031 £41.67 £17.12 £58.79
30 June 2032 £41.67 £17.12 £58.79
31 December 2032 £41.67 £17.12 £58.79
30 June 2033 £41.67 £17.12 £58.79
30 December 2033 £41.67 £17.12 £58.79
30 June 2034 £41.59 £17.12 £58.71
Total £1,000.00 £410.88 £1,410.88

Updates

These updates tell the story of the investment over its life and include information reported to investors by the company or council behind the investment. The updates are provided for informational purposes only and do not constitute an inducement or invitation to invest. Information provided at the time of publishing may no longer be accurate.

Orbital Marine Power (Orkney) Debenture 2 opened for investment today.

Please read the full update here

Trading is paused pending an update from the company which is expected in the next few weeks.

An investment return from Orbital Marine Power (Orkney) Debenture 2 was paid today.

Please read the full update here

Please read the full update here

An investment return from Orbital Marine Power (Orkney) Debenture 2 was paid today.

Please read the full update here

An investment return from Orbital Marine Power (Orkney) Debenture 2 was paid today.

This investment closed today.

The investment is now open to all Abundance investors. Existing investors in the first debenture from Orbital Marine Power (Orkney) have the option of using some of their repayment due on 30 June to invest in this new Debenture offer. So far existing investors have already committed over £3.1m which has reduced the amount remaining to reach the £4m target.

Orbital Marine Power (Orkney) Debenture 2 opened for investment today.