The company responsible for running a Somerset council’s renewable energy investment has posted a loss of more than £200,000.

South Somerset District Council invested £9.84M in a battery storage facility on the outskirts of Taunton in May 2018, allowing it to earn money for front-line services by storing electricity and selling it back to the National Grid at peak times.

The council teamed up with Opium to create SSDC Opium Power Ltd as a special purpose vehicle (SPV), a form of company, to run the site.

But the company was operating at a loss as of the end of the last financial year – which the council says is “a cash flow matter” as a result of the facility not yet being fully up and running.

A report by official auditors Grant Thornton was published before a meeting of the council’s audit committee on Thursday (July 25).

A spokesman said: “The council has recently set up SSDC Opium Power Ltd, which is a special purpose vehicle (SPV) set up to deliver a renewable energy project.

“The shares are jointly held with SSDC and Opium Power Limited each holding a 50 per cent interest. The council has provided a secured term loan facility to the SPV to finance the acquisition of long-term assets, with the loan to be fully repaid before any distribution of profit to shareholders.

“The facility will commence full operation during 2019/20. The draft unaudited accounts of the joint operation for the year ended March 31, 2019 disclose net liabilities of £222,000 and a net loss of £222,000, reflecting the start-up phase of the business.”

The council has confirmed the battery storage facility is not yet fully operational, but said the SPV’s net loss would be repaid through revenue earned from it.

A spokesman said: “This is a year-end accounting position (stated on a particular date), and some charges to the company are made in advance and other payments/ income on a project like this are made in arrears.

“The site is not fully operational yet. The first energy auction contract for SSDC Opium Power, which was won by Kiwi last year, commences in October, so there has been no cost to the council.

“Cash flow for the project is projected from this time.”

The council said no additional money from taxpayers would be needed to cover this, stating it “a company cash flow matter” and the facility’s value was now higher than the cost of purchasing it.

The spokesman added: “It will balance in due course, when the site is fully operational through revenues and returns due to the company.

“The council earns interest on all outstanding loan monies to the company until all funds are repaid.”