UK – Lancashire County Pension Fund has invested £12m (€14m) in a community owned solar power plant in Oxfordshire, a commitment the scheme's chair described as "worthwhile and sustainable".

The £4.6bn fund for the English county will provide £12m to refinance the project's cost, with the Westmill Solar Cooperative repaying the loan by 2037.

David Westley, councillor and chair of the Lancashire local authority fund, acknowledged there had been much debate surrounding more localised and specifically community-focused investment and said he was pleased to be able to make the commitment.

"Our first responsibility is to secure the best returns for people in our pension fund, but many will be interested in knowing their pension investments are helping fund worthwhile and sustainable schemes such as this one," he said.

The 23.5-year bond will provide the coop with long-term finance, as well as guarantee Lancashire a return 3 percentage points above the retail prices index.

Investec Bank's Ian Dixson said the bond deal had been in the works for almost a year and stood alongside an additional £6m raised from individual shareholders.

"With long-term bank finance increasingly scarce, bond investment is now more relevant for long-term infrastructure projects," he added.

Westmill's 21,000-panel farm will stand alongside an existing wind farm in Oxfordshire, providing 4.5m kWh a year.

The farm's chair Philip Wolfe praised Lancashire for its "pioneering investment".

"The long-term income from community energy provides a great match to a pension fund's commitments, and there is an obvious fit between local authorities and community projects," he said. "This is a model many others should follow in the future."

Mark Luntley, board member at the coop, said Lancashire's commitment was a good example of how pension funds could invest in community infrastructure, aided in future by a proposed collective bond finance agency.

The creation of an agency was suggested in a report published by the Local Government Association in September last year.

The deal comes shortly after the Universities Superannuation Scheme announced nearly £100m in long-term financing to a UK water company, the £36bn fund's second such deal in under a year.