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UK watch: Tracking renewable energy investment trends


KATHARINE EARLEY

As we head into 2015, Renewable Energy Focus contributor Katharine Earley speaks to Triodos Bank about investment trends, including crowd-funding, community-owned energy and businesses opting for on-site energy generation.

With renewable energy set to be one of the key winners to emerge from the EU’s new three-year, £250bn investment plan, 2015 could be a promising year for renewables. We caught up with ethical investment pioneer Triodos Bank to understand what trends it foresees for the year ahead.

“We could see some real strides forward for renewable energy in Europe, particularly if the EU’s investment plan focuses on grid infrastructure,” Matthew Clayton, executive director of Triodos Renewables, explained. “As we move from centralised power plants to smaller, distributed energy generation, government investment could really help to address this important systems issue. Coupled with private investment in energy efficiency and generation, such a move could lead to more rapid progress.”

For Triodos’ part, its renewables company, owned by some 5,000 shareholders, operates 11 onshore wind and hydroelectric projects across the UK with a capacity of 53MW, enough electricity to power 34,200 homes. Founded in 1994, the company has seen a 35% increase in shareholders and a 50% increase in generating capacity in the past three years. Its projects generated more than 100m kWh of clean electricity in 2013. Having already raised £2m from its latest share offer, it is now extending the offer until 30th January 2015.

So what does Clayton see as the reasons for this prosperity?
“Investor confidence has grown as the nature of the projects become more robust,” he explained. “The technology is proven and is also decreasing gradually in price. Interestingly, we’re seeing interest from a wide range of investors, from individuals through to institutional investors. And we want to make investing in renewables accessible – that’s why we’re inviting minimum investments of £50 through our current share offer.
From an individual’s perspective, they’re investing in something tangible that’s making a positive difference, Clayton added. “Meanwhile, for pension funds, for example, renewable energy investments represent long-term, retail price index-linked income streams.”
Elsewhere, Clayton notes that the UK government is taking steps to prevent scenarios in which investors benefit from tax breaks by investing in a renewable energy project that is itself benefitting from subsidies. He envisages a possible ‘gold rush’ as the window closes, and a shake-out of projects seeking new sources of capital. But ultimately, with other options available (including through Triodos), he does not expect it to dampen investors’ spirits.
Triodos also lends capital to support developers of renewable energy projects across the UK and Ireland, including community energy projects. The bank is targeting 20% growth per year for the next three years across onshore wind, ground-mounted solar, roof-mounted solar and hydro-electricity projects.
Philip Bazin, environment team manager at Triodos, is optimistic about the future: “We expect further government support for renewables, and we hope to see more long-term binding targets moving into place post 2020. In the coming year, we anticipate the top trends to be crowd-funding, community-owned energy schemes and businesses benefitting from on-site energy generation.”
Triodos’ Top Three Renewable Energy Investment Trends for 2015
1. More projects will be developed to supply a business
“We’ll see more projects developed with a direct supply of renewable electricity to a business,” Bazin stated. “This helps the developer to achieve a better price for the power and reduces electricity losses during transmission. Meanwhile, the business purchasing the energy benefits from greater security of supply, lower cost compared to using major utilities and a boost to its efforts to reduce its environmental footprint.”
According to Bazin, this direct supply of electricity will be a key component of roof-mounted solar projects, which are high on the UK government’s agenda in 2015. This type of direct supply model also helps to raise awareness of the positive impact of renewable energy among building users, he confirms.
2. Community-owned energy will gather momentum
In Germany, more than 50% of renewable energy projects are already community-owned. As communities across the UK embrace the benefits of renewable energy, Bazin sees more communities owning or part-owning projects. For example, schools and communities already benefit from higher Feed-in Tariff (FIT) rates. Now, the government is helping further by raising the maximum size of renewable energy projects that can be supported through the FIT from 5MW to 10MW, provided that at least 5MW is community-owned.
Renewable energy project developers are also expected to offer communities the opportunity to invest in their projects, and the £10m Urban Community Energy Fund (UCEF) is now live. Added to this, the new Community Benefit Register, a joint initiative from the Department for Energy and Climate Change (DECC), RenewableUK and Regen SW, will help communities to share best practice and see the benefits that renewable energy can deliver.
“Together with DECC’s recent guidance on community-owned energy, the register is raising the bar on how developers engage early, proactively and creatively to bring lasting benefits to their host communities,” Bazin added.
3. Crowd-funding is on the upswing
With the largest solar installer in the US (SolarCity) offering $200m of bonds to retail investors, the potential of crowd-funding as a means to grow investment for clean energy is increasingly in the spotlight. In the UK, crowd-funding platform Abundance Generation has raised more than £4m for seven renewable energy projects since 2012.
“Triodos is interested in providing debt to projects that are raising equity through crowd-funding platforms,” Bazin explained. “We’re also helping to raise equity for Triodos Renewables using the Trillion Fund and Ethex platforms.”
Triodos Renewables is already making good progress on raising finance for its four wind turbine projects in Cambridgeshire and Scotland, including through crowd-funding. The projects total 13.4MW of capacity and will take the company’s total generation capacity to more than 65MW. Through a £4.5m, 1.5MW wind turbine project on an industrial site in Cambridgeshire, potato supplier Greenvale will benefit from low cost energy, with the remaining 40% being supplied to the local electricity network.
In another instance, Triodos has acquired a 55% stake in a £16m, five-turbine project near Ely with a capacity of 10.25MW. It has plugged a funding gap, giving the landowner and the developer the opportunity to maintain a significant stake in the project.
Looking to the future, is Triodos is negotiating a further 12 MW of projects worth £20m, and it aims to increase its generation capacity to 125 MW by 2020.
 
Katharine Earley is a copywriter and journalist, specialising in sustainable business.

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Energy efficiency  •  Energy infrastructure  •  Photovoltaics (PV)  •  Policy, investment and markets  •  Solar electricity

 

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