Renewable energy has enjoyed a huge boost from retail investors in 2013, according to Trillion Fund, the renewable energy crowd investing platform.
IPOs were responsible for the lion’s share of investment, with renewables benefiting from a general increase in Stock Exchange listings this year.
The amount raised by renewable energy companies increased from a few million in 2012 to slightly more than £1 billion in 2013, from institutional and some private investors.
There were five IPOs of investment companies specialising in renewable energy this year.
The launch of two retail bonds in October: Good Energy and Energy Bonds, generated additional revenue for the sector of £22.5 million from retail investors.
Small investors have also helped to fund community projects from small-scale right up to some of the biggest solar and wind parks in the UK, attracted by uncorrelated, steady returns made up of electricity revenues and subsidies.
Trillion Fund estimated that £200 – £250 million will have been raised for renewables through EIS and VCT funds in 2013 (final figures not disclosed) if funds that are currently open meet their targets.
Solar accounted for the greatest proportion of raises, at 60 per cent of the total. From the figures available, £460 million approx. will have been raised this year for solar parks through bonds and other investment vehicles for solar (institutional and retail) and £8.8 million through communities and crowdfunds.
Of the total amount invested in projects this year, 37 per cent went to solar PV, with 54 per cent in wind and the remainder invested in hydro and biomass or mixed funds.
The cost of solar PV to developers has fallen dramatically in the last 12 months and it is one of the easiest technologies in terms of planning; in the last five years, solar PV has a 93 per cent planning approval rate, compared to a 67 per cent rate for onshore wind.
Trillion Fund managing director Julia Groves said: “This year the renewables sector has benefited from a perfect coincidence of developers wanting to raise money to grow and refinance; a booming IPO market, the inflation-protected returns from projects reaching a level that suits income seekers and the sector reaching a stage of maturity that is palatable to more risk-averse, retail investors.
“The result has been a record year for renewable energy stocks with five IPOs, five crowdfunds, two retail bonds and a smattering of EIS funds and co-operative raises.
“Now the Treasury must recognise this huge level of demand and support for the sector by making debt investments in renewables projects eligible for ISAs and SIPPs and continuing to promote renewable technologies through the Enterprise Investment Scheme.”
Trillion Fund predicts that renewable energy will remain an exciting alternative asset class for investors looking for income.
Looking ahead, returns for new onshore wind and solar schemes could decline slightly next year as subsidy decreases for some technologies and sizes of project kick in. However returns for existing schemes would not be affected.
Trillion Fund expects to see projects based on other, less developed forms of renewable technology that are still in receipt of higher subsidies, such as Anaerobic Digestion and biomass, increasingly turn to retail investors for finance.