Renewable energy has enjoyed a huge boost from retail investors in 2013 – according to a report which analyses the year and what it has meant for the UK.
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 £1bn 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 £22.5m 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.
Individual raises ranged in size from £65,000 to £300m.
We estimate that £200 - £250m 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.
2013 was the year of the sun
Solar accounted for the greatest proportion of raises, at 60% of the total. From the figures available, £460m approx. will have been raised this year for solar parks through bonds and other investment vehicles for solar (institutional and retail) and £8.8m through communities and crowdfunds.
Of the total amount invested in projects this year, 37% went to solar PV, with 54% 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% planning approval rate, compared to a 67% rate for onshore wind.
Developers have increasingly turned to retail investors to fund projects as private equity has become less available and because investors can be a more affordable source of finance than banks.
This year, investors’ money has been used to refinance existing projects as well as to build new ones.
Julia Groves, managing director of Trillion Fund, the renewable energy crowd investing platform, 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.”