Renewable investment companies are having their time in the sun

AIC's renewable energy infrastructure sector hits £2.2bn this year

In 2021 alone, fundraising by investment companies in the AIC’s Renewable Energy Infrastructure sector has hit £2.2bn, more than any other sector. This includes the proceeds of three IPOs targeting opportunities in hydrogen fuel, energy efficiency and sustainable infrastructure.

The existing renewable energy investment companies that have raised the most this year so far are the Renewables Infrastructure Group (TRIG) (£440m), SDCL Energy Efficiency Income (£410m) and Gore Street Energy Storage (£208m). Each contributes to a greener future but the differences between their portfolios demonstrate the huge range of choice on offer to investors today.

Launched in 2013, TRIG is the one of the longest-established companies in the Renewable Energy Infrastructure sector and at £2.6bn of assets, it’s also one of the largest. Its portfolio consists of 77 solar, wind and battery projects across the UK and Europe. Last year, these assets meant that more than a million tonnes of CO2 emissions were avoided and they produced enough clean energy to power more than a million homes. TRIG yields above 5% and has delivered a 62% total return over the past five years.

SDCL Energy Efficiency Income invests in projects that help save energy and when it launched in 2018 it was the first listed company of its kind to invest exclusively in the energy efficiency sector. The company states that up to 75% of energy is currently lost in generation, transmission and distribution, and end use. Its portfolio of 40 projects, such as combined heat and power assets, rooftop solar panelling and green gas distribution, aims to help put this right at more than 55,000 properties. SDCL has delivered a 12% total return over the past year and yields 4.9%.

The sun doesn’t always shine and the wind doesn’t always blow so having a reliable way of storing renewable energy is a vital part of achieving net zero. This is where companies such as Gore Street Energy Storage come in. Gore Street owns battery storage facilities across the UK and Ireland capable of delivering 460 megawatts of power. Between March and September last year these assets helped power more than 225,000 homes. Investors are rewarded with a generous yield, 6.1% at the time of writing, and the company generated a 15% total return over the past 12 months.

The attractions of investment companies for investing in this area are clear. Sustainable assets require long-term commitment and investment companies’ closed-ended structure, with no need to manage redemptions, makes them the ideal vehicle. Investors benefit from contributing to a greener future but renewable energy infrastructure companies also provide healthy yields, typically in the mid-single digits, which are an additional draw in the current low-interest environment.

Avatar

Natasha Turner

Natasha is global deputy editor at ESG Clarity, part of the Bonhill Group, and has been a financial journalist for six years. She has been shortlisted for Story of the Year and Investment Journalist of...