The clean energy sector is “very vibrant” and investors are attracted by the “predictability of returns”.
That’s the view of James Axtell, Clean Energy Investment Director at Ingenious – which invests in projects including solar, onshore wind, anaerobic digestion and energy efficiency.
At the Major Energy Users Council (MEUC) conference in London yesterday, he told ELN: “The market has gone beyond a nascent phase into a more mature phase. So what we’re seeing is new investors coming in, particularly institutional investors, both overseas and the UK, which are bringing down the cost of capital and as a result more and more of the projects being invested in and developed.”
He added: “One of the key attractions in many ways is the fact that a significant proportion of the return is index-linked through some of the government subsidies that are available.”
He believes the UK Government’s Contracts for Difference (CfDs) – from an investor’s perspective – has got some “really attractive merits” as there’s confidence in the price they’re going to get for what the asset is producing.
Mr Axtell added: “I think where there is a little bit of, not so much uncertainty but a change in the risk profile is for developers who are looking to invest in and develop projects but don’t necessarily know they’re going to be successful in the auction which potentially lends itself to more larger scale developers thriving and perhaps some of the smaller developers finding it a bit more difficult.”
He believes that while there is currently a “big focus on solar projects and to a degree wind as well”, investors are being increasingly comfortable with newer technologies such as anaerobic digestion in the UK.