Around £1.3 billion was directly invested into the renewable energy sector in 2013, according to Trillion Fund. The sector benefited from a huge boost from retail investors.
Over the last 12 months, a record £1 billion was raised through UK stock market initial public offerings (IPO), from both institutional and private investors. There were five IPOs of investment companies specialising in renewable energy in 2013.
Community-funded schemes also continued the pattern of increased investment seen in 2012, with almost £7m raised through share offers. The size of the projects varied from £65,000 to £300m.
Julia Groves, managing director of Trillion Fund, said, “This year the renewable sector has benefitted form 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.”
Based on the returns of products listed in the Trillion Fund directory, small investors have enjoyed 5-9% returns when investing in renewables this year.
Groves added, “The sector may depend on small investors as we go into 2014 and beyond for growth, and with the criteria from renewables looking so attractive for investors looking for uncorrelated, steady income investments, there is no reason why retail investors cannot provide this.”
A recent survey found that renewable energy was the preferred investment for 33% of respondents and the second most popular investment for the British public, with only property beating the industry.
Looking ahead to 2014, Trillion Fund said returns for new onshore wind and solar schemes could decline slightly as subsidy decreases for some technologies and sizes of projects kick in.
“We expect 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”, the organisation said.