WELCOME TO GRESHAM HOUSE NEW ENERGY

A STRATEGY OF GRESHAM HOUSE

ABOUT US

The aim of Gresham House New Energy is to generate sustainable financial returns for our investors while supporting the shift from finite resources to a clean energy world.

The investment team includes responsive, analysis-driven investment managers who understand the potential of clean energy, and have an impressive track record to prove it. Our target clients are yield-focused investors seeking capital preservation.

The team creates attractive investment offerings which are focused on the four transformative technologies – solar power, electric transportation, onshore wind and energy storage. Attractive means strong asset backing that supports a sustainable yield and potential for capital growth over the medium term. Where a tax-efficient structure is available, the team will seek to maximise the opportunity.

Why invest with Gresham House New Energy

Over the last decade since 2007, Gresham House New Energy has successfully invested in the very rapidly changing energy landscape despite regulatory uncertainty and complex risks. It has harnessed its team’s technical and investment expertise to produce a strong track record while delivering sustainable, attractive yields for its investors and preserving capital. Gresham House New Energy has invested across the clean energy spectrum in wind, rooftop and ground-mounted solar, energy and battery storage. By having good capital-backing, best-practice management processes and an IT infrastructure which minimises costs and the potential for inefficiencies, the team has been free to apply its core competences. This, combined with a resilient determination to learn, has allowed Gresham House New Energy to maintain its edge over the competition and the result is one of giving our investors a feeling of pride that comes from successfully investing in new and critical areas of the clean energy industry.

Gresham House New Energy investment solutions are appropriate for investors who seek investment returns supported by strong asset backing, a sustainable yield through regular income distributions (where applicable) and potential for capital growth from investment in new energy infrastructure.

Investment Overview

Renewable energy is a proven asset class for both institutional and private investors.

By investing into sustainable real assets such as wind and solar, investors can hold the asset for the long-term income stream, providing stable and partially inflation linked returns.

The development opportunities to invest in consented Renewable Obligation Certificate (ROC) and Contract for Difference (CfD) projects are now limited.  However, a significant number of opportunities exist to invest in operational assets on a subsidy free basis. Operational assets have a proven track record and c.50% of the revenues are secure as ROCs and CfDs are grandfathered. They are not subject to the government’s early closure of the Renewables Obligation and CfD regimes.

Currently, onshore wind and ground-mounted solar are the most established of the renewable energy technologies and are two of the lowest cost technologies. For more details on investment opportunities please contact Gresham House.

Attractive Index Linked Income Streams

The UK is a prime location to invest in renewable energy projects.

  • UK demand for electricity is forecast to rise on an annualised real basis of c.2% over an assets life, despite the drive for energy efficiency as much has already been implemented. Meanwhile, supply from traditional thermal generators continues to decline in line with government emission reduction schemes, e.g all coal stations will close by 2025. This is forecast to lead to upward pressure on power prices over the medium and long-term.
  • UK power prices have declined over recent times and Gresham House believe now is a good time to acquire renewable energy assets whilst power prices are relatively low.
  • UK Government has legislated that 15% of total energy consumption should come from renewable sources by 2020.
  • The UK has the best wind resource in Europe and assets enjoy high capacity factors generating high levels of electricity output associated revenue.
  • These market conditions provide attractive returns to investors through partially indexed linked cash flows and potential upside from expected power price increases.

Investment Opportunities

There are a significant number of UK direct investment opportunities for equity investors in both operational wind farms and solar parks.

Gresham House is able to source and structure a transaction to suit your investment requirements.

Renewables FAQs - Direct Ownership

What is Renewable Energy?

Renewable Energy is energy derived from resources that are continuously replenished by nature. Types of Renewable Energy resources include wind, solar and water to produce non-polluting, carbon free power.

 

What are the benefits of Renewable Energy? 

Unlike fossil fuels that form over millions of years and release carbon dioxide and other harmful pollutants into the atmosphere when burnt, Renewable Energy is a clean source of energy that can be harnessed with a minimal impact on the environment.

 

What targets does the UK have for Renewable Energy?

In Britain, we consume energy for three main uses: heating, electricity and transport.  Over 90% of this energy still comes from fossil fuels. UK Government has legislated that 15% of total energy consumption should come from renewable sources by 2020.

 

Why invest in Renewable Energy assets?

Renewable Energy is now a mainstream investment and a proven asset class as some sites have been operating for over 20 years.  Investments in Renewable Energy assets are socially responsible and provide long term cash flows which are partially linked to inflation.

Once a Renewable Energy asset becomes operational, the operating costs required to produce electricity are circa 25% of the revenues, and are largely fixed and predictable.

Gresham House has a dedicated Renewable Energy Team with significant experience of acquiring and maximising the returns from Renewable Energy assets, in particular onshore wind and solar.

 

What subsidies do Renewable Energy assets receive?

Operational wind and solar assets (subject to size) receive substantial government subsidies, either through the ‘Renewable Obligation’, ‘Feed in Tariff’ or more recently the ‘Contract for Difference’ scheme.  These provide a substantial element of the total revenue, typically >50%. Subsidies are provided under legislation for 15, 20 or 25 years depending on the scheme, and are index-linked to increase annually with inflation.

 

Is there a risk that subsidies will be reviewed for existing operational UK Renewable Energy generating assets?

In our opinion, it is highly unlikely that the UK Government will review its strategy towards operational assets or retrospectively change its support for existing Renewable Energy assets.  Any retrospective changes to the subsidy regime could be subject to legal challenge and undermine investor confidence, at a time when there is much investment needed in infrastructure.  To date, the UK Government has been careful not to undermine investor confidence.

 

Is now a good time to invest in Renewable Energy?

Yes, we believe so. Electricity prices are relatively low and are forecast by industry experts to rise by circa 2% in real terms over the next 20 years. Buying an asset with 20 to 25 years life now, will allow investors to benefit from index-linked cash flows whilst being in a position to benefit from an expected increase in power prices as supply becomes more constrained as old coal and nuclear are phased out.

 

How is the electricity sold?

There is a competitive market for trading renewable electricity, which is growing steadily, resulting in increased choice and improved terms. The most common route to market is through a ‘Power Purchase Agreement’ (PPA), which is a contract to sell power and Renewable Obligation Certificates (ROCs) on pre-agreed terms, under a contract that ranges from six months to 15 years. This long term contract ensures investors have a route to market that meets their desired risk return profile with minimal cost and effort.

 

What is the potential for income growth?

There are opportunities for enhanced returns from Renewable Energy investments through increased demand for electricity and an increasing shortage of UK generating capacity putting upward pressure on power prices.

As well as the subsidy (typically 50% of the revenue) being index linked, wholesale electricity prices are forecast to increase in real terms by circa 2% annually according to one leading industry consultant, as old power generating capacity becomes redundant, putting increased pressure on the future supplies.

 

Are there any tax benefits?

Renewable investments can offer attractive and efficient tax benefits dependent on the investors’ specific tax status and the investment structure.

Certain structures allow distributions to typically be tax-free for up to seven years as investors benefit directly from capital allowances offsetting taxable profits. In certain circumstances, investments may also qualify for 100% inheritance tax relief (once held for 2 years).

Note: Gresham House does not provide taxation advice and the guidance above is based on Gresham House’s current understanding of UK tax laws. You are advised to consult your own professional advisers in relation to such matters.

 

What is the minimum investment?

Gresham House acts for both private and institutional investors with an interest in direct ownership of consented or operational Renewable Energy assets.

The typical investment in operational assets for Institutional investors or High Net Worth Individuals is greater than £1 million. Other investment structures are available for smaller investors.

 

How are the assets managed?

Gresham House has a dedicated Asset Management team for its Renewable Energy investments, that has a long track record of maximising returns through active asset management.

Gresham House can provide a range of Asset Management services including: full accounting and VAT services, regular in-depth reporting and analysis, control of expenditure and debt service, power price hedging, taxation, market intelligence and investment vehicle management. Gresham House is focused on maximising plant availability, output, power price and on strong financial control.

 

How are Renewable Energy assets valued?

Renewable Energy asset valuations take into account a wide range of factors including annual energy yield, power prices, level of subsidy, age of project and operational costs.  Using our specialised industry experience and market knowledge, we are able to forecast the anticipated cash flows from a Renewable Energy asset, which derive a valuation based on a discounted cash flow model.

Gresham House’s annual internal valuations are supported by regular independent external valuations.

 

Is there a difference between Solar and Wind returns?

Returns on solar assets will typically be lower due to the generation being more predictable than that from wind. Solar assets also have fewer moving parts so tend to be cheaper to maintain and lower risk. Returns also depend on levels of gearing which vary between asset classes, with wind assets having typically 40 to 60% gearing and solar assets often ungeared, or < 30% gearing in many cases.

Both asset classes offer attractive cash yields in the current low interest environment. For more detail on current rates of return please contact admin@greshamhouse.com.

 

What are the main risks to an investment in Renewable Energy assets?

The main risks are from wholesale power prices, wind-speeds/hours of sunshine and therefore energy output. Power prices are currently at relatively low levels with industry forecasters expecting power prices to rise over the long term.  Low energy yields from adverse weather conditions (low wind, poor sun) can affect short-term distributions, however these are expected to be balanced out over the longer term.

 

What are the environmental benefits of owning Renewable Energy assets?

Energy generated from renewable sources offset the need to generate electricity from coal and gas, which, according to the DEFRA reporting guidelines produce 430g CO2/kWh. Using these figures gives the following Carbon Dioxide emission reductions:

  • A 10MW Wind Farm saves c.11,300 tonnes of carbon dioxide emissions per year.
  • A 10MW Solar Park saves c.4,100 tonnes of carbon dioxide emissions per year.

Renewables UK assumes a standard home uses 4,222kWh of electricity per year, so a typical 10MW wind farm supplies more than 7,000 homes per year and a 10MW solar park supplies more than 2,220 homes per year.

Gresham House recently managed the acquisition and construction of Harburnhead Wind Farm near Edinburgh. This 51.7MW wind farm will generate enough power to supply the equivalent of 33,000 homes. It is expected to contribute over £3 million to the local community and will save almost 60,000 tonnes of carbon dioxide emissions every year.

If you wish to know more please contact admin@greshamhouse.com or submit a Client Financial Information Form (“CFIF”).

How to Invest

For information on how to invest in Gresham House Energy Storage Fund plc, please click here.

For information on how to invest in the Gresham House Renewable Energy VCT 1 and 2, please click here.

Our other vehicles are unregulated collective investment schemes (UCIS).  As such they are subject to restrictions on how they can be promoted to investors.  Gresham House Asset Management Ltd is regulated by the Financial Conduct Authority (FCA) in relation to the promotion, operation and management of UCIS.

In order to be provided with information in relation to such opportunities you must be either:

  • An investment professional authorised to advise on UCIS; or
  • A person who has completed the Client Financial Information Form (“CFIF”) and has been assessed by Gresham House as being suitable and appropriate to invest in the opportunity by being either a Certified High Net Worth Investor or a Self-Certified Sophisticated Investor; or
  • A person who is a Certified Sophisticated Investor; or
  • An Eligible Counterparty or Professional Client as set out in the FCA Handbook.

 

Direct Ownership

Gresham House is able to acquire operational renewable energy assets for a wide range of Retail and Institutional investors to suit varying investment objectives.

  • Investments are generally available from £1 million upwards.
  • Ability to generate regular partially index-linked income for up to 20 years.
  • Ready liquidity through an active operational asset market.

Gresham House provides a fully independent investment management service, including:

  • Investment Selection and Due Diligence
  • Contracting
  • Project Financing and Structuring
  • Construction Management
  • Operational Supervision
  • Asset Management
  • Financial Control
  • Annual Reporting and Accounts
  • VAT Administration
  • Banking (if required)
  • Insurance

Gresham House offers a flexible approach in providing these services in order to meet the investor’s needs.

Gresham House can act on the buy or sell side of onshore wind and solar PV transactions on behalf of investors.

Gresham House’s extensive knowledge of the renewable energy market, combined with detailed analysis of an asset’s potential, assist in identifying the right acquisition for an investor.

Gresham House’s asset management strategy is to maximise the return on the investment whilst ensuring that renewable assets are operated and maintained in accordance with all regulations as effectively and efficiently as possible.

Gresham House would be pleased to discuss either direct investments or bespoke requirements for an individual, group of investors or institutional investors.

Direct ownership of renewable energy assets is not regulated by the Financial Conduct Authority.

Gresham House would be pleased to discuss either direct investments or bespoke requirements for an individual, group of investors or institutional investors.

For further information, please contact:

Anthony Crosbie Dawson: +44 (0)1451 843 096

a.crosbiedawson@greshamhouse.com

Team