"Renewable energy lifts hopes of a safe return": FT headline.

FT: “With yields on index-linked government bonds at desultory levels, investors could be forgiven for craving an asset that could offer similar long-term, inflation-linked sustainable returns, but perhaps with a little more juice. Some believe they have found it in the shape of renewable energy installations, such as solar power, wind farms and biomass plants.” “The crucial point is that in most of Europe, and increasingly in countries ranging from Canada to China, operators of such clean energy operations are guaranteed a fixed price for every unit of electricity they generate. These government-backed guarantees typically run for 20-25 years and are inflation-linked.”
Joost Bergsma, managing partner of Glennmont Partners, which has raised €650m for a strategy targeting gross yields of 8-10 per cent: “Clean energy infrastructure is a highly attractive asset class for those investors looking for lower-risk assets simultaneously offering wealth protection, consistent yield and capital value appreciation.”
David Mott, managing partner of Oxford Capital, which operates a relatively conservative strategy designed to deliver index-linked returns of 7-9 per cent a years: “It’s an incredibly attractive asset class, a productive fixed asset with a government-supported income stream. We know the variability of sun and wind.”
Oliver Hughes, senior infrastructure investment manager at Oxford Capital: “There has been a tipping point. Before there wasn’t enough scale in the market. But the growth opportunity is still absolutely enormous. The big opportunities are in Canada, South Africa and parts of southern Europe. Canada, Japan, Thailand and Malaysia have tariffs. China has now as well and they give you half your money back on day one [reducing government risk],” he adds, although for now the bulk of the action is in Germany, the UK, Italy and France.
….Three renewables infrastructure funds – Greencoat UK Wind, Bluefield Solar Income Fund and The Renewable Energy Infrastructure Group – have floated on the London Stock Exchange.”