EUROPE - Real-estate fund manager Palmer Capital and renewable energy firm Low Carbon have launched a fund investing in solar parks, aiming to raise £52m (€60m) and buy as much as a third of the UK’s solar parks.
The new fund - the UK Solar Income Partnership - is the first fund specifically made to invest in this type of green energy plant, the parties said.
It aims to raise £52m from institutional investors and use this to buy three operational solar parks from Low Carbon.
Roy Bedlow, chief executive at Low Carbon, said: “Solar photovoltaic power is a commercially available and proven technology with significant potential for long-term growth.”
He said that, by 2050, it was estimated that photovoltaic power would provide around 11% of global electricity production, equivalent to cutting carbon-based emissions from the average annual electricity use of 253m homes.
The fund will be a 10-year, closed-end, tax-efficient investment vehicle, although there is an option to extend it to 25 years.
It aims to produce an attractive long-term rate of return supported by government-backed income in the form of the Feed in Tariff (FIT).
The government introduced FITs, which are RPI-indexed and applicable for 25 years, to boost renewable energy output.
The management team will co-invest £2m of equity into the fund. Palmer Capital is acting as sponsor, while Low Carbon will be responsible for fund and asset management.
Alex Price, chief executive at Palmer, said the fund aimed to provide an annual net return of 9% on a geared basis, or 8% on an ungeared basis, depending on the final capital structure of the fund.
“We are one of the first property companies to invest into renewables and one of the first to see a new alternative institutional asset class emerging from the cross-over between real estate and renewable energy schemes,” he said.
The solar parks are at Kilkhampton, Hayle and St Austell in Cornwall. They have sites of 21-25 acres and together comprise more than 65,000 photovoltaic solar panels producing more than 15m Kilowatt hours per year.
The fund has an option to buy a fourth solar park, which is also in Cornwall.
If this option were exercised, the fund would then own four of the 12 solar parks in the UK.