Octopus to raise £120 million for renewable energy

Asset manager Octopus Investments has signalled a continued commitment to back the UK’s solar industry, announcing plans to raise £120 million to make further investments in renewable energy.

In a statement, the firm says it hopes to raise up to £120 million into its Octopus EIS, an Enterprise Investment Scheme which is currently open to investors, and a new Venture Capital Trust (VCT) soon-to-be launched.

The minimum investment for the VCT fund will be £3,000, which is an amount the firm expects will lead to smaller investors participating in the fundraising.

The move from the firm follows the delivery of 11 large-scale solar sites last month, which were funded in a joint venture between Octopus investors and solar development partner Lightsource Renewable Energy. All of the large-scale solar power sites, which are located throughout England, were connected to the National Grid ahead of the feed-in tariff (FIT) deadline of 1 August.

Octopus managing director Paul Latham says, ‘People haven’t missed out on the investment opportunity from solar, but now that the 1 August deadline for large-scale solar farms has passed, the focus has turned to a portfolio of smaller solar installations. By smaller we mean sub-50kW sites, about the size of two tennis courts.

‘Investments in solar currently qualify for both VCT and EIS tax benefits, although this is set to change after 5 April 2012. So there’s a limited opportunity for investors and they can’t afford to wait until next tax year. With investors able to invest in solar starting with as little as £3,000 this is substantially less than it would cost to install a solar array onto the roof of a house.’

The product launches can also be seen as a show of support for the solar investment industry after it was thrown into chaos in February when energy minister Charles Hendry announced that all aspects of the FIT scheme were to be reviewed.

Under the scheme created in April last year, the government pays homeowners, businesses and organisations which generate power using small-scale green energy installations such as solar panels.

But Hendry said at the time that he was concerned large-scale commercial operations are exploiting the tariffs and imposed limits on the size of the solar farm. He also launched a review of the scheme, but granted a concession to projects connected to the grid ahead of 1 August to enable them to continue receiving the tax benefits.

Todd Cardy

Todd Cardy

Todd was Editor of GrowthBusiness.co.uk between 2010 and 2011 as well as being responsible for publishing our digital and printed magazines focusing on private equity and venture capital.

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