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Green Loans Dry Up As Subsidies End

June 19, 2018

By Paul Homewood

 

More evidence that new investment in onshore wind and solar power has dried up since the ending of subsidies in the UK.

From the finance magazine, Peer2Peer:

 

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A DEARTH of renewable energy loans has been blamed on over-zealous lenders chasing “low hanging fruit” and an end to a government-backed subsidy programme.

In May, Assetz Capital closed its Green Energy Account (GEA) and in March, defunct P2P platform Trillion Fund paid off its final renewable energy loan. Both platforms have blamed a lack of new loans and an end to government subsidies for the failure of their green initiatives.

However, Bruce Davis, joint managing director of Abundance Investment, told Peer2Peer Finance News that most P2P lenders were disproportionately targeting lower-risk operational loans in the renewable energy space, and ignoring the opportunities in infrastructure and construction.

“In terms of operational assets, there is an abundance of money chasing too few deals at the moment,” said Davis. “The big money tends to go after the low hanging fruit which is operational assets. This means that it is challenging to compete for project tenders in this sector.”

According to Theresa Burton, chief executive of Trillion Fund, the end to government subsidies meant that Britain’s emerging wind and solar sector was unable to scale up to meet demand, and this is what caused deal flow to dry up.

“The last three years have been a difficult transition for the industry in wind and solar,” she said. “The cuts were too hard and too fast. It didn’t give the sector time to adjust to the economics.”

Meanwhile Stuart Law, chief executive at Assetz Capital, confirmed that the end of the subsidy scheme was largely to blame for the end of the GEA account, but he pointed out that the GEA did invest in some green energy construction projects.

“The subsidy reductions created a situation where far less entrepreneurial development was taking place for us to fund,” said Law. “The wind turbine industry has hit critical mass now, with very substantial contributions to national energy needs, and we took the opportunity to simplify our lending back to property-secured loans”

http://www.p2pfinancenews.co.uk/2018/06/15/green-loans-dry-up-as-lenders-target-low-hanging-fruit/

 

The low hanging fruit referred to is investment in existing, operational projects, which are still for subsidies. This is common practice, which allows the original developers to cash in.

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7 Comments
  1. Derek Buxton permalink
    June 19, 2018 9:09 am

    As the subsidies, bribes, are being reduced, can we please have our energy prices reduced in line with that? No? thought not!

  2. David Richardson permalink
    June 19, 2018 9:32 am

    You mean I am too late to get on the bandwagon? B**g*r !!

    Reminds me of the cartoon I saw recently – two unicorns stood looking out over the water with Noah’s Ark sailing off in the distance – one says to other “Oh! hell was that today??”

    Story of my life – should be more organised (my better-half says) or just do less perhaps?

  3. June 19, 2018 10:33 am

    But we’ve been repeatedly told how wind is now the cheapest form of electricity generation, so investors should be queuing up to get on the bandwagon and make big profits now that electricity prices are high and rising. I wonder why they aren’t. Has the wind farm scam ended?

  4. It doesn't add up... permalink
    June 19, 2018 1:08 pm

    What worries me is seeing pension funds being encouraged to disinvest in reliable energy sources in favour of unreliable ones. Whenever governments are desperate they raid pensions. So we have things like this:

    https://www.insidermedia.com/insider/wales/pension-fund-backs-tidal-lagoon-project

    based on this:

    https://www.theguardian.com/business/2018/jun/18/uk-pension-funds-get-green-light-to-dump-fossil-fuel-investments

    Future pensioners will be very angry when they find how their funds have been misallocated, and their pensions cut.

  5. markl permalink
    June 19, 2018 6:04 pm

    All one has to do is look at the lack of success to date with so called “clean energy solutions” to understand it’s a losing financial proposition. If you insist on continuing down this path don’t use my tax money to bankroll your boondoggles.

  6. Ben Vorlich permalink
    June 19, 2018 7:33 pm

    Seems to me, since man started making stuff, there are 3 ways to become wealthy.
    1. Find a source of raw material and sell it. It could be flint or cows,wool or animal skin, iron ore or wood, gold or diamonds.
    2. Buy a raw material and turn it into something. Flint axe or knife, cloth or leather, steel tools or wood furniture. Jewelry for displays of wealth.
    3. Lend money to 1 and 2 and charge interest.

    If you are able to be the only supplier of 1 or 2 or if yours is the lowest cost then you can become very rich, no 3 will become rich whatever happens.

    So called renewables are bound to fail because in order compete with fossil fuels they need a second source or a system which stores surplus; but a surplus cannot be guaranteed so a third source is required. Without subsidy renewable won’t make money for lenders, who will therefore invest in something else. Particularly something subsidised by the taxpayer which will guarantee repayment.

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