Karina Sidenius – Renewable energy investment


Karina photoKarina graduated from Royal Holloway, University of London in 2013 with a degree in History. While studying she developed a keen interest in climate change and renewable energy, choosing to study the history of carbon taxes in Denmark and their effect on renewable energy investment and CO2 emissions. She joined Abundance in November 2013 as an intern and is now part of the Marketing team, focusing on social media marketing and content.

Brighthelm_mastheadThere’s a neat symmetry about getting out of fossil fuels and getting into renewables, especially those that benefit the local community too. Tell us about the role you play as a financing intermediary for renewable projects.

Karina photoAbundance works with developers and investors to make UK renewable energy projects beneficial to as many people as possible, and thereby increase the positive lobby for renewables in the UK and abroad.

We work with developers to produce a model, investment Offer Document, due diligence – the lot! Once the offer is live, it’s through the Abundance platform and our marketing that potential investors get to hear about the project and invest.

This makes life easier for both parties, since we do all the work finding and administering the investors for the life of the investment, while also keeping investors up to date on their project and how their investments are doing, all in one place.

For developers, by raising funds through us they have the opportunity to show that they genuinely care about local engagement with the project by opening investment to the local community from just £5, as well as sharing the benefits of renewables with people outside the local community too.

On the investor’s side, our role is also about letting people know that yes, they can earn 6-9% IRR over a project’s lifetime, but also that their money – by going into an Abundance project – is going to be doing something useful for society and the environment too.

This is an important factor for a growing number of people who they really care about what their money is supporting. All our projects have different community benefits. So far these have included reducing energy bills for schools, social housing tenants, libraries and more by giving them free or discounted solar power. Some of our wind turbines also pay into Community Funds or support rural car schemes.

With all of us paying for the switch to more renewables on our energy bills, we may as well help as many people as possible take advantage of the financial, social and environmental benefits that come with that switch.

Brighthelm_mastheadIs there scope for larger institutional investors to follow this route – or other ways they can invest in renewables? What kind of returns are on offer?

Karina photoVery large institutional investors such as pension funds are already investing heavily in renewables, but that’s in the region of millions and tens of millions of pounds.

For smaller institutional investors who still have significant sums they’d like to invest in renewables but don’t want to be overly exposed to any one project, there’s certainly the chance to go down the direct investment route.

For example, if an institutional investor were to go through Abundance the benefit to is that they can test the waters first with a smaller amount. It’s also ideal for these types of investors as, just as with ordinary investors, they can spread their risk by investing smaller amounts across a large number of projects. This reduces their exposure to risk since all the projects are standalone investments and therefore the failure of one, if it were to happen, would not affect the rest of your portfolio.

The returns on offer vary from project to project, but are usually between 6-9% IRR over the lifetime of the investment (typically 15-25 years). 

Brighthelm_mastheadWhat are the risks involved in practice with renewable energy projects – how safe are they as a long-term investment?

Karina photoThe risks with renewable energy projects vary from project to project depending on a host of different factors, including technology type. All our returns are calculated taking into account variations in weather over the project’s lifetime, with allowances for the amount of sunlight or wind, for example, the specific project site receives. All the risks for Abundance projects are listed in the individual project’s Offer Document.

The safety of investing in renewables as a long-term investment will always vary from project to project and between product types too. Our Debentures, for example, pay back an equal proportion of capital each 6 months over the project’s lifetime along with interest payments. This reduces the risk to investors over time, as more money is back in their hands as the years go on – without reducing the proportion of a project’s profits they’re entitled to.

 

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2 Responses to Karina Sidenius – Renewable energy investment

  1. geoffbarnard says:

    Thanks for kicking off the debate Karina. What is the recent slump in oil prices doing to the economics of renewable energy projects? Is this an added risk factor, or a help?

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    • Karina says:

      In terms of our projects it isn’t a big concern as they all earn revenues from the Feed in Tariff, which is unaffected by things like a slump in the price of oil.
      With the UK Feed in Tariff system set to continue for years to come until renewables no longer need a little extra support, I personally don’t think there’s too much to worry about in terms of new projects not going ahead. There is still the opportunity to earn a decent return from renewable energy projects and as such I don’t think investors – whether institutional or individual – will be particularly “put off”.

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