The backing is seen as investors sending a strong signal, with the money coming from IPOs and secondary issuance from existing companies.
On Wednesday Aquilla European Renewables Income will list.
Here members of the Association of Investment Companies (AIC) reveal what is sparking their interest and why.
Jon Forster, manager of Impax Environmental Markets, said: “We invest in four sectors; new energy, water, waste and sustainable food and agriculture. We look for companies providing compelling solutions to environmental challenges. For example, investing in companies offering products and services that help us to either adapt to or mitigate climate change.
“The main objective of our portfolio is to deliver strong risk-adjusted returns for our investors. However, as an outcome of the opportunities that we actively invest in, the portfolio delivers a net environmental benefit. Of the technologies in our universe, those that have the biggest net environmental impact are reverse vending machines and renewable energy.”
For Richard Crawford, manager of The Renewables Infrastructure Group (TRIG): “To date TRIG has invested in wind, solar and battery storage. Jädraås wind farm is an example of one of our more recent acquisitions. This is a large operational onshore wind farm in Sweden, capacity 213MW (megawatts), which we acquired in February.
“Jädraås is interesting because most of the revenues come from power sales rather than a subsidy, which demonstrates the success of renewables as costs have been coming down. In 2018, TRIG acquired several assets with highly contracted feed-in-tariff or contract-for-difference subsidy revenues, so Jädraås complements our existing portfolio nicely.”
Chris Tanner, director of John Laing Environmental Assets Group (JLEN), commented: “JLEN has invested in a diversified portfolio of environmental infrastructure projects across a range of technologies, including onshore wind, solar photovoltaic, wastewater and waste management, and anaerobic digestion.
“We have recently been acquiring assets in the anaerobic digestion sector, such as Vulcan Renewables, a 5MWth (megawatt thermal) plant that uses energy crops as a feedstock and produces ‘green’ gas (gas created from biodegradable material that can displace fossil fuel gas) for the UK’s gas network, for which it earns an attractive inflation-linked subsidy. We are engaged in an upgrade project at Vulcan that will more than double its capacity, generating enhanced returns for investors.”
Ben Guest, manager of Gresham House Energy Storage, added: “The Gresham House Energy Storage Fund seeks to capitalise on the growing intraday supply and demand imbalances caused by our increasing reliance on renewable energy. The fund is aiming to provide investors with an attractive and sustainable dividend by investing in a portfolio of grid-connected, utility-scale energy storage systems located in Great Britain, which primarily use batteries to import and export power, accessing multiple revenue sources available in the power market.
“After the fund’s successful £100m IPO in November 2018, a portfolio of five operational seed energy storage systems projects was acquired, with a total capacity of 70MW. Of these, Project Staunch in Staffordshire and Project Roundponds in Wiltshire are the two largest at 20MW each. These two projects are typical of the fund’s investments. Set within a reasonably small compound of 1-2 acres, lithium-ion batteries function as the core component of the projects which store and release power almost immediately upon receiving the signal to do so.”
“But where it gets really interesting is the addition of positive disruptions, because they really accelerate growth,” said Impax’s Jon Forster.
“The science of climate change is no longer in doubt and what is clear is that, on its present trajectory, the economy cannot react quickly enough to the climate challenges we are facing.
“Governments will turn up the ratchet of regulation, which will in turn encourage action – we’ve seen this most recently with the war on plastic, for which the regulatory response has been unprecedented. But there is also a clear need to adapt to climate change. I have been co-managing IEM for 17 years and the growth trajectory for environmental markets really has never looked as compelling to me as it does now.”