The development side of the Hydro market has been hit by the reduction to the FIT’s, but that doesn’t mean all activity needs to stop and so we should look to the secondary market for activity. Speaking to various people both in Scotland and London it seems there is plenty of appetite for investment into clean energy projects both small and large.
Investors looking to buy a single project should consider this thought:-
Separation of Assets
Opportunities may arise through separation of operating hydro assets on the sales of Estates or Farms. This could also be a way to maximise sale revenue as different buyers would maximise sale prices.
Consideration would need to be given to the splitting of the Farm or Estate and making sure each constituent part has the necessary rights such as access and/or rights to run cables.
Investors who have an appetite for a larger investment should consider:-
EIS fund exit opportunities
Many of the existing hydro schemes have EIS investment with the EIS funds investing for a limited period.
There is a potential opportunity for portfolios to be packaged up and sent to market when EIS funds are exiting. The divestment of the EIS funds is likely to occur late 2017 through 2018.
In either scenario there are issues to consider such as land rights, shareholdings of schemes and grid sharing agreements and do get in touch if that is the case. If you have other feedback or ideas for the future of renewables in Scotland, shape our report into the industry by spending a few minutes taking our survey. Results will be published ahead of All Energy in May.