Commitment to the UK Renewable Energy Market

On the 1 August 2012 the solar industry was hit with further reductions to solar feed-in-tariffs (“FiT”). While there is speculation as to what impact this will have on investment across the industry, Octopus Investments (“Octopus”) believes that there is a compelling investment case for renewable energy despite the inevitable legislative changes that come with the sector.

Over the last 18 months Octopus (UK), in partnership with Lightsource Renewable Energy, its dedicated in-house solar development company, has made a significant contribution to the UK solar market investing in both small and large scale solar power sites. Having become the largest installer of commercial solar in the UK, deploying around £300 million since the start of 2011, Octopus is already building on its solar experience and expanding its investment into the broader renewable energy market.

Most recently, Octopus announced its partnership with Geothermal International to install ground source heat pumps into some of Sainsbury’s supermarket sites, as part of the retailer’s innovative renewable energy strategy. With the UK Government’s commitment to achieve 15% of its energy consumption from renewable sources by 2020, there is increasing pressure on everyone in the UK - both individuals and corporate - to play their role in supporting the green agenda.

Octopus combines significant renewable expertise with the ability to raise funds through its Venture Capital Trust, Inheritance Tax Service and Enterprise Investment Scheme products, to help deliver renewable technologies more efficiently to customers. Through its flexible approach to investment, Octopus enables its investors to benefit from investment opportunities in the green energy market and to support the UK’s renewables policy, while also delivering on its product mandates. The market provides an opportunity for investors to gain access to attractive and stable returns through investment in renewable energy companies, many of which benefit from renewable energy production subsidies.

Commenting on Octopus’ green energy strategy, Kat Johnston, an investment manager at Octopus, said: “The 1 August deadline is a milestone, but it doesn’t spell the end for the solar energy sector. Far from it. The reduction in FiT rates was inevitable given that solar technology is getting cheaper. We think that solar still has a great future and remains a key part of the UK’s renewable energy commitment.

“Octopus has worked hard over the last 18 months to support the Government’s commitment to renewable energy. It is now a rapidly growing market that is positively impacting the economy, including creating opportunities for UK smaller businesses. Our work with Lightsource has seen us develop into one of the biggest solar investors in the UK and we look forward to building on this success as we continue to expand our investment alongside solar into other areas of the renewable energy market.”

Since the beginning of 2011, Octopus and Lightsource have successfully built a number of large solar sites across the UK, including at Dunsfold Park in Surrey which is best known as home to the BBC’s ‘Top Gear’ race track, as well as building a series of smaller scale sites for schools and farms. The flexible investment approach that Octopus provides has enabled it to work across a diverse range of solar sites, including sites that need building and those that are already operational. Octopus will continue to develop these sites that benefit from FiTs and Renewable Obligation Certificates, as well as supporting other renewable investments.