AMID widespread agreement that wind power will play an important part in the transition to a lower carbon energy system there are questions to be answered about how the costs should be shared.
Last week a successful renewables investor provided an indication of how keen financial institutions are to invest in windfarms.
This reflects management’s belief the assets TRIG has accumulated have become increasingly valuable. The company cited “strong underlying demand for the asset class together with portfolio enhancements”.
TRIG, whose investments are managed by London-based InfraRed Capital Partners, has interests in 45 windfarms, including 16 in Scotland.
These include a 100 per cent stake in a project to build a wind farm on the Kintyre Peninsula, which TRIG bought earlier this year.
In the results statement TRIG made clear that further acquisitions are on the agenda as it eyes growth in a range of markets.
Chairman Helen Mahy said: “In particular, we expect to see an increase of activity in offshore wind in the UK and Germany and we also continue to see the French onshore wind market as an attractive source of subsidised deals.”
TRIG has spread its bets to cover a range of technologies and geographic markets.
But InfraRed stressed last week that TRIG was keen to add more Scottish windfarms to its portfolio.
With the amount of power generated by Scottish windfarms an average 13% up on budget in the six months to June 30, operating conditions in the country have been helpful for TRIG.
Champions of renewable energy may see reasons to be cheerful in TRIG’s statement.The company has shown that it can harness the resources of private investors, funding specialists and operations experts to deliver windfarms that will produce low carbon energy the country needs. Local economies are getting a boost in the process.
However, some people have reservations about windfarms’ impact on the landscape.
Others may wonder if the regulatory regime that has been developed to encourage investment in the sector is skewed in favour of investors rather than consumers.
The fallout from the coronavirus has devastated sectors such as travel and hospitality, in which firms have seen revenues plunge.
In TRIG’s results Ms Mahy said: “Despite trading through a period of significant market volatility … TRIG is well placed; most of our revenues are fixed through government subsidies, which provides strong levels of visibility on cash flows in the near-to-medium term. Over the next five years, approximately 74 per cent of our revenue is fixed through subsidies and power price fixes.”
The comments highlight the value of schemes such as the Contracts for Difference (CFD) programme in the UK, under which developers of renewable energy projects are paid a flat rate for the power they supply for 15 years.
David Cameron barred onshore windfarms from benefitting from CFDs in 2015 following vocal opposition in some areas to developments.The then energy secretary, Amber Rudd, said the subsidy regime had encouraged the development of a huge number of windfarms and it was time for the sector to stand on its own two.
“We could end up with more onshore wind projects than we can afford – which would lead to either higher bills for consumers, or other renewable technologies, such as offshore wind, losing out on support,” Ms Rudd told MPs. She added: “Although renewable energy costs have been coming down, subsidies still form part of people’s energy bills and as the share of renewables in the mix grows, the impact gets proportionally larger.”
Amid the clamour for The Government to take action on climate change, in March, Boris Johnson decided to open up the subsidy scheme to onshore windfarms again. They will be able to bid for CFD support under the round that is due to be held next year.
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