Opportunities in the renewable energy technology sector are becoming more diverse as regulatory support extends to technologies other than wind farms, Steve Read, investment manager of the Ventus Funds, said. Read said the Ventus Funds, venture capital trusts operated by Climate Change Capital, are spreading their investments more evenly between wind farm projects and other renewable energy technologies such as land-fill gas and waste biomass.
LONDON (Reuters) - Opportunities in the renewable energy technology sector are becoming more diverse as regulatory support extends to technologies other than wind farms, Steve Read, investment manager of the Ventus Funds, said.
Read said the Ventus Funds, venture capital trusts operated by Climate Change Capital, are spreading their investments more evenly between wind farm projects and other renewable energy technologies such as land-fill gas and waste biomass.
The change has come as viable wind projects start to dwindle in the UK.
The trio of Ventus funds - which invest directly in projects - are all in the top 10 of UK small and mid-cap funds as collated by Thomson Reuters fund data company Lipper. The first fund, Ventus VCT, has outperformed peers in the Lipper Global UK equity Small and Mid-cap index by 63.35 percent over the past year and is the top performer in that period.
Returns are based on dividend payments and profits from the sale of stakes in projects.
The original fund - listed in 2005 - has invested almost all its assets in small and mid-sized wind farm projects. The Ventus VCT 2 and 3 launched a year later are becoming more evenly split between wind farms and other technologies. The family of trusts has more than 37 million pounds ($64.68 million) of capital.
"One of the most interesting parts of the market at the moment is the waste and waste wood biomass market which is getting regulatory support through a multiple number of renewable obligation certificates (Rocs) for each hour of generation," Read told Reuters.
The principle driver behind growth in the sector remains support from regulators principally through the Renewables Obligation Order which came into effect in the UK in 2002.
Providers of renewable electricity are awarded a renewable obligation certificate (Roc) for every megawatt hour of electricity they produce. The Rocs are sold to electricity suppliers which have a quota to meet each year.
Read sees no sign of regulatory support drying up as public pressure for action on global warming continues to grow and while the government looks to alternative energy sources to reduce its reliance on coal and gas imports.
Waste biomass, which among other things uses methane from rotting waste to power engines, is one of the fastest growing sources of renewable energy in the UK, Read said.
He believes the sector has matured and now proven its ability to generate returns. The firm does not disclose return targets for the Ventus funds.
Read said the rise of technologies like biomass has arrived as the environment for wind farms becomes more challenging. Good quality wind sites are increasingly scarce, planning permission hard to obtain, and the windiest sites are typically a long way from a connection point to the national grid.
Ventus invested in its first biomass and waste sector project in 2005 through PBM Power Limited, which operates a 2.5 megawatt waste wood power generating plant. The Ventus VCT 2 and 3 have also invested in landfill gas generation projects with installed capacity of over 10 megawatts.
(Reporting by James Molony; Editing by Paul Bolding)
