Background to hydro energy
Hydro energy is one of the most established and least environmentally intrusive renewable energy technologies, and has been an electricity generating source for over 150 years. This track record means that levels of electricity produced through this technology can be forecast with a relatively high level of accuracy. Furthermore, hydro energy provides a natural weather diversifier for investors with solar and wind assets.
The UK Government has a binding commitment under the EU Renewable Energy Directive to source at least 15% of its primary energy from renewable sources by 2020. In 2017, the total installed capacity of renewable energy generation across the UK reached 38GW, with hydro energy accounting for 5% of this total.
To achieve its renewable energy targets, generous Government support is being provided for the renewable energy sector through the Feed-in Tariff scheme (FIT) and Renewable Obligation Certificates (ROCs). FIT qualifying schemes are supported through the payment of tariffs, set at a fixed amount, for every kilowatt hour of energy generated through renewables. ROCs can be traded and are ultimately used by wholesale electricity suppliers to demonstrate they have met their obligations.
Participating in hydro energy
Hydro Energy Renewables LLP into which the TIME:Advance and TIME:CTC Inheritance Tax services participate, operates a 500kW run-of-river hydro energy installation at Glen Quoich, Scotland.
Operational since May 2014, the site generates around 1,760MWh each year, the equivalent of powering over 500 homes, and reduces the UK carbon footprint by over 850 tonnes.
The installation qualifies for the Government backed FIT scheme, with tariff payments guaranteed, from the date of operation, for 20 years and index-lined to RPI.
Why hydro energy is an attractive trading opportunity
- The installations and the land represent tangible assets with a related value
- FIT subsidies provide a secure 20 year income stream from the date of operation, the level of which is known up front for each site
- Stable income return
- There is a strong market for mature, energy generating assets which helps provide liquidity within the overall portfolio