Background to the solar business
The Renewables Obligation places responsibility on UK electricity suppliers to source an increasing proportion of the electricity they supply from renewable sources. It is the main support mechanism provided by the UK Government for commercial scale renewable electricity projects in the UK. Smaller scale renewable energy projects are supported through the Feed-in Tariff scheme and Renewables Obligation Certificates.
Feed-in Tariff scheme (FIT)
FIT qualifying schemes are supported through the payment of tariffs, set at a fixed amount, for every kilowatt hour of energy generated through renewables.
Renewables Obligation Certificates (ROCs)
ROCs can be traded and are ultimately used by wholesale electricity suppliers to demonstrate they have met their obligations.
Participating in solar energy
Elm Trading’s solar division acquires and develops solar energy installations. Solar and other forms of renewable energy generating assets provide a stable income return, with the benefit of long term Government backed subsidies, which are linked to inflation.
The portfolio currently contains six large scale commercial ground mounted solar energy installations, located in Somerset, Oxfordshire, Worcester and East Sussex. These are installed and energised and the combined projects have a generating capacity of approximately 36.4MW and qualify for the Government backed, inflation linked ROC subsidy or FIT scheme.
The Salford Lodge and Willows sites are FIT qualifying, with tariff payments guaranteed for 20 years and index-linked to RPI.
The rest of the sites within the current solar portfolio qualify for ROCs, producing two clear revenue streams:
- sale of electricity to a utility company via the National Grid
- sale of the ROCs to traditional generators of energy
Why solar energy is an attractive trading opportunity
- The installations themselves and the land represent tangible assets with a related value
- FIT and ROC subsidies provide a secure 20 year income stream, the level of which is known up front for each site
- Stable income return
- Strong market for mature, energy generating assets which helps provide liquidity within the overall portfolio