AURIUM CAPITAL MARKETS WARNS OF INCREASED RISK OF UK ENERGY SECURITY ISSUE AS IT LOOKS TO RAISE UP TO £500 MILLION TO FUND RENEWABLE ENERGY PROJECTS
· Decision to phase out coal fired stations; falling renewable infrastructure costs; rising energy prices and the UK falling behind on its emissions targets makes renewables more attractive for investors
Specialist finance house Aurium Capital Markets (Aurium), which provides investors with access to innovative investment opportunities, has warned that the government’s recent announcement to phase out all coal fired stations within ten years, has dramatically increased the chances of the UK having blackouts and energy security issues.
It says the coal announcement will actually place an increased reliance on renewable energy projects. Combined with falling long term infrastructure costs in this sector, rising power prices and the fact that the UK is behind on its emission reduction charges, as well as being a responsible way to fill the energy gap, the sector is an increasingly attractive long-term investment notwithstanding the phasing out of investment subsidies. Aurium is therefore aiming to raise up to £500 million for investment into the renewable energy sector, including adding to £200m already raised to help build and acquire a portfolio of major biomass and Energy from Waste (EfW) plants in the UK.
Steven Blase, Partner Aurium Capital Markets said: “The decision to remove coal fired stations increases the risk of the lights going out in the UK because it will have a negative impact on our energy capacity. Coal’s share of UK electricity generation was 30% in 2014, and renewables accounted for approximately 19%. This winter, for example, our overall excess energy capacity is just 1.5%.
“The announcement over coal makes the UK’s reliance on renewables even stronger, and we believe that the growing focus from investors for assets that provide long term steady returns with low or no correlation to other more mainstream asset classes makes this an increasingly attractive investment proposition for institutional investors.”
Aurium, which was rated by InfraNews as the No 1 UK solar debt provider and No 2 provider of debt in the UK renewables sector overall for 2014/2015, has delivered mid teen returns to its investors from the sector.
The company is targeting institutional investors, who it says are placing a growing focus on investment opportunities that have low correlation with equities and bonds, and which can provide a steady and attractive long-term return.
Aurium addresses a fundamental barrier facing developers of UK renewable projects: a lack of specialist finance. It assesses risk based on the unique nature of renewable projects rather than more traditional metrics, delivering liquidity regardless of the stage of the project (e.g. construction finance), the speed of turnaround (i.e. weeks not months) or the size of the project (i.e. too small for larger institutions).
In October this year, Aurium sponsored the launch of Bioenergy Infrastructure Group (BIG), a platform established to invest in the construction of biomass and EfW plants in the UK.
BIG has recently agreed to build a 21.5 MW EfW plant at Ince Park, Cheshire with a construction value of £87 million and also a £200 million 25 MW plant in Hull, East Yorkshire. The latter is expected to operational by January 2018 and will be the first Refuse Derived Fuel (RDF) based advanced combustion technology plant supported by the Government’s new Contracts for Difference (CfD) arrangements. CfDs aim to help stimulate investment in green energy developments to achieve carbon reduction targets by guaranteeing a fixed price for generators supplying energy.
About Aurium Capital Markets
Founded in 2011, Aurium Capital Markets (Aurium) provides investors with access to innovative investment opportunities across several asset classes, the most significant of which is currently renewable energy.
The Aurium team has a proven track record in renewable energy, structured finance, asset finance and fund management. In addition to in house expertise, the team collaborates and partners with highly respected industry experts with proven track record in each sector.
For clients seeking finance, Aurium aims to look beyond superficial metrics of financial strength to work with both established counterparties as well as those with the ambition to deliver robust projects with the objective of building strong relationships that endure.
The ultimate aim is provide a flexible approach to investing while delivering to investors:
· a range of investments in carefully targeted sectors;
· high quality collateral as security
· expert analysis and execution
· transparency
· attractive returns
Aurium’s approach to providing finance to the renewables sector
Aurium seeks to finance high quality renewables projects across the UK – whether alongside developers that have a strong track record in an established technology or more entrepreneurial teams that are able to demonstrate a clear plan to deliver robust solutions in the sector.
The essential element of Aurium’s approach is to leverage over 100 years of combined management experience in structured and asset finance to assess risk in a manner that is specifically tailored to the sector. It is Aurium’s view that renewables projects are often analysed by financiers on the basis of generic criteria rather than a detailed analysis of the quite unique combination of elements that make up projects in this sector – including land rights, planning consents, asset and equipment finance, long term public sector subsidies and substantial corporate guarantees and warranties. Aurium is fortunate to have both an internal team with an appropriate blend of skills and access to an ecosystem of partners and advisers to provide support in specialist areas.
In addition to a flexible approach to risk, Aurium seeks to fill a gap in terms of the nature of the projects it finances. It is not uncommon for developers to find their projects not only too early stage for institutional finance but also too small on an individual project basis; whereas the same projects often prove too large for private equity or family/friend/crowd sources of funding. Aurium’s flexible approach is able to address this issue.
