What Are Renewable Energy Bonds?
Everything You Need To Know
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• 11% Fixed ReturnsFor the first 3 years
Ventures begin at £10,000
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12 month minimum term
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Wind Energy Bonds
• 12% Fixed ReturnsFor the first 3 years
Minimum term of 12 months
Low entry level – £10,000
Upheld by HM Government
No Hidden Fees
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• 14% Fixed ReturnsFor the first 3 years
Paid quarterly or bi annually
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Market has solid development
Extensive track records
Entry levels start at £10,000
Renewable & Green Energy Bonds?
Sometimes referred to as green energy bonds, renewable energy bonds are an increasingly popular way of investing in the renewable energy market in the UK.
In fact, renewable energy bonds for UK investors are available for all sorts of people, whether they are looking for short, medium or long-term financial products and for a wide range of investment levels.
Why Issue Bonds For Renewable Energy?
Bonds are issued by companies working in the renewable energy sector which allows investors to put their money into the industry and help to support a cleaner and greener environment – something that makes this sort of investment highly desirable in many people’s eyes.
Of course, the rates of return that are offered are another important reason that investors choose to put their money into them, as well. Read on to discover more about renewable energy bonds, how they work, what they help to achieve and the various terms under which they are offered.
Types Of Renewable Energy
Since renewable energy first became a commercially viable industry in the UK, more and more businesses have started to create electrical energy from sustainable sources. In the past, the UK’s electrical generation industry relied on only three major sources of power.
Moving Away From Fossil Fuels
Firstly, the extremely carbon-heavy coal-fired electrical plants derived their power simply by burning one of the most environmentally unfriendly sources of fuel to make turbines turn which, in turn, generated the mains supply of electricity. Sometimes referred to as a cleaner fuel, natural gas-fired electrical generation plants operate in much the same way and – despite having a better reputation than coal-fired plants – still release lots of carbon dioxide into the atmosphere from fossil fuels.
Increasing Green Energy Output
A very small amount of electrical output in the UK has been derived from hydroelectric plants, it is fair to say that the only other source of electrical power of any significance in the country over the last few decades has been nuclear. Although nuclear powered electrical plants don’t create nearly the same amount of carbon as gas and coal-fired ones do, they create their own forms of waste and have long been viewed with at least a degree of suspicion by campaigners and the public at large.
Rising Popularity of Green Bonds
As the growing awareness of the problems with these sources of energy came about, so more of the UK’s electrical production has shifted to renewable sources. In the last decade or so, more and more solar, wind and biofuel energy has been used in the mix of supply to the UK’s mains electrical distribution system, simply known as the grid. Investors in green energy bonds should note that it is not simply the aforementioned environmental factors that have driven growth in the industry.
Green Energy Prices Coming Down
The price of energy from fossil fuels and the current generation of nuclear plants has risen. This has made electrical production from other sources, like biofuels and wind energy, much more attractive. Then there is the economy of scale to consider. As oil prices have gone up, so production costs for things like wind turbines have gone down.
In short, demand for this sort of technology has shot up in the last few years globally, so more production has been devoted to it which, in turn, has led to greater manufacturing efficiencies that UK renewable energy producers have been able to take advantage of.
The Demand For Sustainable Energy
What’s more, demand for sustainable energy is not likely to peak for some time to come. The UK has signed up to all of the major international treaties on climate change – all of which place a great emphasis on reducing the use of fossil fuels. Energy security is another important driver to take into consideration. With so much of the world’s remaining oil reserves coming from some of the less stable parts of the planet, the UK’s strategy to become more self-sufficient with its own energy production is only likely to become more and more reinforced.
Good Return On Investment
All of these factors, plus the desire to make a good return on investment in what has been an historically low era of interest rates following the global financial crisis, have made renewable energy bonds of significant interest to many investors. They should certainly be under consideration if you are looking into the best sorts of bonds that are available in the UK these days. If you want to find out how to invest in renewable energy and take advantage of the latest technological advances in creating a greener economy, then read on.
Wind Energy Bonds
Wind renewable energy bonds are available from a number of businesses that generate electrical energy from wind farms across the UK. Anyone looking for clean renewable energy bonds that have a proven track record should at least consider the merits of wind-based energy. This is because – as any UK resident will tell you – the country is a reasonably windy place.
In other words, the technology that harvests this sustainable form of energy is in plentiful supply across the country and that is good news for investors. Both on-shore and off-shore wind farms are being constructed across the UK which means that the simple ebb and flow of the air around us all can be used to drive turbines reliably.
How Wind Energy Is Captured
From a technological point of view, capturing wind energy to drive a machine is something which has been going on for hundreds of years. There used to be windmills that were used to pump water or to grind corn all over East Anglia for generations, after all. That said, modern wind turbines are highly advanced devices which are much more efficient than their historic counterparts.
Costs Of Wind Energy
They use high-tech components and innovative gearings which allow them to ramp up their electrical production as the wind continues to blow. Once installed, a wind turbine can run with very little maintenance being required to keep it in good working order. Having said that, wind energy companies do face significant start-up costs.
The cost of procuring a wind turbine itself is relatively high given the global demand for these units. Then, there is the cost of shipping them to their site and of the installation expenditure that will also be required. In the case of an on-shore installation, the land that is being used will need to be procured, usually in the form of a long-term lease.
Long & Short Term Investments
As such, the UK’s wind energy sector has many short-term costs but few long-term ones. Therefore, the operators in the industry need to secure financing that means their short-term investment requirements can be met in order to derive a return in the medium and longer term. It is for this reason that wind-based renewable energy bonds are issued.
Returns On Wind Energy Bonds
Like other types of bonds – such as property bonds, for example – this sort of investment opportunity arises because of the need to finance a project with working capital. Rather than turn to banks or sources of venture capital, wind energy companies often prefer to issue bonds with a fixed-rate of return. This means they obtain the money needed to buy the equipment, land and expertise needed to install a wind farm and to start making electricity.
Over the months and years that pass following an installation, so that working capital is recouped by selling the electricity produced to the grid and, ultimately, to the UK’s consumers. Once a wind turbine has paid for itself and started to generate profit, there are few onward costs so wind generation businesses are able to offer a healthy level of return on their investment, something which is reflected in the attractive rates that are offered with this form of green energy bond.
As you might expect from a technology that will start to make money in the medium to long-term, the best rates tend to be offered with the longest terms to maturity. Anyone looking for a shorter term investment may still find wind an attractive option but, essentially, the industry is seeking working capital that it can use to invest in the sector over several years, at least. Seeking expert advice from a bond investment company is highly advisable to guide you through the myriad of options that are available.
Choosing The Right Bond
Picking the right sort of bond to meet your personal attitude to reward versus risk as well as the right sort of investment to meet your desire for an ethical investment will often require a bit of expertise within the sector. Fortunately, help is at hand for anyone interested in helping to secure their own as well as the globe’s future with a wind energy sector bond.
Wind Energy Is Now Commonplace
Finally, it is worth mentioning how established wind energy is within the UK’s current energy mix these days. Because it is a relatively new form of energy production when it comes to electrical output, you should not be misled into thinking that wind energy is a minor player in the energy sector as a whole any longer. Indeed, during windy periods of the year, typically in autumn and winter, the majority of the UK’s electrical energy production can be derived from renewable energy sources with wind-powered production leading the way.
It is now commonplace for the country’s remaining coal-fired electrical generating plants to not be used at all for days and even weeks on end thanks to the growth in wind energy and the greater diversity the UK now has in the way in which it makes its own electricity.
Biofuel Energy Bonds
In common with the vast majority of bonds that the UK public can take advantage of, biofuel energy bonds are used to help raise financing directly from investors. Bonds are available in the biofuel sector to individuals and businesses which are looking to divest their investment portfolios. Why might you be interested in investing in this part of the renewable energy sector?
Firstly, it should be said that using a biofuel to run a generator or to power a bus, for example, is not carbon neutral. Carbon dioxide is released into the atmosphere when you burn a biomass or a fuel that is derived from it. The key thing to take on board about biofuel energy is that they are not derived from fossil fuels which can, in essence, only be burned once.
In other words, it takes millions of years of geology to make coal, oil and natural gas. This is not the case with a biofuel which can be grown, cropped and replanted. In other words, in stark contrast to oil that is pumped out of the ground, coal that is hewn from huge open cast mines or natural gas that is fracked from deep beneath the earth, biofuel is a manageable and, therefore, sustainable form of energy.
Biofuel Energy Bonds
In the UK, all of the future modelling for the energy needs of the country factor in biofuels as an important part of the mix, particularly in the transportation sector where biofuels can be used to replace diesel, for example. In fact, some global airlines have already switched entirely to aviation fuel that is sourced sustainably rather than use traditional sources.
As such, the biofuel industry is one which is growing and for which future demand is widely predicted to go up even further. What’s more, the so-called third generation of biofuels can be used to replace more than jet engine fuel and might even be the future of petrol powered engines as well as becoming a replacement for things like ethanol, butanol and methane.
Why Invest In Renewable Energy Bonds?
In order to turn a crop of biomass into a biofuel, significant investment is required in the kind of plant that can do the job and bring about a truly sustainable future. This is where renewable energy bonds in biofuel businesses come in. For around a £10k investment, it is possible to see some extremely attractive returns which far outstrip anything you might find at a retail bank or building society, for instance.
Like the wind energy sector, the biofuel industry requires inward investment to ramp up its production in the UK for which demand is only likely to augment. Returns can be gained in as little as six months with minimum investment periods starting at as few as twelve months. These facts alone make this part of the renewable energy bonds market extremely eye-catching to many savvy investors.