Insight Investment, a large pension fund manager in the UK, is considering an investment in a solar power fund that promises steady, inflation-linked returns for up to 25 years – an investment that, if made, would represent a rare public commitment by a big institution to the renewable energy source in the UK.
Insight is in talks with Solar Capital, a new venture founded by Angus Fraser, a former Ernst & Young partner and entrepreneur. Fraser’s company has been running for about six months, buying and installing solar panels, but to date has been operating at the level of “tens of millions [of pounds]”, he said.
Fraser added: “We are still at the exploratory stage with Insight, but if someone like that did decide to invest, we could take it to hundreds of millions [of pounds].”
Solar Capital is one of a number of start-up firms that have sought to take advantage of the UK’s “feed-in tariff” policy, which came into force in April 2010. Under the scheme, electricity providers have to pay building owners who feed electricity back into the grid. For those who install solar panels, the tariffs last for 25 years and are linked to the retail prices index.