Octopus Investments sells GBP 400 million of UK solar PV projects

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The PV projects were owned by funds managed by Octopus Investments, a company that manages more than £5 billion ($7.75 billion) of funds. These are specifically 74 ground-mounted operational PV farms whose generated power is remunerated via the Renewables Obligation (RO) scheme.

Octopus Investments had acquired the projects from Lightsource Renewable Ltd, the U.K.’s largest solar PV developer, and is now a leading renewable power investor in the U.K., owning projects that also include wind, biomass, landfill gas and anaerobic digestion.

The Royal Bank of Scotland and Investec Bank facility was underwritten by the two banks and attracted strong interest from banking and institutional investors markets, closing well oversubscribed.

The RBS and Investec Bank were advised by Ashurst (legal), Sgurr (technical), Willis (insurance) and Operis (model audit), while Dentons (legal) and Lightsource (financial) advised Octopus Investments.

Secondary deals to reduce the cost of capital

The deals are in line with many analysts’ expectations that the U.K.’s solar PV sector will experience a wave of secondary deals imminently.

Speaking at the Solar Energy UK trade show that took place last week in Birmingham, Ben Warren, head of energy and environmental finance at Ernst and Young’s U.K. energy team said: "The [U.K. PV] sector will experience many secondary deals in the next 18 months that will bring down the cost of capital."

Large pension funds are also very much attracted by solar PV assets, added Warren. However, "they were slow to embrace PV and ironically they now want to invest but the sector has lost the subsidies."

Overall, where long-term political stability is forecasted there are no issues with capital, Warren said at the show. Specifically in the U.K., "solar PV has innovated in capital schemes and this is why the government is nervous about solar." But the UK has recently lost its good ranking as a renewable energy investment destination due to the policy changes in the sector, Warren concluded.

2015’s Solar Energy UK was held between 13-15 October and was largely concerned with the effect of the recent policy changes to the country’s solar PV market. Yet despite widespread and understandable fears regarding consolidation and contraction of the industry over the coming months, there were also positive plans rolled out concerning new business models fit for the emerging zero solar subsidy era.