UK yieldcos, publicly listed companies that own operational renewable energy projects, are delivering good returns for investors and outperforming US equivalents, according to a report from Imperial College Business School.
The research published by Imperial College’s Centre for Climate Finance and Investment found UK yieldcos have delivered annualised returns of 8.09% over three years.
Other benefits include lower transaction costs, greater liquidity and improved diversification, the report said.
Imperial College Business School Centre for Climate Finance and Investment director Charles Donovan said: “The findings have displayed a robust evidence about the risk-return profile of clean-energy investing, with yieldcos in the UK performing better than conventional energy.”
The report also found that the yieldco performance varies by geography.
“The US yieldco portfolio consisting of yieldcos that rely heavily on their sponsor parents for asset ‘drop-down’ and more aggressive use of leverage are characterised by higher volatility,” the report said.
“Meanwhile the Canadian yieldco portfolio also had relatively high volatility but managed to compensate with higher annualised returns. In contrast, only the UK yieldcos deliver on the promise of high risk-adjusted returns,” it added.
Image: Pexels
‘Boom time’ for UK yieldcos
By EBS