Octopus EIS keeps FIT
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Octopus Investments is taking advantage of the final opportunity to invest in solar energy through feed-in tariffs with tax breaks.
FITs, which are 25-year inflation-linked Government subsidies for electricity generated by qualifying solar power installations, will not qualify for inclusion in enterprise investment schemes and venture capital trusts after April next year.
Octopus sees the renewable energy sector, particularly solar energy, as an attractive area to provide EIS tax advantages with lower risk than typical EIS. The EIS invests in a portfolio of at least five unquoted EIS-qualifying companies, with capital preservation as a priority.
Solar energy is seen as suitable for a lower-risk portfolio because solar panels are well established and provide a predictable revenue stream through FITs. Octopus points out that the costs involved in setting up solar installations are incurred upfront and can be budgeted for, while ongoing maintenance and monitoring costs are very low and income from electricity sales is predictable.
The firm’s investment in solar energy is based on the installation of solar panels on the roofs of commercial buildings or brown field sites. It has a partnership with solar energy firm Lightsource Renewable Energy, which identifies potential roof sites of a suitable size with a southerly aspect. Once negotiations with the landlords of these sires are completed, the solar panels are installed and connected to the National Grid.
Octopus says many investors have seen the value of their assets fall in the current economic client, with uncertainty around the future value of these investments. It adds that some people will be hit by tax increases so an investment with tax benefits such as an EIS may be appealing.
This is one of several products that are taking an invest while you can approach to the solar energy sector. Similar products from Enterprise Corporate Finance, Goldfield Partners, Downing and Triple Point could provide competition.
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