FITs are Government incentives for individuals and companies to generate their own electricity using renewable energy such as solar power. They provide a fixed payment for each unit of electricity generated for 20 to 25 years, providing a predictable, long-term inflation-protected revenue stream for investors.
However, from next April, no new shares will be issued by schemes that benefit from feed-in-tariffs because these will no longer qualify for inclusion in an EIS. This follows a Government review on the back of concerns that firms were creating solar farms, exploiting subsidies in a way that was not intended.
In keeping with the original purpose of FITs, the Goldfield solar EIS fund invests only in solar panels that are already installed in residential properties through an agreement with A Shade Greener, an installer of solar panels to homes in and around Yorkshire. These systems have not been affected by the Government review, which was concerned with much bigger systems.
Goldfield has already raised around half the £10m it is looking to raise for this EIS fund and has been able to increase its initial target return of £1.11 to £1.18 at year four. The firm has its own You Tube channel to keep investors informed as part of its commitment to transparency.
The focus on existing solar panels minimises risk, as there are no planning and development risks, and benefits from higher tariffs than solar panels on new properties. Investors can also remain in the fund after the EIS relief ends to benefit from the index-linked income generated by FITs. Foresight and Invicta may provide competition, but investing in a single sector limits diversification so that performance is dependent entirely on the performance of the solar investments.