The VCTs will aim for a target yield of 5 per cent. They will be managed by a team led William Heller, managing director of Falck Renewables which is responsible for renewable energy projects in excess of 200m.
The VCTs are set against a background of the governments target for over 15 per cent of UK electricity to come from renewable sources by 2015. Electricity suppliers are currently offered financial incentives to obtain some of their electricity from renewable sources under the Renewables Obligation, which will remain in place at least until 2007.
This has made renewable energy sources an attractive investment opportunity not only for Keydata, but the directors of the Ventus VCT.
Keydatas VCTs will focus on companies entering into the construction of renewable power generation projects or which are already in operation to reduce the risks associated with the planning and development stage.
According to Keydata, there are 18 wind projects under construction in the UK so there should be a number of products looking for investment which will meet its criteria.
The directors of the VCTs anticipate long term income flows from forward sales of renewable power to major utilities such as Powergen, known as a power purchase agreements.
Although renewable energy sources may be a good investment story, there are risks related specifically to this market. To some degree these projects depend on financial support regulated by the government and there is a risk that this could change. Average wind speeds can vary and this may have a negative impact on the VCTs returns, as would a fall in the market price of renewable energy.
However, a fall in market price may be mitigated by the power purchase agreements.