FCP was founded in 2000 and the renewables sector is one of its specialist areas.The Elara I and Elara II EIS funds are now closed to new investment but investors have another chance to invest through Elara III which treads a similar path.
Elara III takes a lower-risk approach with the aim of preserving capital and also aims for growth, targeting gross returns of around 29.28 per cent a year. It will invest in companies that provide services to firms such as Blue Energy, a UK renewable energy development and investment company that has recently completed the biggest solar farm in the UK.
Most of the companies in which it invests will be new firms set up specifically to develop particular projects initiated by small-scale developers. Returns for investors are produced through the contractual revenues that the companies get for the provision of their services, which means returns are unaffected by issues such as feed-in tariffs. FCP says gaining returns from contractual revenues also provides liquidity for investors, unlike EIS funds investing in firms which own assets that need to be sold before an exit is possible.
Elara III will invest in a range of lower risk renewable energy projects including the construction of wind installations, anaerobic digestion plants and wholesaling of renewable energy supplies such as solar panels. Smaller renewables projects enable a higher quality and wider choice of site selection to be obtained, as they place lower demands on local infrastructure so are subject to fewer planning objections.
FCP believes that long term regulatory support for UK and European renewable projects, combined with targets for reducing CO2 emissions, creates strong investment opportunities that are not affected by the current economic conditions. However, the risks of investing in renewables projects can make it difficult to predict future revenues. For example, varying wind speeds can impact on how much energy is produced, which in turn could affect returns. However, FCP believes its selection of projects that have been independently analysed and stress tested can mitigate these risks.