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Ventus plans for wind of change

Brewin Dolphin Securities is sponsoring the Ventus VCT, a specialist venture capital trust that invests in companies developing, constructing and operating small UK wind energy projects.

The directors point out that the UK has made a strong commitment to the development of renewable energy. The main aspect of this is the Renewables Obligation introduced in 2002 which provides financial incentives for electricity suppliers to obtain a portion of their electricity from renewable sources. This will remain in place until at least 2007 and the directors feel this makes wind generation, as one of the most cost-effective renewable energy sources, an attractive investment opportunity.

The directors are looking for up to 25m to invest in projects that will typically consist of between one and six wind turbines. The focus will be companies involved in community projects, projects initiated by small-scale developers, small industrial sites and projects which are too small to be of interest to large development companies.

The manager is Climate Change Advisory, a subsidiary of a specialist merchant banking group which provides products and services to companies involved in the development of a low-carbon economy. It has established a financing package for small wind projects, enabling the companies will benefit from long-term power purchase agreements for the sale of electricity at an agreed price. The directors believe this solves the potential problem of uncertainty of the future price of renewable energy and the financing problems smaller wind projects face.

However the director point out that on the positive side, smaller wind projects are subject to fewer planning objections than large sites and as they place fewer demands on the electricity grid they are connected more easily.

Investment opportunities will be identified using a database of wind energy projects maintained by Climate Change Advisorys parent companies. Projects will be analysed and subject to due diligence.

This VCT provides an alternative to the crowd of Aim VCTs available to investors looking for VCT income tax reliefs. However, it focuses on one industry and performance may be affected by factors such as variable wind speeds, the failure of the wind turbines and the ability to find suitable projects.

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