New clean energy bond promises high returns – at a price

A green investment that has received an endorsement by a Government minister has been launched, paying 12% a year to investors brave (or canny) enough to sign up.

For many investors, this may seem risky with little recourse to compensation if things go wrong, but you will be investing in clean energy in the home.

The scheme is run by the Green Deal Finance Company (GDFC), which plans to raise £5 million by issuing a new bond using the peer-to-peer lender Abundance Investment.

The GDFC wants to revive the Green Deal, which was the Government’s energy efficiency programme scrapped in 2015 after a low take-up. The Green Deal was an energy-saving scheme aimed to make people’s homes warmer and cheaper to run, without them spending big sums of money up front.

Householders were encouraged to take out an unsecured loan to pay for energy saving technologies such as a new boiler or insulation etc. The loan with interest would then be paid back through the householder’s electricity bill.

The new bond, fixed for three years, will offer 12% a year return and give those looking to invest from just £5. So by investing £1,000, you can expect a return of £1,387 after the 3 years, a 38.7% increase.

Such a huge return is far more attractive than any high street bank scheme, but as with most things in life; the higher the investment, the higher the risk.

Anyone interested can sign up by going to Abundanceinvestment.com. Bruce Davis at Abundance acknowledges: “It’s a riskier investment, for sure, than what we’ve done in the past”. But it’s also a great investment for entrepreneurs with an appetite for risk and high rewards.

The GDFC plans to relaunch the Green Deal with just a limited number of Green Deal Providers and Installers to make sure a top-quality service before allowing others to get involved. It also plans to broaden the scheme to include other technologies like battery storage and solar PV.

Elsewhere, those wishing to invest in clean energy, but who are more risk averse, can opt for an opportunity to invest in a £10 million “mini-bond” scheme from Good Energy, which supplies renewable electricity to more than 70,000 homes and businesses, and carbon-neutral gas to over 40,000 homes.

The mini corporate bonds offer an interest rate of 4.75% a year over four years, or 5% if you are a customer. The minimum investment is £250.

While Karsons Consulting are a building services consultancy firm, we have expertise in these initiatives and provide advice on financial schemes with any of the technologies we advocate in our design solutions.

In conclusion, it’s exciting times as the Government provides some financial backing for green initiatives, but we have seen this too many times with the changes to the Green Deal and the Feed in Tariffs. We advise our readers to tread carefully and read the small print.