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UK Green companies outperforming US equivalents

View profile for Miles Dearden
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Green companies in the UK are generating greater returns for their clean energy investments. That is according to a new report from the Imperial College Business School.

The research found that Yieldcos – companies engaged in renewable energy projects – were delivering an annual return of 8.09 per cent, making them an attractive investment with greater risk-adjusted returns than those available on the broader equity market.

The Business School’s study also found that Yieldcos were key to reducing the impact of climate change. This was because they met the requirements of investors looking to play their part in the move away from fossil fuels in favour of renewable energy.

The aim of the Imperial College’s research was to redress the difficulties in getting institutional investors to consider clean energy like wind and solar, due to the lack of historical data regarding the risks and the financial returns.

Commenting on the study, the director of the Centre for Climate Finance and Investment at Imperial College Business School said: “We’ve been developing a unique initiative focused on putting hard-nosed data behind renewables investment. This paper has sought to contribute to the evidence base about clean energy investing through a quantitative analysis of Yieldcos in North America and the United Kingdom.

“The findings have displayed robust evidence about the risk-return profile of clean energy investing, with Yieldcos in the UK performing better than conventional energy.”

It was found that geographically, only Yieldcos located in the UK were delivering on the promise of high, risk-adjusted returns.

Discussing this, the Business School director said: “I find the disparity between the US and UK fascinating. Both markets embarked down this green infrastructure path at the exact same time with the exact same idea. But here’s the rub, the US blew it. There has just been too aggressive an approach to structuring in the US and performance has suffered as a result.”

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