Ecotricity’s second Ecobond has smashed its subscription target by more than 60 per cent, proving this innovative green financial product is striking a chord with the UK general public.
By the offer deadline at 5 pm on Friday December 16, applications had reached £16.2 million worth of
Ecobonds, far above the £10 million target set for the issue by
green energy company
Ecotricity. More than 2,000 individuals participated in this year’s Ecobond offer, which will fund the building of new green energy projects in the UK.
The value of applications for 'Ecobond Two’ eclipsed that of last year’s Ecobond, which was oversubscribed by almost 50 per cent and at the time represented the largest private bond issue in the UK.
For a minimum investment of £500, successful applicants will get a four year fixed rate of return of 6.5 per cent if they are Ecotricity customers or new customers. Those that are not Ecotricity customers will get a return of six per cent. The money raised will be spent on 19 new windmills that already have planning permission. Ecotrcity said some of the money would also help fund biogas projects.
Risks
Ecobonds are being described as an exciting new way to raise funding for green projects at a time when traditional sources of investment are drying up. They also offer attractive returns for small investors at a time of low interest rates for savers. However, people are being warned of the risks of investing in Ecobonds because they do not offer the same protection as many other financial investment products.
"Our concern," says Mark Hoskin, managing partner of Holden & Partners, "is that the contract on offer from Ecotricity leaves Ecobond investors at the bottom of the creditor pile if the sole shareholder and controlling director mismanages his own business."
But Ecotricity founder Dale Vince described the result as "fabulous", saying it upheld the idea the product was not "a flash in the pan.
"We’ve found a way to raise funding that is resonating with the British public and expect to do this annually in order to ramp up the green energy sources that Britain desperately needs," he said.
Ecotricity, which already supplies
renewable energy to over 55,000 customers, says it is committed to changing the way energy is made and used in the UK. As well as the 19 wind turbines it has planning approval for, it has seeking approval for a further 78 and has a target of having over 200 megawatts of operational capacity in the next five years. It also intends to increase its
investment in other renewable energy technologies, including wave power and green gas made from organic waste.
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