Energy efficiency investor SDCL Energy Efficiency Income Trust (SEIT) announced the $150 million acquisition of a series of portfolios of commercial and industrial on-site solar energy projects in the United States from the Blackstone Group and a 50% interest in Onyx Renewables. The shares dipped 0.5% to 107p.
GROWTH OPPORTUNITIES
The trust will acquire four portfolios which generate over 175 MW comprising over 200 operational, construction and development stage roof-top, carport and ‘private wire’ ground mounted solar PV projects.
Clients include municipalities, universities, schools, hospitals, utilities and corporations. Around 27% of the projects are currently operational with the remainder expected to become operational over the next 12-to-18 months.
It has also acquired a 50% interest in Onyx’s Partners follow-on pipeline which is projected to exceed 500 MW over the next five years.
This will provide the trust with access to several on-site solar and energy storage projects in the United States where it will have a right of first refusal at pre-agreed rate of return.
The projects are aimed at increasing the supply of renewable energy generated on-site and helping to reduce greenhouse gas emissions arising from the supply, distribution and consumption of energy.
The acquisition will be funded from existing cash and debt resources.
Numis commented, ‘the investment is expected to meet SEIT’s total return target (7%-8% pa) and further support its progressive dividend policy.
‘At 30 September the company had cash of £117m and raised £105m in October, since then it has announced acquisitions of £213m, which reduces available cash to c.£10m.’
GREEN TAIL WINDS
The investment manager of the trust believes that the US is one of the largest and most dynamic markets for investment in clean energy and energy efficiency, and can be expected to gain further momentum under the incoming Biden administration which has put energy efficiency at the forefront of its climate policies.
In addition, the manager believes that the energy efficiency market in Europe is set for substantial growth following the launch of the European Commission's Renovation Wave policies.
The trust pays quarterly dividends and is targeting a pay-out of 5.5p per share for the year ended 31 March 2021.
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