Downing has successfully raised £1.25m to fund its first ever hydro Bond for a newly opened ‘run-of-river’ power station developed by Nightjar Sustainable Power Limited in Argyll, Scotland.
Downing Bonds is part of experienced London-based investment manager Downing LLP, which has over a third of its £700m funds under management invested in renewable energy1.
Most of Downing Bonds invest in established UK businesses that have already come through one of Downing’s previous investments making Bonds the next natural step for funding. Downing asset-backed bonds, along with their due diligence process and typically low loan-to-value (LTV), seek to help reduce risk for investors.
The Nightjar hydro Bond
The Bond reached its £1.25m fundraising target ahead of the closing date for the offer period on 30 November 2016.
The OFGEM accredited hydro power station project, based at Inverloch, got up and running in July 2016, with the original development having been funded by Downing LLP. The sizeable new funds being raised by Bond investors will help support the ongoing operation of the Lochy Hydro Project, which has already made a promising start with electricity generated above forecast for the first three months2. The hydro power station is valued at £8.3m in total, which is based on the actual cost of construction.
The power station generates ‘run-of-river’ hydroelectricity which redirects water flow from a weir downhill, where the pull of gravity creates energy to spin turbines and generate electricity. Unlike traditional hydro power generation, run-of-river does not require a large reservoir and projects tend to be smaller scale.
Commenting on the Lochy Hydro project, Julia Groves, Head of Downing Bonds, said: “We are immensely proud of our involvement with the Lochy Project to date and have some exciting prospects in the wider Scottish market in the pipeline too."
Carl Crompton, Director of Nightjar Sustainable Energy, said “Scotland’s abundant renewable energy resources continue to bring huge opportunities, realised in our latest project on the River Lochy. Seeking more traditional forms of funding still proves challenging for many businesses but thanks to the support of Downing Bonds we can be confident that the Lochy Project will build on the success of its first few months of operation and go on to become a productive energy source for years to come.”