This article written by Richard Cook, CEO of Blackfinch, features as part of IFA Magazine’s celebration of World Earth Day.
It’s hard to avoid hearing about changes to energy prices at the moment. It’s on the news almost daily and we’re starting to receive our latest bills through the door with some eyebrow-raising figures. But how does this relate to the way people invest?
At a time when people are thinking carefully about their money, there’s naturally a role for advisers to help investors understand where to invest and how to make a difference.
Yes, more renewable energy plants are needed, but they’re only part of the puzzle. Instead, a holistic approach is needed to tackling the energy crisis, and that’s what Blackfinch does.
The outcome is that advisers can offer their investors a range of risks and returns while still making sure their funds are contributing to a positive future.
Our Approach
The lifecycle of energy consists of three core needs:
· Energy generation
· Storage and distribution
· Consumption
Decarbonising energy means moving away from oil and gas to renewable sources such as wind and solar. It’s also about looking at how the energy is stored and distributed, then finally how it’s used in the most efficient manner. Blackfinch has teams investing across all three areas.
Blackfinch Energy – investing in top class renewable energy generation
Clean energy won’t appear overnight. It requires significant investment into building additional capacity from renewable sources to make a sustainable difference. At Blackfinch, we take retail investor’s funds and use them to invest into UK solar and wind renewable energy plants.
Through good governance, we spread our investments across the whole of the country, and into a range of different technologies, to reduce risk. Our UK focus helps to build resilience into the provision of renewable energy nationally that’s decoupled from overseas sources where geo-political factors can make pricing volatile.
Our teams also leverage their extensive experience and deep relationships to work with developers who have a pipeline of new solar and wind projects, not just existing infrastructure.
Not only is this growing the UK’s overall renewable energy capacity, but it also boosts job creation in the economy for the construction and ongoing operational management of the facilities. It’s also key to our approach of adapting and evolving.
As older renewable energy plants offer less economies of scale because technology has moved on, our investment strategy ensures we also move with the times, putting retail investors’ money into top class developers and technology.
“Our investments into solar and wind farms generate, on average, over £85,000 into local community projects. So, not only are we building out more resilient clean energy for the UK, but we’re also making a difference on the ground in the local area.”
Guy Lavarack, Investment Director, Blackfinch Energy
As you’d expect, the size and scale of technologies in which the teams invest have changed significantly over the years, as with anything new. For retail investors who may be concerned that they don’t know enough about how wind and solar farms work, it’s worth noting the drop in government subsidies and what that means. Subsidies are important in a new market; they’re a strategy used by the government to encourage investment into finding the best and right way to tackle the energy crisis.
The abolition of direct subsidies is a sign that the market has matured, that both investor experience and technologies have become more sophisticated as they’ve evolved, and that the peaks and troughs of the early days are gone. This will be the reassuring signal some investors need to be confident in choosing renewables within their portfolio.
Blackfinch Asset Management and Blackfinch Ventures – investing to stabilise the availability of clean energy, no matter the weather
If there’s one thing we can all recognise, it’s that the sun doesn’t always shine and the wind won’t always be blowing. The efforts of the energy team in increasing capacity for renewable energy doesn’t solve the whole problem; we need to ensure we can capture and distribute the energy when it’s needed and not just when it’s created.
This is where Blackfinch Ventures is helping to create a resilient and stable clean energy sector. The team is actively looking to support businesses who are, in turn, adapting and evolving the technology needed to unlock the potential for renewable energy as a genuine alternative to oil and gas. There are many great businesses across the UK, exciting start-ups, and early-stage firms with genuine ideas, who need the investment to grow and bring a viable product to the wider market.
Blackfinch Asset Management also invests in listed funds which are themselves invested in businesses across the globe, seeking out innovative ways that energy storage and usage can be improved. Through responsible governance, they vote against businesses and strategies that don’t demonstrate enough progress on climate-related issues.
Instead, they seek to support organisations – such as a U.S. firm that pivoted from the diesel engine space where they’d operated since the 1920s, to enhanced fuel cell and hydrogen production technologies – allowing for more efficient energy storage versus the more traditional, carbon-intensive means.
Blackfinch Property – investing to reduce energy consumption and wastage in buildings
Once the clean energy has been successfully generated, stored and then delivered to the end user, the focus moves to making sure it’s not wasted. While many investors look at electricity generation as the key to solving the energy crisis, they’re often surprised to hear that 40% of carbon emissions are from buildings . Changing the energy profile of our homes and businesses requires a change to how they’re built as well as how they’re run.
Developing new homes is more straightforward. Starting with a blank page, you can use responsibly sourced materials, modern methods of construction and a commitment to a low-energy profile Energy Performance Certificate (EPC) rating through great insulation. Innovations such as ground-source heat pumps and recycling of rainwater are now becoming mainstream, driving down the cost of implementation.
But it’s not just about new homes; existing properties can be renovated to create energy savings. Retrospective additions to a property can make significant changes to the EPC rating, such as replacing oil and gas fired boilers, improving loft insulation and considering solar panel installations.
Blackfinch Property are experienced investors in real estate, understanding that change is needed to tackle the energy crisis. We use retail investors’ funds to carefully select opportunities to lend to developers who are making a positive impact on the carbon footprint of property. Their extensive due diligence, into both a developer and their property project, includes assurance for energy efficiency and positively screening for responsible strategies for construction.
“Homes and buildings aren’t something we can do away with to tackle the energy crisis, so we must act responsibly in how we create and change what will stay with us. We actively seek out developers who have a forward-thinking approach to energy, because in the long-term that will be a key driver in determining the value of a property.” – David Higson, Investment Director – Head of Property, Blackfinch Property
A recent example of this includes the provision of a loan that optimises the coastal location to create energy efficient homes in Newhaven. The loan facility will enable the demolition of existing buildings and erection of 13 eco-apartments within two blocks and 19 car parking spaces.
The homes will be built to the Active House principles set by the Active House Alliance – the highest ecological standard in the property industry. The team is working with a committed developer on this sustainable ecological project, which will also help to put disused land to good use. The build will include solar panels, electric charging points, rainwater harvesting, infrared panels and insulation.
Blackfinch – an Environmental, Social, Governance (ESG) investor, building UK energy resilience
The need to address decarbonisation of the energy market has increasingly climbed the social agenda in recent years, but has more recently catapulted into our daily lives at an expensive pace. We need to act to make a difference – we need to work together to create change at scale.
Our holistic approach to understanding all aspects of the energy market, coupled with experienced teams who are committed to having ESG integrated into all our investment decisions, allows investors to be confident that we take their money and make it work hard to build a more resilient renewable energy sector for the UK.
“Blackfinch has been on a journey alongside, and within, the energy market for several decades. We want retail investors to be proud that their money is being used responsibly, safely and proactively to make a difference that will be felt for generations to come.” –Richard Cook, CEO, Blackfinch
There are many ways that investors can place their funds with the Blackfinch, through our range of tax-efficient savings and managed portfolios. What we do with those funds is key and what makes us different. Taking our responsibilities very seriously, we move with the world around us – always adapting and evolving, because where we invest is where we thrive.
