UK: Weaker pound and higher power prices makes solar investment more attractive after Brexit

The U.K.’s historic decision to vote to leave the European Union (EU) last June continues to send pulses of political shockwaves around the world, but for some industries and financial segments, Brexit has been bright.

While the wider solar outlook for the U.K. remains shady – and in truth, it did so before the Brexit vote – data compiled by Bloomberg shows that solar funds based in the U.K. have more than doubled their trading in the six months since the vote as the weaker pound, lower interest rates and higher power prices have converged to make such investments a safe haven.

In the U.K., solar funds steer cash generated from the sale of solar electricity to their shareholders, and for investors seeking stable and attractive dividends, such investments make more sense now than last summer. Since Brexit, the Bank of England has slashed interest rates in anticipation of economic turmoil. This, combined with a pound sterling that has lost one-fifth of its value prompting rising power prices, means that revenues generated by solar funds are rising.

“The solar funds may be benefiting from enthusiasm from U.K.-based investors seeking protection from pound inflation,” BNEF solar analyst Jenny Chase told Bloomberg. “FITs are also adjusted for inflation.”

 

 

 

Source: pv magazine, citing Bloomberg.

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