Ecobonds

Ecotricity, an electricity company which sources all its electricity from wind turbines, recently raised a £10million bond release.  This is the largest private bond release in the UK and was even 50% over subscribed.  The company offered interest rates of 7% or 7.5% for its customers.  The company promotes itself as the largest investor (by customer spend) in renewable electricity in the UK and has several wind farms across the country plus more in the pipeline- which it will spend its bond capital on.

This scheme is interesting on many different levels, the scale of the bond issue, the high interest rates offered and its over-subscription.  What is even more interesting is that this comes at a time of economic downturn when we are told people have very little money to invest or spend.  Most financiers might have thought now was not the ideal time to launch such an ambitions bond release.  However this is not the case and the launch, not widely covered in the press, has been a huge success.  This is surely a sign that investors are happy to trust green companies with their money and many analysts are now predicting a surge in green investment.

With the government promising a green investment bank, which should open its doors in 2012, things are looking promising for Britain's green credentials.  Often environmental projects face early fund raising issues owing to high start-up costs but if money is invested wisely we could see great returns, both financially and for the environment.  The caveat here is that we need to ensure we do not create an 'eco boom' that leads to a bust and that money is spent wisely and carefully to offer the best sustainable solutions but not throwing money at any project that labels itself green.  What is needed now are strong financial analysis tools that will allow us to find the best places to invest in not just investing in anything green because it is the fashionable thing to do.

Environmentalists and investment bankers are not normally bed-fellows but there is a possibility that working together could become a win-win situation.