Green electricity firm Ecotricity launches bond to raise money for developing wind-farm capacity
Miles Brignall
guardian.co.uk, Friday 11 November 2011 23.02 GMT
If you like the idea of investing in renewable energy, but think that installing solar panels sounds like too much aggravation, green electricity firm Ecotricity has just launched a bond promising to pay a 6% return.
"Ecobond two" aims to raise £10m and allow people to share in the benefits of the green energy revolution "without needing to stick anything on their roof". The bond has an initial four-year term and will pay an annual rate of interest of 6%, rising to 6.5% for Ecotricity customers. The latest offer is a repeat of the firm's Ecobond one, launched in October last year, which was oversubscribed by 50%.
The bonds are open to UK-based individuals, companies, trusts and charities and the minimum investment is £500. Issuing them allows the company to bypass the banks, raising cash that will be spent on developing its wind-farm capacity.
Ecotricity says that for investors, the bond is a great alternative to feed-in tariffs, though unlike that scheme, the income is taxable and is not inflation linked. It should also be noted it is not without risk. Investors putting the same money into a top-paying bank/building society four-year fixed rate savings bond would currently get a little over 4%, but if the worst happened and the bank went bust, the first £85,000 of your investment would be protected. In the unlikely event Ecotricity folded, savers would be likely to lose some or all of their investment.
If you want a more traditional savings account, some top payers have been launched this week. Close Brothers Savings has a "Premium Gold" two-year fixed rate account paying 4.25% on a minimum investment of £10,000.
Meanwhile, Kent Reliance has a one-year fixed rate bond that pays 3.6% with a minimum investment of £1,000. There is no minimum age – the account can be operated on behalf of a child – and withdrawals are allowed, but are subject to a penalty of 180 days' interest on the amount withdrawn.
