Insurance Giant Aviva Acquires £100 Million Solar Portfolio

Deal Hailed As UK’s Largest Residential Renewables Transaction

Insurance Giant Aviva Acquires £100 Million Solar Portfolio

On 13 August 2012, the Solar Power Portal reported that the international insurance company Aviva (AV) had completed the purchase of approximately 7,000 solar photovoltaic systems from the London-based private company HomeSun Holdings.

The £100 million deal, hailed as the UK’s largest residential renewables transaction ever, was completed by Aviva Investors, the asset management arm of the insurance company. Although the precise financial details surrounding the deal in question were not disclosed, BusinessGreen reports that the £100 million transaction, which involves a 23MW portfolio, gives the insurer access to the related feed-in tariff payments, providing 25 years of returns.

HomeSun, however, will continue to service and maintain Aviva’s portfolio of solar arrays. “HomeSun will continue to work with all of our customers, supporting all of the installations and developing the next innovation in products and services,” noted HomeSun’s CEO Daniel Green, as quoted by BusinessGreen.

According to the Financial Times, most of HomeSun’s solar panels now acquired by Aviva were installed during the solar power “gold rush”, or the initial phase of the UK feed-in tariff, which provided lucrative returns on investments in solar energy. The decision of the UK government to slash feed-in tariffs, however, has prompted solar companies to look into alternative financing solutions.

Yet, HomeSun has not explicitly stated whether the much-debated changes in the UK’s feed-in tariff have had anything to do with the Aviva transaction. “Our plan has always been to find a long term partner that will continue to provide security to our customers whose systems will be managed and monitored for 25 years. Aviva Investors has demonstrated itself to be the ideal choice throughout the process”, said Mr Green, as quoted by the Solar Power Portal.

Aviva also seems quite pleased with the transaction, with BusinessGreen quoting Ian Berry, fund manager for infrastructure and renewable energy at Aviva Investors, who said that the deal was part of a wide-ranging commitment of the company to increase its presence in the green energy sector. “This strategic investment in UK renewables is one of many we have planned and is part of our strategy of investing in high-quality renewable-energy infrastructure assets,” he noted in a statement.

As it seems, Aviva will stick to its commitment, considering that it also recently acquired a 49.4MW Spanish wind farm, together the German investor SachsenFonds GmbH, as reported by Bloomberg. Aviva Investors and SachsenFonds bought the Almatret wind farm in Lerida, Catalonia, from Element Power US LLC, a Portland-based developer, for an undisclosed amount. The wind park, which started production in 2010, uses 25 turbines manufactured by the Danish Vestas Wind Systems A/S (WVS).

Both the wind farm and the solar panel purchases are seen as benefitting Aviva’s pension fund clients by helping offset lower returns on bonds. “In a challenging macroeconomic environment where yields remain low, especially on government bonds, institutional investors are looking for diversified sources of stable income,” said Mr Berry in an email statement regarding the wind farm deal, as quoted by Bloomberg.

Pension funds in particular have lately been showing a growing interest toward alternatives, with investments in infrastructure and renewables being a popular way to counter underperforming equities particularly in Europe on account of the EU’s ambitious climate goals, which are often supported by subsidy programmes in the different EU Member States.

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