When it comes to investing, there’s a new opportunity on the rise – the Energy Bond. Energy Bonds are a type of retail bond that offer investors a great way of supporting clean, green energy while earning an income way above the rate of inflation.
Retail bonds were hailed as a revolutionary new method of investing when the London stock Exchange launched the Order Book of Retail Bonds (ORB) in 2010. This enabled companies to raise funding by selling retail bonds to private individuals rather than to major City investors. With a low minimum investment requirement (usually £1,000, but sometimes as little as £100), retail bonds provide an easy entry into the finance market for smaller investors without having to use the services of a stock broker.
Retail bonds offer a fixed rate of interest and can usually be traded on the Stock Exchange in much the same way as stocks and shares. Although the interest rate is fixed, the value of each retail bond depends on the market at the time of sale. When the retail bond matures, providing the company is still trading, then the investor will get his initial investment back.
Energy Bonds are a type of retail bond which are not listed, so cannot be traded on the ORB and must be held until maturity – they provide no potential for capital growth, but yield a high rate of return compared with the rate of inflation. However, they provide investors with a clean, green way of earning greenbacks that is fairly secure. The energy companies that offer Energy Bonds use the cash raised to invest in clean energy projects like solar panels. The bonds are secured against the solar sites which means that if the issuing company should go under, then it will sell off the solar site to an alternative company.
Renewable energy projects provide a predictable revenue flow, in part from subsidies and in part from the Feed-in Tariff (FiT). One of the advantages of investing in Energy Bonds is that once a solar project has been installed (such as solar panels on roofs), operating costs are low and maintenance requirements are minimal while output is predictable. This means that the income returned from the FiT is fairly secure, making Energy Bonds a relatively secure type of Retail Bond for investors.
Energy Bonds are easily accessible, meaning that investors are able to purchase them direct, rather than having to pay for the services of a broker. Investors earn competitive rates of interest on the Energy Bonds while they hold them and then the initial investment is returned on a fixed date in the future (maturity date).
Energy Bonds provide investors much higher returns than bank deposits – the average account on the high street pays 0.66%, whilst a cash ISA pays an average of 1.7%. In contrast, Energy Bonds usually provide returns of between 6% and 7.25% and are becoming a popular choice for investors.
With more investors looking for ethical methods of investing Energy Bonds are a great way of investing in ourselves and the future. Renewable, clean green energy is energy for the 21st Century and investors with a social conscience would do well to take a look at Energy Bonds – it’s a sustainable, responsible method of investing which is becoming more popular as we strive to reduce carbon emissions in order to meet the targets set by the Climate Change Act and comply with the requirements of the Kyoto Protocol.
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