Downing Renewables EIS. Half-Yearly Report for the six months ended 31 March 2015

Transcription

1 Downing Renewables EIS Half-Yearly Report for the six months ended 31 March 2015

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3 About the Service Downing Renewables EIS was launched in September 2012 to provide investors with access to investments in renewable energy businesses and attractive EIS tax reliefs, including 30% income tax relief. Key features of the Service Minimum investments per Tranche: 5 renewable energy EIS Companies Minimum subscription: 15,000 Target exit: within approximately 4 years of underlying investments being made Seeking to manage risk All EIS investments should be considered as high risk. Within the restrictions of the EIS rules, Downing seeks to manage risk by: 1. Diversification: both by spreading funds across different investments and investing in at least two different sectors in each Tranche. 2. Predictable revenue streams: from (i) Government-backed subsidies and (ii) sale of renewable energy (electricity, biogas or heat). 3. No planning risk: we only invest in businesses that have in place all the relevant consents and planning permissions. 4. Downing consents: we place various restrictions on the businesses in order to protect our investors, including limiting debt and our consent being required for major expenditure. EIS tax reliefs ff30% income tax relief on the amount subscribed, subject to 3 year holding period ffiht-free after 2 years (from date of share issue) ffcgt deferral relief ffloss relief against income or capital This is only a brief summary of the EIS tax reliefs and investors should take personal tax advice on the reliefs available to them. Upside potential Investments are made in genuine renewable energy businesses. The focus is on companies that are installing their own renewable energy plant rather than purchasing existing operating developments, in order to enhance potential returns. Although this strategy increases risk, it is managed by working with experienced operators on fixed priced contracts. We will seek the best possible price on exit and our interests are aligned with investors because we receive a performance fee based on cash proceeds paid to investors in excess of the initial 100p invested (20% of proceeds between 100p-110p and 30% above). Key risks Investors capital is at risk. Rates of tax, tax benefits and allowances may change and depend on personal circumstances. There is no access to capital until exit, which is expected approximately four years after the underlying investments are made. Investments made through the Service are in unquoted companies that are considered to be higher risk than securities traded on the London Stock Exchange. Past performance is not a guide to future performance. The value of investments may go down as well as up and investors may not get back the full amount invested. Changes to legislation regarding renewable energy subsidies may reduce the revenue streams of the EIS Companies and, therefore, the returns to investors. Downing Renewables EIS 3

4 Investment Manager s Report Introduction The Service raised nearly 160 million between October 2012 and early 2015, and all of these funds have been invested in renewable energy EIS Companies. The portfolio comprises 38 renewable energy EIS Companies across various sectors and different locations. Recent investments Tranches 8A and 8B raised a combined total of over 53 million. These funds have been invested in a mixture of anaerobic digestion (AD) and hydro power generation businesses. The summary pages for Tranches 8A and 8B provide further details of how the funds have been invested and when the EIS3 forms are expected. For both of these tranches, income tax relief should be available in the 2014/15 tax year or in the 2013/14 tax year (via carryback). Valuation Although we are at an early stage, progress so far has been in line with expectations. Once an investment has been generating energy for at least 12 months, we will consider a revaluation to reflect the performance to date. At the valuation date of 31 March 2015, uplifts were applied to Wickham Solar (in Tranches 1 and 2) and Agri-Gen (Tranche 3). All other investments remain held at cost. Progress All of the companies in Tranches 1 to 3 are operational and generating energy. Of the companies in Tranches 4, 5A and 5B, most are generating whilst some are still in the construction phase. It is expected that all construction work in these Tranches will be completed by the end of summer Whilst some companies in Tranches 6, 7, 8A and 8B are already operational, construction work continues for the remainder. The majority of companies in these Tranches are expected to be operational by the end of We are working closely with operators to monitor performance and progress. Outlook The Service is now fully invested and we continue to work closely with operators to monitor the performance and progress of the investments. 4 Downing Renewables EIS

5 Renewable Energy Sectors Anaerobic digestion (AD) AD is a process of decomposition, which breaks down organic matter and produces biogas. The biogas can power a generator to produce electricity, or be de-oxidised to produce biomethane which is fed into the national gas grid. Run-of-river hydro Run-of-river hydro harnesses the energy in water as it loses altitude. Water is diverted from a stream or river through a pipeline to a powerhouse, driving a turbine that generates electricity, before the water is returned back to its course. Solar Solar panels create an electric field when solar energy reaches them, generating electricity which can be fed to the national electricity network. Wind Wind is used by aerodynamically engineered rotor blades to turn a turbine, which generates electricity. Government-backed Renewable Energy Subsidies Feed-in Tariffs (FITs) A fixed tariff for each kilowatt hour of energy generated by FIT qualifying renewable energies and a further payment for generated energy that is not consumed but exported to the national electricity network. Tariffs are set for 20 years and linked to the retail price index. Renewable Heat Incentive (RHI) The RHI scheme makes payments to those installing renewable heat generation technologies that qualify for support, including biomethane and heat pumps. RHI covers the difference in cost between conventional fossil fuel heating and renewable heating systems, plus an additional incentive on top. Renewable Obligation Certificates (ROCs) ROCs are awarded for every megawatt of renewable electricity generated, plus additional value over and above the price of the electricity itself. ROCs can be sold to utility companies that must source over 10% of their energy from renewable sources. The UK government has committed to ROCs until Downing Renewables EIS 5

6 Tranches 1 to 8B 6 Downing Renewables EIS

7 Tranche 1 Tranche 1 is invested across a portfolio of six EIS qualifying companies in the solar and anaerobic digestion sectors. The portfolio includes AD plants in Norfolk and Lincolnshire and solar projects in Devon, Northern Ireland and Lincolnshire. All of the companies are now generating energy, and current activity relates primarily to the operation, monitoring and maintenance of the systems. Some improvements (which should enhance returns) are being made to the AD plant owned by Oak Grove Renewables. As shown in the table below, the valuation of Wickham Solar has been uplifted above cost, and all other investments remain held at cost. Date of Investment EIS Company Sector Cost Value % of tranche by value EIS3 sent 19/03/2013 Oak Grove Renewables AD 3,466,023 3,466, % 21-Oct-13 19/03/2013 Wickham Solar Solar 2,964,365 3,287, % 04-Oct-13 19/03/2013 Galgorm Renewables Solar 1,003,319 1,003, % 29-Nov-13 19/03/2013 Wylam Power Generation Solar 3,557,235 3,557, % 09-Jan-14 19/03/2013 Lambridge Solar Solar 4,378,130 4,378, % 30-May-14 05/04/2013 Merlin Renewables AD 2,873,143 2,873, % 27-Feb-14 18,242,215 18,565, % Amount invested Tax certificates Sector split 100% across 6 investments Target exit date Spring 2017 Tax relief/year 30% income tax relief in 2011/12 (via carryback) or 2012/13 EIS3 certificates have been sent to investors for all investments. Performance summary Gross Net Subscription price 100p 70p Current value per 100p invested (as above) 101p 34% Solar 66% 34+66AD Downing Renewables EIS 7

8 Tranche 2 Tranche 2 is invested across a portfolio of six EIS qualifying companies in the solar and anaerobic digestion sectors. The portfolio includes AD plants in Norfolk and Lincolnshire and solar projects in Devon, Northern Ireland and Lincolnshire. All of the companies are now generating energy, and current activity relates primarily to the operation, monitoring and maintenance of the systems. Some improvements (which should enhance returns) are being made to the AD plant owned by Oak Grove Renewables. As shown in the table below, the valuation of Wickham Solar has been uplifted above cost, and all other investments remain held at cost. Date of Investment EIS Company Sector Cost Value % of tranche by value EIS3 sent 05/04/2013 Oak Grove Renewables AD 492, , % 21-Oct-13 05/04/2013 Wickham Solar Solar 488, , % 04-Oct-13 05/04/2013 Galgorm Renewables Solar 244, , % 29-Nov-13 05/04/2013 Wylam Power Generation Solar 585, , % 09-Jan-14 05/04/2013 Lambridge Solar Solar 568, , % 30-May-14 05/04/2013 Merlin Renewables AD 625, , % 27-Feb-14 3,004,589 3,067, % Amount invested Tax certificates Sector split 100% across 6 investments Target exit date Spring 2017 Tax relief/year 30% income tax relief in 2011/12 (via carryback) or 2012/13 EIS3 certificates have been sent to investors for all investments. Performance summary Gross Net Subscription price 100p 70p Current value per 100p invested (as above) 101p 36% Solar 64% 36+64AD 8 Downing Renewables EIS

9 Tranche 3 Tranche 3 is invested across a portfolio of eight EIS qualifying companies in the solar and anaerobic digestion sectors. The portfolio includes AD plants in East Anglia and Lincolnshire and solar projects in the West Country and Northern Ireland. All of the companies within the portfolio are now generating energy, and current activity relates primarily to the operation, monitoring and maintenance of the systems. The installation of further rooftop solar PV systems continues in Eider Renewables, and should be completed by the end of the summer. As shown in the table below, the valuation of Agri-Gen has been uplifted above cost, and all other investments remain held at cost. Date of Investment EIS Company Sector Cost Value % of tranche by value EIS3 sent 24/07/2013 Eider Renewables Solar 2,000,008 2,000, % 31-Jan-14 28/11/2013 Eider Renewables Solar 1,272,503 1,272, % 05-Mar-14 26/07/2013 Agri-Gen AD 1,738,394 1,969, % 02-Oct-13 12/09/2013 Woodbridge Solar Solar 4,999,753 4,999, % 03-Oct-14 13/09/2013 Merlin Renewables AD 500, , % 27-Feb-14 28/11/2013 Merlin Renewables AD 954, , % 27-Feb-14 18/10/2013 West Kingsmill Solar 1,700,002 1,700, % 18-Sep-14 30/10/2013 Egmere Energy AD 1,415,000 1,415, % 05-Mar-14 30/10/2013 Wylam Power Generation Solar 755, , % 09-Jan-14 28/11/2013 Galgorm Renewables Solar 1,647,003 1,647, % 31-Jan-14 16,983,364 17,214, % Amount invested Tax certificates Sector split 100% across 8 investments Target exit date Late 2017 Tax relief/year 30% income tax relief in 2012/13 (via carryback) or 2013/14 EIS3 certificates have been sent to investors for all investments. Performance summary Gross Net Subscription price 100p 70p Current value per 100p invested (as above) 101p 28% Solar 72% 28+72AD Downing Renewables EIS 9

10 Tranche 4 & 5A Tranche 4 & 5A are invested across a portfolio of six EIS qualifying companies in the solar, anaerobic digestion and hydro sectors. The portfolio includes AD plants in Norfolk and Devon, solar projects in Somerset and Lincolnshire and a hydro scheme in Scotland. Construction work continues on the Redstow AD project, and it is expected that this will be completed by the end of the summer. Current activity in the other investee companies relates primarily to the operation, monitoring and maintenance of the systems. All of the investments remain held at cost. Date of Investment EIS Company Sector Cost & Value % of tranche by value EIS3 sent 04/12/2013 Argyll Solar Solar 3,239, % 18-Sep-14 04/12/2013 Nomansland Biogas AD 3,340, % 03-Mar-15 04/12/2013 Redstow Renewables AD 4,180, % 04-Feb-15 04/12/2013 Grange Farm AD 3,380, % 23-Jan-15 04/12/2013 Goldcrest Renewables Solar 2,500, % 15-Oct-14 04/12/2013 Mulard Renewables Hydro 4,230, % 03-Jun-15 20,869, % Amount invested Tax certificates Sector split 100% across 6 investments Target exit date End 2017 Tax relief/year 30% income tax relief in 2012/13 (via carryback) or 2013/14 EIS3 certificates have been sent to investors for all investments. 52% Solar 28% Hydro 20% AD 10 Downing Renewables EIS

11 Tranche 5B Tranche 5B is invested across a portfolio of five EIS qualifying companies in the solar and anaerobic digestion sectors. The portfolio includes AD plants in Devon and solar projects in Lincolnshire and Northern Ireland. All of the companies are now generating energy, and current activity relates primarily to the operation, monitoring and maintenance of the systems. All of the investments remain held at cost. Date of Investment EIS Company Sector Cost & Value % of tranche by value EIS3 sent 18/03/2014 Argyll Solar Solar 1,160, % 18-Sep-14 18/03/2014 Nomansland Biogas AD 1,160, % 03-Mar-15 18/03/2014 Willowglen Renewables AD 1,000, % 19-Feb-15 18/03/2014 Grange Farm AD 344, % 23-Jan-15 18/03/2014 Galgorm Renewables Solar 894, % 12-May-14 4,560, % Amount invested Tax certificates Sector split 100% across 5 investments Target exit date Early 2018 Tax relief/year 30% income tax relief in 2012/13 (via carryback) or 2013/14 EIS3 certificates have been sent to investors for all investments. 55% Solar 45% 55+45AD Downing Renewables EIS 11

12 Tranche 6 Tranche 6 is invested across a portfolio of fourteen EIS qualifying companies in the solar, anaerobic digestion, hydro and wind sectors. The portfolio includes AD plants in Devon and Norfolk, hydro schemes in Scotland, and solar projects in Lincolnshire and Northern Ireland. The wind farm owned by Curlew Power is located on the Cumbrian coast. Construction work continues in about half of the companies within the portfolio. The hydro schemes should be completed by mid-2015, and the remaining projects should be completed towards the end of The other companies are now generating energy, and the current activity in these companies relates primarily to the operation, monitoring and maintenance of the systems. All of the investments remain held at cost. Date of Investment EIS Company Sector Cost & Value % of tranche by value EIS3 sent/ estimated 17/04/2014 Willowglen Renewables AD 4,000, % 19-Feb-15 26/06/2014 Redstart Renewables Hydro 2,100, % 20-Mar-15 03/07/2014 Galgorm Renewables Solar 1,000, % 20-Oct-14 07/07/2014 Shearwater Renewables Solar 2,000, % 19-Feb-15 08/07/2014 Eider Renewables Solar 600, % 18-Sep-14 08/07/2014 Nomansland Biogas AD 360, % 03-Mar-15 08/07/2014 Lambridge Solar Solar 510, % 18-Sep-14 11/07/2014 Asgard Renewables AD 3,060, % 26-Feb-15 11/07/2014 Garganey Solar 1,300, % 12-Mar-15 14/07/2014 Curlew Power Wind 2,900, % 18-Jun-15 14/07/2014 Avocet Renewables AD 2,890, % 27-Apr-15 14/07/2014 Goldeneye Renewables Hydro 1,156, % Aug-15 31/10/2014 Merlin Renewables AD 1,379, % 09-Jan-15 11/11/2014 Gorst Energy AD 1,023, % Aug-15 24,281, % Amount invested Tax certificates Sector split 100% across 14 investments Target exit date 2018 Tax relief/year 30% income tax relief in 2013/14 (via carryback) or 2014/15 EIS3 certificates have been sent to investors for 12 of the investments. The remaining EIS3 certificates are expected by August % Solar 22% Hydro 14% AD Wind 12% 12 Downing Renewables EIS

13 Tranche 7 Tranche 7 is invested across a portfolio of eleven EIS qualifying companies in the solar, anaerobic digestion, hydro and wind sectors. The portfolio includes AD plants in Wales and Norfolk, hydro schemes in Scotland, and solar projects in Lincolnshire and Northern Ireland. The wind farm owned by Curlew Power is located on the Cumbrian coast. Construction work continues in about half of the companies within the portfolio, and most of the projects should be completed towards the end of The other companies are now generating energy, and the current activity in these companies relates primarily to the operation, monitoring and maintenance of the systems. All of the investments remain held at cost. Date of Investment EIS Company Sector Cost & Value % of tranche by value EIS3 sent/ estimated 11/07/2014 Lambridge Solar Solar 1,020, % 18-Sep-14 11/07/2014 Asgard Renewables AD 1,440, % 24-Feb-15 11/07/2014 Garganey Solar 1,900, % 12-Mar-15 11/07/2014 Shearwater Renewables Solar 1,000, % 17-Feb-15 14/07/2014 Avocet Renewables AD 1,109, % 27-Apr-15 14/07/2014 Goldeneye Renewables Hydro 544, % Aug-15 14/07/2014 Curlew Power Wind 2,099, % 18-Jun-15 31/10/2014 Merlin Renewables AD 619, % 20-Jan-15 11/11/2014 Gorst Energy AD 2,850, % Aug-15 11/12/2014 Egmere Energy AD 2,377, % 17-Feb-15 17/12/2014 Osprey Green Power Hydro 2,185, % Aug-15 17,146, % Amount invested Tax certificates Sector split 100% across 11 investments Target exit date End 2018 Tax relief/year 30% income tax relief in 2013/14 (via carryback) or 2014/15 EIS3 certificates have been sent to investors for 8 of the investments. The remaining EIS3 certificates are expected by August % Solar 23% Hydro 16% AD Wind 12% Downing Renewables EIS 13

14 Tranche 8A Tranche 8A is invested across a portfolio of twelve EIS qualifying companies in the anaerobic digestion and hydro sectors. The portfolio includes AD plants in East Anglia, Lincolnshire and the West Country and several hydro schemes in Scotland. Construction work continues in most of the companies within the portfolio. Most of the projects should be completed by the end of 2015, although some are not scheduled to complete until All of the investments remain held at cost. Date of Investment EIS Company Sector Cost & Value % of tranche by value EIS3 sent/ estimated 28/01/2015 Gorst Energy AD 1,126, % Aug-15 05/02/2015 Sustainable Energy Generation AD 4,000, % Oct-15 13/02/2015 Corbiere Renewables AD 2,500, % Sep-15 13/02/2015 Goshawk Energy Hydro 1,800, % Sep-15 13/02/2015 Osprey Green Power Hydro 1,414, % Aug-15 18/02/2015 Redstow Renewables AD 2,500, % 18-Jun-15 20/02/2015 Southwestern Sustainability AD 2,500, % Oct-15 12/03/2015 Grange Farm AD 2,850, % 08-Jun-15 13/03/2015 Nightjar Sustainable Power Hydro 2,173, % Oct-15 27/03/2015 Egmere Energy AD 1,099, % 08-Jun-15 27/03/2015 Merlin Renewables AD 1,490, % 18-Jun-15 02/04/2015 Barley Brigg Biogas AD 1,119, % Sep-15 24,573, % Amount invested Tax certificates Sector split 100% across 12 investments Target exit date 2019 Tax relief/year 30% income tax relief in 2013/14 (via carryback) or 2014/15 EIS3 certificates have been sent to investors for 4 of the investments. The remaining EIS3 certificates are expected by the end of % Hydro 22% 78+22AD 14 Downing Renewables EIS

15 Tranche 8B Tranche 8B is invested across a portfolio of twelve EIS qualifying companies in the anaerobic digestion and hydro sectors. The portfolio includes AD plants in East Anglia, Lincolnshire and the West Country and two hydro schemes in Scotland. Construction work continues in most of the companies within the portfolio. Most of the projects should be completed by the end of 2015, although some are not scheduled to complete until All of the investments remain held at cost. Date of Investment EIS Company Sector Cost & Value % of tranche by value EIS3 sent/ estimated 23/03/2015 Southwestern Sustainability AD 2,500, % Oct-15 23/03/2015 Sustainable Energy Generation AD 1,000, % Oct-15 24/03/2015 Redstow Renewables AD 2,450, % 18-Jun-15 24/03/2015 Corbiere Renewables AD 2,500, % Sep-15 27/03/2015 Nightjar Sustainable Power Hydro 1,500, % Oct-15 27/03/2015 Grange Farm AD 1,899, % 18-Jun-15 30/03/2015 Cranbrook Renewables AD 2,790, % Nov-15 01/04/2015 Green Puffin AD 2,650, % Nov-15 01/04/2015 Guillemot Green Energy Hydro 2,480, % Nov-15 02/04/2015 Condate Biogas AD 5,000, % Nov-15 02/04/2015 Amicus Renewables AD 3,503, % Nov-15 02/04/2015 Barley Brigg Biogas AD 703, % Sep-15 28,976, % Amount invested Tax certificates Sector split 100% across 12 investments Target exit date 2019 Tax relief/year 30% income tax relief in 2013/14 (via carryback) or 2014/15 EIS3 certificates have been sent to investors for 2 of the investments. The remaining EIS3 certificates are expected by the end of % Hydro 14% 86+14AD Downing Renewables EIS 15

16 The Investments 16 Downing Renewables EIS

17 Agri-Gen Agri-Gen owns and operates a 3.5MWe AD plant in Suffolk, and the electricity produced qualifies for payments under the FIT scheme. The company has also installed two organic rankine cycle systems to convert waste heat into electricity (which also benefits from FITs). Feedstock for the plant is sourced locally from farms on long term fixed price contracts. The plant continues to perform to plan and has benefited from high energy yields as a result of a good maize cropping season. The valuation of this investment has been uplifted to approximately 13% above cost at 31 March Amicus Renewables Amicus is building a 1MWe combined heat and power AD plant near Dumfries, Scotland. It will principally generate electricity from approximately 24,000 tonnes of agricultural feedstock per annum. Construction is underway and it is expected that the plant will start commissioning by the end of 2015, with full operation targeted by the end of March Argyll Solar Argyll owns and operates a 4.2MWp ground mounted solar farm in Lincolnshire, which qualifies for payment under the Renewables Obligation through the receipt of ROCs. The array was commissioned in March 2014 and receives 1.6 ROCs for each megawatt of power generated. In November 2014, the provisional acceptance testing of the array was successfully completed, and current performance is in line with expectations. Asgard Renewables Asgard is developing a 499kWe waste AD plant in Cardigan, Wales. The plant will process waste food and other waste to produce biogas which will be run through a gas engine to generate electricity. Waste feedstock has a higher calorific value and biomethane potential than agricultural waste; therefore, when compared to agricultural waste, each tonne of feedstock generates more electricity and higher revenues. The electricity will be exported to the national electricity network and the scheme will earn income from both the sale of the electricity and the FIT scheme. Construction has started and electricity generation is expected to commence in the first quarter of Avocet Renewables Avocet has developed a 499kWe AD facility on a farm near Norwich, and is expected to process 14,000 tonnes of feedstock per annum. The plant will process agricultural wastes and energy crops to produce biogas that will be processed through a combined heat and power engine to generate electricity and usable heat. The company will generate revenues both from the sale of the electricity and renewable energy subsidies (both FITs and RHI). Downing Renewables EIS 17

18 The Investments Barley Brigg Biogas Barley Brigg is developing a 1.1MWe combined heat and power AD plant in Suffolk. The plant will be fed a combination of maize and rye silage as well as processed sugar beet and slurry from nearby farms. The first phase of the construction has been completed and the gas engines have been connected to the grid, commissioned and accredited by OFGEM. The EIS investment will be used to fund the completion of a second silage clamp, the construction of the post fermenter tank (with gas store), and finally the installation of two RHI qualifying digestate concentration systems which is expected to be completed by the end of summer 2015.

19 Condate Biogas Condate is developing a 2.5MWe equivalent gas to grid AD plant near South Molton, Devon. Construction has commenced and it is expected that initial commissioning will start in the autumn, with full operation targeted from the start of Corbiere Renewables Corbiere is developing a 2.5MWe gas to grid AD plant in Norfolk, which will qualify for payments under the RHI. The site is expected to process 33,000 tonnes of energy crops and agricultural wastes annually. Construction of the plant is underway and completion is expected in the third quarter of Cranbrook Renewables Cranbrook is building a 200kWe agricultural AD plant in Devon that is due to be completed by summer The plant is expected to process 14,500 tonnes of energy crops and agricultural wastes annually, and will benefit from the FIT scheme. Curlew Power In December 2014, Curlew acquired 16.5MWe operational wind turbines on the Cumbrian coast. The turbines have been operating since 1997 and have approximately 8 years of operational life remaining, with opportunities for repowering thereafter. The turbines are performing in line with expectations. Egmere Energy Egmere has developed a 2.0MWe AD plant in Holkham, Norfolk. The plant receives payments under the FIT scheme for electricity generated, and also injects biomethane into the gas grid for which it receives payments under the RHI. The plant is performing in line with expectations. Downing Renewables EIS 19

20 The Investments Eider Renewables Eider has developed a 2.7MWp portfolio of roof mounted solar photovoltaic systems in Northern Ireland across over 750 properties. Installations are ongoing, and it is expected that the portfolio will exceed 2.8MWp by the middle of Solar installations in Northern Ireland that are sub-50kwp in size qualify for 4 ROCs for each megawatt of electricity produced, which is higher than the equivalent FIT scheme. The portfolio continues to perform in line with expectations. Galgorm Galgorm owns a 3.2MWp portfolio of roof mounted solar photovoltaic systems in Northern Ireland across 676 properties. Solar installations in Northern Ireland that are sub-50kwp in size qualify for 4 ROCs for each megawatt of electricity produced, which is higher than the equivalent FIT scheme. The portfolio continues to perform in line with expectations. Garganey Garganey is developing a portfolio of roof mounted solar photovoltaic systems in Northern Ireland and has to date installed 1.0MWp across more than 260 properties. Installations continue and the portfolio is expected to be fully completed later in 2015 in advance of subsidy reductions in Northern Ireland. Goldcrest Renewables In March 2014, Goldcrest acquired a 2.2MWp ground mounted solar photovoltaic system in Goldenhaye, Somerset. The site is fully operational and has been generating electricity since the end of May A 5 year Power Purchase Agreement was entered into with Total who acquire all the electricity produced at a pre-agreed price. The system continues to perform well, and generation to date is slightly above forecast levels. Goldeneye Renewables Goldeneye is developing a 499kWe run-of-river hydroelectric scheme in Argyll, Scotland. The scheme will divert a fraction of the existing water course down a pipeline to a turbine down the valley where the water pressure will turn the turbines to generate electricity. Although some weather related delays were experienced over the winter, construction is scheduled to be completed by the end of the summer. The electricity will be exported to the national electricity network and the scheme will earn income from both the sale of the electricity and the FIT scheme. 20 Downing Renewables EIS

21 Gorst Energy Gorst is building a 2.0MWe gas injection AD plant near Exeter in Devon. The plant will sell the biomethane that is injected into the gas grid and will also qualify to receive payments under the RHI. Construction of the plant is on time and budget, and is due to be completed by the third quarter of The plant will be fed a combination of energy crops and agricultural wastes. The crops will be grown on nearby farms as part of their crop rotation, with the digestate from the process going back to these local farms to reduce their reliance on chemical fertilisers and to improve their soils. Goshawk Energy Goshawk is developing a 499kWe run-of-river hydroelectric scheme in the Scottish Highlands near Inverness. The electricity will be exported to the national electricity network and the scheme will earn income from both the sale of the electricity and the FIT scheme. Construction is underway and is due to be completed by the third quarter of Grange Farm Grange Farm has developed a gas to grid AD plant in Lincolnshire. The plant receives payments under the FIT scheme for electricity generated and also injects biomethane into the gas grid for which it receives payments under the RHI. The plant was completed in December 2014 and performance to date has been in line with expectations. Guillemot Green Energy Guillemot is developing a 0.9MWe run-of-river hydroelectric scheme situated near Inverary, Scotland. The electricity will be exported to the national electricity network and the scheme will earn income from both the sale of the electricity and the FIT scheme. Construction started in May 2015 and is due to be completed by summer Green Puffin Green Puffin is developing a 200kWe AD plant near Yeovil in Somerset. The project is expected to benefit from both FITs and the RHI. Construction started in April 2015, and, subject to additional planning permission being received, further funding is likely to be raised in order to increase the output of the plant to 450kWe. Downing Renewables EIS 21

22 The Investments Merlin Renewables Merlin has developed a gas injection AD plant in Hibaldstow, Lincolnshire. The plant, which was completed towards the end of 2014, qualifies to receive payments under the RHI for injecting biomethane into the gas grid. The plant is fed on crops which are grown on nearby land and sold to Merlin for use in the plant. The plant is now fully operational and is performing in line with expectations. Mulard Renewables Mulard has developed a 1.6MWe run-of-river hydroelectric scheme in Perthshire, Scotland. The electricity generated will be exported to the national electricity network and the scheme will earn income from both the sale of the electricity and the FIT scheme. Construction has recently completed and the scheme has begun to generate electricity. Nightjar Sustainable Power Nightjar is developing a 2.0MWe run-of-river hydroelectric scheme in Argyll, Scotland. The scheme is located close to that being developed by Osprey Green Power. Construction has already commenced and is expected to complete in mid Nomansland Biogas Nomansland has developed a 1.2MWe electricity producing AD plant near Tiverton in Devon. The plant is located at Menchine Farm, which is the primary provider of the feedstock. Construction was completed towards the end of 2014, and the plant began to export electricity to the grid in December Oak Grove Renewables Oak Grove operates a 2.0MWe electricity producing AD plant in Scottow, Norfolk. The plant is primarily fed on maize and rye grass acquired from a local farming co-operative on a long term feedstock agreement. The plant was commissioned in November 2013 and is fully operational, although financial performance was impacted by higher than expected operating costs during the first year of operation. Further investment has been made into Oak Grove to fund the installation of equipment which will improve the efficiency of the plant, including an organic rankine cycle system and a digestate concentration system. These improvements should increase income and improve project returns. 22 Downing Renewables EIS

23 Lambridge Solar Lambridge owns and operates a 9.0MWp ground mounted photovoltaic system at Burton Pedwardine in Lincolnshire. The system qualifies for ROCs and receives 1.6 ROCs for each megawatt produced. The site was connected to the national electricity network and commissioned on 31 December Although the site suffered from some minor problems earlier in 2014, performance for the 12 months to April 2015 was ahead of forecast.

24 The Investments Osprey Green Power Osprey is developing a 1.45MWe run-of-river hydroelectric scheme in Argyll, Scotland. Construction is underway and is scheduled to be completed towards the end of Redstart Renewables Redstart is developing a 0.9MWe run-of-river hydroelectric scheme in Argyll, Scotland. Construction is underway and remains on time and on budget, with completion scheduled for the summer of The electricity will be exported to the national electricity network and the scheme will earn income from both the sale of the electricity and the FIT scheme. Redstow Renewables Redstow is developing a 4.8MWe AD plant on a farm in Swaffham, Norfolk, which will be fed locally sourced energy crops. Construction is underway and is scheduled to be completed by August 2015, with the plant becoming fully operational by the end of Shearwater Renewables Shearwater owns and operates a 3.1MWp ground mounted solar farm in Rutland. The solar farm is located on the site of a quarry owned by Hanson plc, and in return for a peppercorn lease, Hanson receives a percentage of the power generated free of charge. The installation was commissioned in December 2014 and is fully operational. Southwestern Sustainability Southwestern Sustainability is building a 1.0MWe agricultural AD plant in Devon. The plant will process a mix of feedstocks including slurry, manure and maize silage to generate renewable electricity and heat for exporting to the grid and for use on site. The plant should benefit from FITs and the RHI. Construction has commenced and the plant is due to begin commissioning in the autumn, with full operation targeted from the second quarter of Downing Renewables EIS

25 Sustainable Energy Generation SEG is building a 2.0MWe gas injection and electricity generation AD plant in South Petherton, Somerset. Construction is underway and the plant is due to be commissioned by the third quarter of It will be fed a combination of energy crops and farmyard wastes, with the crops grown on nearby farms as part of their crop rotation. The plant will sell the biomethane that is injected into the gas grid and will sell electricity that is produced on site. It should qualify to receive payments under the FIT and RHI schemes. West Kingsmill West Kingsmill owns and operates a 1.6MWp ground mounted solar farm in Cornwall. The array was commissioned in March 2014 and receives 1.6 ROCs for each megawatt of power generated. Neas Energy, a Danish electricity trading house backed by Danske Bank, acquires the electricity produced under a Power Purchase Agreement. After encountering some initial operational problems, which have been resolved, the site is now performing in line with projections. Wickham Solar Wickham has developed a 5.6MWp ground mounted solar photovoltaic system in Lincolnshire. The system, which was commissioned in March 2013, receives 2 ROCs for every megawatt of power generated. A 5 year Power Purchase Agreement was entered into with Total who acquire all the electricity generated at a pre-agreed price. The valuation of this investment has been uplifted to approximately 11% above cost at 31 March Willowglen Renewables Willowglen has developed a 1.3MWe agricultural AD plant in Exeter on land neighbouring a business park. The plant, which began to export electricity to the grid in December 2014, receives payments under the FIT scheme, and a nearby business park purchases most of the electricity produced under a Power Purchase Agreement. Wylam Power Generation In November 2013, Wylam acquired an operational 4.0MWp ground mounted solar photovoltaic system in Rexon Cross, Devon. The site had been generating electricity since the end of May A 5 year Power Purchase Agreement was entered into with Total who acquire all the electricity produced at a pre-agreed price. The site is performing in line with expectations. Downing Renewables EIS 25

26 The Investments Woodbridge Solar Woodbridge owns and operates a 9.0MWp ground mounted solar farm in Rutland. The array was commissioned in March 2014 and receives 1.6 ROCs for each megawatt of power generated. The solar farm is on the site of a quarry owned by Hanson plc. In return for a peppercorn lease, Hanson receives 20% of the power generated free of charge. The system is performing within expectations and was voted best ground mounted solar site (<10MW category) at the 2014 Solar Power Portal Awards.

27 Guide to Claiming EIS Income Tax Relief Claiming income tax relief Once you have received your EIS3 certificates, you should enter the amount invested on your tax return for the year you are entitled to claim the income tax relief. If you have already submitted your tax return, then the claim section of the EIS3 certificate should be completed and sent to your tax office. Please note that you will receive one EIS3 certificate per EIS Company (i.e. you do not receive one certificate for your entire investment through the Service), and these are likely to arrive separately. If your shares were issued in the current tax year and you pay tax under PAYE, you can apply to claim relief for that year now. Fill in the claim form on page 3 of the EIS3, then tear off and send that page to your HMRC office. Claiming capital gains tax deferral relief If your chargeable gain accrues in the current tax year and the shares were issued either in the current tax year, or in a previous year, fill in the EIS3 certificate and send it with your tax return to your HMRC office after the end of the tax year. If your chargeable gain accrued in a previous tax year, fill in the EIS3 certificate and send it to your HMRC office with your tax return if not already submitted. In both circumstances, you will need to enter the chargeable gain(s) details on the appropriate capital gains summary page. Remember that if you are sent a tax return after the end of the year, you will also have to enter details of the claim on that return. If you want to claim relief for a previous tax year for which you either did not receive a tax return, or you received a return and you have already sent it in, fill in the claim form on page 3 of the EIS3, then tear off and send that page to your HMRC office. If the claim is made in time it will be treated as amending the tax return. Please keep your EIS3 certificates safe as it can take time to source replacements from HMRC. Downing Renewables EIS 27

28 The Renewables Investment Team All members of Downing s investment team are available to transact and manage renewable energy investments. The five members listed here specialise in the sector. Investments are only made after rigorous due diligence is carried out and they have been approved by Downing s Investment Committee. Colin Corbally Colin is a partner of Downing LLP and head of the renewable energy investment team. He qualified as a solicitor with Linklaters in He spent six years at 3i Group in corporate finance and venture capital where he was a senior manager. He then spent four years at The Royal Bank of Scotland where he was a director, structuring debt and equity investments, before joining Downing in Downing Renewables EIS

29 Michael Hughes Michael is a partner of Downing LLP. He qualified as a chartered accountant in 2001 and spent seven years at Close Investments Limited where he was a director within the property and tax division. He joined Downing in May 2009 and has cross-sector investment experience with special focus on renewable energy and licensed trade investments. Ed Simpson Ed qualified as a chartered accountant with Arthur Andersen in 1998 before moving into corporate finance. He has been working in venture capital and private equity since 2006, most recently advising the Carbon Trust on its venture investments and before that with Bridges Ventures with a focus on the environmental sector. Ed joined Downing in David Freeder David is responsible for deal origination, appraisal and execution. David joined Downing in 2013 from Ernst & Young s renewable energy corporate finance team and previously, in 2012, spent a year on secondment at the Social Business Trust. He qualified as a Chartered Accountant with Deloitte. Ross Board Ross joined Downing in 2014 as an Investment Executive, focusing upon the renewable energy sector. Prior to joining Downing, he acted on numerous renewable energy transactions with a combined value of over 200m. He is currently concluding an executive MBA at Warwick Business School, focusing on international energy/finance. Downing Renewables EIS 29

30 About Downing Structure of the Service We have over 75 staff, and our main office is in Westminster, London. We have specialised in tax efficient investments for over 25 years and have raised in excess of 1.3 billion from over 30,000 UK investors. The Service is a discretionary managed portfolio of EIS Companies, where each investor will own, through a nominee, a beneficial holding in each EIS Company. The Service is not an unregulated collective investment scheme. The Financial Services Compensation Scheme, which provides compensation to eligible Investors in the event that an FCA authorised and regulated party (Downing, a custodian or retail bank) fails to meet its liabilities, will apply to the Service. We are experienced in providing equity finance to renewable energy businesses that qualify for attractive tax reliefs, having invested over 300 million in the sector since Important notice This document has been prepared for investors and their advisers by Downing LLP ( Downing ), Ergon House, Horseferry Road, London SW1P 2AL. It is for information only and does not constitute an offer or invitation to apply for shares in the Service and no reliance should be placed on it. Any subscription to the Service should be made solely on the basis of the memorandum relating to the Service and investors should note that their investments may be illiquid, high risk and are long term in nature. Past performance is not a guide to future performance. 30 Downing Renewables EIS

31 Downing Renewables EIS 31

32 Ergon House Horseferry Road London SW1P 2AL This document has been printed on 100% recycled paper Downing LLP is authorised and regulated by the Financial Conduct Authority