Aberdeen Standard Investments puts £43m behind six hydro projects

THE asset management business of investment giant Standard Life Aberdeen is backing the development of hydro-electric power with a major investment in six schemes which it said would provide a long-term reliable income stream.

Aberdeen Standard Investments’ infrastructure debt team provided more than £43m in private debt to finance the construction of six hydro-electric schemes in Scotland.

Commissioned over a year to autumn 2017, the schemes were built by Gilkes Energy and associated company, Gilkes Hydro Investments (GHI), which owns and operates 17 renewable energy projects across Scotland.

The funds were raised from Phoenix Life, the Standard Life Investments Secure Income and Cashflow Fund (SICF), and Standard Life Assurance. The schemes are Strathan, Loch an Laoigh and Uisge Dubh in Strathcarron, Wester Ross; Pattack, north of Laggan; Kendrum Burn in Lochearnhead; and Ben Glas, on the Glenfalloch Estate, at the north end of Loch Lomond.

All six are accredited under the UK Government’s feed in tariff programme, which produces a fixed price per megawatt hour for the energy produced, protecting project revenues from fluctuations in electricity prices.

Hydro energy has been produced in Scotland since the 1950s, which it became a pioneer in harnessing energy from water movement.

Estimates suggest hydro now produces around 12% off Scotland’s electricity with more than half of all schemes based in the Highlands and Islands.

In spite of its head start, hydro has been overtaken by wind power, but remains the second largest form of renewable energy produced in Scotland. In 2017 hydro produced 5,384 gigawatt hours of hydro-electricity while wind power generated 16,783 gigawatt hours.

Jeremy Allcock, head of infrastructure debt at Aberdeen Standard Investments, said: “We recognise the importance of hydro-electric projects in meeting UK renewable energy targets; these projects are a focus area for our investment team.

“The funding we have provided will help GHI to grow and at the same time will provide our investors with stable and predictable returns over 19 years, helping to protect them from inflation and to meet their liabilities.”

Aberdeen Standard Investments was created last year. It has £575.7bn of assets worldwide.