25 January 2023
Securing investment returns and green electricity
We know that climate change presents the biggest tangible threat to the fund. It is the fund's firm belief that investing in positive environmental assets can be done in conjunction with earning a competitive financial return.
Wiltshire Pension Fund wants their members to feel proud that their contributions are helping to deliver positive change for future generations and for the planet.
On a sunny November morning, we were delighted to be travelling south, crossing the county border into Dorset to visit the Christchurch Solar Farm.
The site is nestled away on rural fields a few miles north-east of the town of Christchurch, and is accessed by traversing rural lanes, the recent heavy rain making the journey more problematic for a team more used to spending time at a desk that ranging the countryside.
Wiltshire Pension Fund is invested in this site as part of its allocation to secured income, a portfolio designed to provide lower risk inflation-linked returns, perfect for funding the payment of pensions. The investment manager responsible for this site is Schroders-Greencoat, Andreas Kyriacou - Asset Manager, met us on the site to show us around and explain more about how it generates electricity and importantly investment returns for the pension fund.
The site itself covers 87 acres of fields, it uses 80,000 panels to generate 18MW of electricity, enough to power 6,500 homes. The cool and sunny weather on the day of our visit was perfect for harvesting photons and generating renewable power, the cooler weather helping the solar panels to operate more efficiently.
Being in a rural location the impact on local biodiversity is a key consideration and requirement of gaining planning. To fulfil this, the site has native planting in suitable locations so as not to disrupt power generation whilst providing benefit to local wildlife. Across the site sheep are used to keep the grass short, allowing the land to have a dual use and providing operational cost savings.
Electricity produced at this site goes towards powering the stores of a major UK high street retailer, all arranged through a purchasing power agreement (PPA). The PPA is a contract mechanism that provides certainty for energy generators and purchasers. The PPA ensures a guaranteed price for the power produced rising by an agreed annual measure of inflation, this helps to make the investment secure and low risk, something the pension fund is looking for. For the energy purchaser the contract provides certainty for future energy prices something that is certainly welcome at this time of rising energy costs.
Andreas explained that the site is generating a return of 6-7% per annum for Wiltshire Pension Fund, of which around 70% is inflation-linked, providing good protection against rising inflation. This site started producing electricity in March 2015, at the time it was a large size for a solar development, new locations are now even larger as demand for renewable power continues to grow. Initially the investment had a lifetime of 25 years, however work is ongoing to extend this to 40 years. To make this happen lease negotiations must be undertaken to extend the life of this power generation site, with the equipment already capable of operating for this longer timeframe.
Besides the obvious solar panels which dominate the site, other equipment is needed to get the electrons produced ready for use by the national grid. The electricity generated is converted from DC to AC by an inverter then specialist equipment ensures the electricity quality is suitable for the national grid. Once ready it joins the power system via wires joining the site. These less obvious bits of equipment and connections are some of the growing areas of investment needed to facilitate more renewable power generation.
This site showcases the best of what Wiltshire Pension Fund's investments have to offer - a long-term sustainable return, alongside clear positive impacts for the planet. It's investments like these that will help us to both contribute to and benefit from the transition to net zero.
Find out more on our Investment pages