Aviva Investors has acquired an 8.6MW portfolio of residential solar photovoltaic (PV) systems installed on over 3,000 properties across the UK from Zouk’s first infrastructure fund, Zouk Solar Opportunities Ltd (ZSOL).
The ZSOL portfolio was developed and financed by Zouk over 2011-2013. The investment model enables homeowners and social housing residents to benefit from free use of the electricity generated by the solar PV systems. The systems were installed at no cost to the residents and can reduce household power bills substantially, which helps to relieve many from fuel poverty. The electricity generated by the portfolio over its lifetime will result in avoided carbon emissions of around 90,000 tonnes.
The acquisition represents a further addition to the existing portfolio of investments in solar PV systems by the Aviva Investors REaLM Infrastructure Fund. The fund focuses on a range of UK infrastructure projects, with particular focus on the energy and energy efficiency sectors. The fund’s portfolio of residential PV systems now exceeds 50MW of installed capacity.
The PV systems are scheduled to deliver predictable, RPI-linked returns with each system eligible for OFGEM-regulated Feed-in Tariffs for every unit of electricity generated for 20/25 years. The homeowners, including a significant number of social housing tenants, will continue to make substantial savings on their electricity bills for the lifetime of the assets.
Ian Berry, fund manager – infrastructure and renewable energy at Aviva Investors, says: “We continue to expand our activities in the UK infrastructure market and in UK renewables in particular and once again are pleased to have invested in such high quality infrastructure assets offering attractive yields. We believe that infrastructure opportunities such as this offer the potential to invest in assets which offer secure and long-dated income streams in order for our clients to meet their future liabilities.”
Colin Campbell, partner, Zouk’s clean infrastructure team, says: “We have created one of the largest portfolios of free residential-scale solar in the UK for Zouk’s first infrastructure fund, ZSOL. By selling this portfolio to Aviva Investors, we continue to demonstrate the value of Zouk’s infrastructure strategy: creating de-risked, long-term infrastructure assets for institutional investors to generate capital gain. In line with Zouk’s investment philosophy, these returns carry real ESG value: distributed solar PV is an efficient method of power generation, has a strong carbon benefit and provides fuel poverty relief. We are delighted to have worked with Aviva on this transaction and hope to be able to work together again in the future.”
Zouk’s clean infrastructure investment funds finance the construction of new high-yielding assets, by acquiring, developing and funding infrastructure projects during the late-stage of development and investing across a broad range of renewable energy and environmental sectors, including distributed energy, energy efficiency, waste to energy and geothermal.
The Aviva Investors REaLM (Returns Enhancing and Liability Matching) strategy contains five funds investing in infrastructure, energy centres, ground rents, social housing and commercial assets. The strategy aims to hedge against inflation risks and generate returns in excess of liabilities.
The objective of the REaLM Infrastructure Fund is to achieve investment returns substantially in excess of the rate of return generated by long-dated index-linked gilts by investing in infrastructure investments which offer secure, long-term and inflation-linked income streams.
