Albion backs second hydro project

The UK firm’s investment in a 2MW Scottish power scheme, its 12th renewables deal, is expected to generate 7GWh a year from 2015.

Albion Ventures, the London-based venture capital firm, has invested £9.3 million (€11 million; $15 million) in its second hydropower scheme.

Made in partnership with Perth-based developer Green Highland Renewables (GRH), the investment will fund the construction of a plant on the Allt A’Chonais, in the Scottish Highlands. The scheme will benefit from the feed-in-tariff regime.

With a capacity of 2 megawatts (MW), the installation is expected to start generating electricity in the first quarter of 2015. Albion anticipates it will produce an average of 7 gigawatt hours (GWh) per year.

“GHR is one of the leading developers of small-scale hydroelectricity schemes in Scotland, having successfully developed many schemes over the last 5 years,” said Christoph Ruedig, investment director at Albion, in a statement. “Hydropower is the oldest renewable technology and has a strong track record of performance, which will provide attractive long-term returns for our shareholders.”

Albion backed its first hydro scheme last year, when it teamed up with Welsh developer Dragon Hydro to develop a 300-kilowatt (KW) plant on the Afon Cadair river in Gwynedd, Wales. Its latest deal, which comes after a cash injection in Northern Ireland-based Erin Solar earlier this month, brings its total number of investments in renewables to 12.

Formed in 2009 through a spin-out from Close Brothers, Albion has been ramping up its exposure to renewable energy in recent years. It now has a 15 percent target allocation to the sector, up from 5 percent before September 2011.

The firm last June launched Albion Community Power, a renewable energy business designed to offer inheritance tax relief to its investors after just two years. The company, which reached a first close on its planned £100 million fund this summer, appointed a new chairman at the beginning of the month.