Albion Ventures in first hydro deal

The UK venture capital firm, which has been ramping up its exposure to renewable energy, has made its first move into hydropower by teaming with Dragon Hydro to develop a 300KW project in Wales.

Albion Ventures, which manages around £230 million (€292 million; $361 million) across eight venture capital trusts (VCTs), has invested £1.3 million in a partnership with Welsh developer Dragon Hydro to develop a 300-kilowatt (KW) hydropower scheme on the Afon Cadair river in Gwynedd, Wales.

The scheme, which is Albion Ventures’ seventh renewable energy investment and its first in hydropower, will benefit from a feed-in-tariff (FIT) regime and is expected to generate its first electricity in the third quarter of 2013. The site will generate an average of 1,300 megawatt hours (MWh) of electricity per year – enough to power 300 households.

“The investment will provide attractive long-term returns for our shareholders,” said Albion Ventures partner Michael Kaplan in a statement. “Hydropower is the oldest renewable technology and we are very pleased that the government continues to support small-scale hydro through Feed-in-Tariffs.”

In September last year, Albion Ventures announced it was increasing its portfolio exposure to renewable energy from 5 percent to 15 percent. In the same month it made its first investment in the wind sector – also in Wales – having previously invested in the solar photovoltaic and waste-to-energy sectors.

Venture capital trusts are investment companies listed on the London Stock Exchange that were launched in 1996 to encourage private investors to support UK growth companies in exchange for tax incentives.