RENEWABLE energy is a growing sector in the UK, and peer-to-peer lenders have been quick to offer their support. Platforms are now facilitating loans for a huge range of green energy projects, from hydropower stations, to wind farms, to biomass plants.
By offering funding during the early stages of construction, these platforms can often negotiate double digit returns for their investors, and when these returns are wrapped into an Innovative Finance ISA (IFISA), the rewards are even more tempting.
However, this is still a nascent sector and very few platforms are able to commit the resources and funds that renewable energy projects require. Earlier this year, Assetz Capital closed its Green Energy Account due to a lack of deal flow, while Trillion Fund closed in 2015 after the government scaled back its green energy subsidies.
This has left just a few ISA-ready players in the marketplace for the 2018/19 tax year.
So in alphabetical order, here are the highest-paying P2P green IFISAs available right now…
- Target returns for IFISA: 3-15 per cent
Abundance has been a pioneer for green P2P lending ever since it launched in 2012. Run by Zopa co-founder Bruce Davis, it focuses on renewable energy projects which are still in development.
As with any P2P investment, the higher the return, the greater the risk, and Abundance’s green loans run the gamut from three to 15 per cent. The highest returns are available for projects that are still under construction, and the 15 per cent returns are only made once the site receives planning permission and is subsequently sold.
- Target returns for IFISA: 3-7.6 per cent
Downing Crowd is another recent arrival to the world of green P2P lending, but it certainly arrived with a bang. Past projects on the platform have offered returns of up to 7.6 per cent for investors who want to support renewable energy projects across the UK.
Earlier this month, the platform made waves when it announced that it would be funding a £1.6bn electric vehicle project in partnership with Pivot Power. The giant loan will be open to investors in the autumn of 2018, although target returns have not yet been released.
Goji and Prestige-Prime Group
- Target returns for ISA: 6.5-8.3 per cent
Goji started life as an aggregator, helping P2P investors spread their money across a variety of different platforms. But last year it launched its first-ever P2P bond, and earlier this year it teamed up with alternative investment firm Prestige-Prime Group to offer an IFISA-eligible green bond.
The bond is aimed at financial advisers and spreads its wealth across more than 40 renewables projects, including wind, solar and biomass power. It has targeted returns of 6.5 per cent for a three-year investment and 8.3 per cent for a five-year investment, with a minimum single investment of £5,000.
- Target returns for IFISA: 5-7 per cent
Ethical bank Triodos launched its own P2P platform earlier this year, named Triodos Crowdfunding. Within the first few months of the year it had already funded seven projects, four of which were IFISA eligible.
Triodos offers its green P2P investments as bonds, all of which can be folded into the IFISA wrapper. Past projects have ranged from solar schemes to heat pump installations, to windfarms, with the majority of loans paying five per cent to lenders.