Investments 

Downing launches power plant bond

Downing launches power plant bond

Downing have launched a bond which loans money to reserve power plants.

The bond will have an initial yield of 7.6 per cent and can be held in an Innovative Finance Isa, making the income free of tax. The duration of the bond is 33 months.

Downing said the yield on the bond - higher than a typical Downing Crowd Bond - reflected the higher risk nature of the investment and its longer term.

The company's head of crowdfunding, Julia Groves, said the UK’s reserve power market can create exciting opportunities for investors.

She said: "Balancing demand for energy has become a much trickier task in the UK, as the increasing popularity of renewable energy creates greener but much more intermittent supply, simply because you can’t ‘turn on’ the sun or wind. 

"This has created extra challenges for the National Grid, which is struggling to react to peaks in demand or sudden loss of supply. Reserve power plants can tackle this issue head on by providing extra capacity to the National Grid at these times and potentially benefit from the peaks in pricing by supplying into a tight market."

Two plants which require funding have already been selected for the portfolio and more projects will be added "over time".

Alistair Cunningham, financial planning director at Wingate Financial Planning in Surrey, said this investment held "no interest" for him.  

david.thorpe@ft.com

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