New investments worth almost £220m reflect renewed interest by asset managers and funds in low-carbon power – but some fear popular backlash suffered by windfarms

UK investors see bright future for solar power – if the nimbys can be won over

The late summer sun is shining on Britain's solar power sector with new investments worth almost £220m unveiled on Thursday by City-based groups.

A new solar fund created by asset manager Foresight is planning to raise £200m to buy eight solar farms across the UK through a flotation on the London stock exchange.

In a separate move, Bluefield Partners, which attracted £130m earlier this year for its Solar Income Fund, said it would spend £17m buying a large-scale solar plant in Norfolk from the pioneering developer Solarcentury.

The new investor interest in low-carbon power is not restricted to solar, with £300m being raised for wind and solar farms by the Renewables Infrastructure Group and a further £260m by Greencoat UK for wind projects.

RenewablesUK, which lobbies on behalf of green energy, described the newfound City interest as "the best possible kind of endorsement" for a sector that has been hit hard hit by recession.

Solar power has been slow to take off in Britain compared with some other European countries such as Germany. But public subsidies and falling equipment costs are combining to make it more attractive.

There is a little over 2.5GW of solar power in place in Britain. The Department of Energy and Climate Change, however, expects this to increase to 3GW by next year.

"The government would like to see 20GW in place by 2020 and from what we see the investor appetite is there, and as for availability of projects: absolutely," said Jamie Richards, a partner at Foresight.

The asset manager says it has binding commitments in place to acquire eight solar parks amounting to 145.5MW – two of them very large at more than 30MW each – all of which either are working or have planning consent. And if the £200m is raised from institutional and retail investors it will be added to £450m already invested in a variety of solar projects both in Britain and on the continent.

The Foresight Solar Investment Fund is promising to pay an initial 6p dividend on each 100p of ordinary shares on the back of the income stream from the solar farms, which are eligible for the government's renewable obligation certificates.

Bluefield and Solarcentury expect to have their 14.8MW solar farm project on an agricultural site near Hadingham ready to generate electricity in December.

One of the changes that has spurred the sector has been the government decision to lift a 5MW cap on the size of projects eligible for subsidies via the feed-in tariff.

The arrival in recent years of low-cost solar panels from China – now subject to challenge by European manufacturers – has also helped make photovoltaic technology more competitive.

But there are also clouds on the horizon, with fears mounting that a move to anything close to the 20GW aspiration would mean coating vast swaths of the British countryside in panels and raising the kind of popular opposition seen in the onshore wind power sector.

A planning application for a £20m solar farm on a 38-hectare (94-acre) site in Tattingstone, Suffolk, was turned down in June following a high-profile campaign by local opponents including the actor and comedian Griff Rhys Jones.

There has been particular unease about new projects in Cornwall and the rest of the south-west. In August, Somerset MP and foreign minister Jeremy Browne described large-scale solar farms as a "monstrous desecration" of the countryside after plans for a 20-hectare site near Taunton were unveiled.

Richards said he was aware of these negative developments but added that his investors were shielded by the fact that the new fund was investing only in existing schemes or those already with planning consent.

RenewablesUK said it was particularly pleased to see the sudden rush of investor money into low-carbon power given that the new energy bill was still wending its way through parliament.

"This is all very useful as it creates a real sense of momentum," said Rob Norris, a RenewablesUK spokesman. "Other people [City investors] wanting a slice of the action is very good to see. These are people who crunch the numbers really hard so it's the best possible kind of endorsement."

The solar and better-established wind power industries have both struggled from the reduction in subsidy levels and what critics have claimed is an inconsistent message of support from the coalition government.

Many leading Conservatives, including the chancellor, George Osborne, have made clear their growing concerns about the costs of supporting renewables. Green energy enthusiasts are worried that some ministers seem more supportive of new shale gas schemes, but today the City seems keen to soak up the solar rays.

Targets

Solar was never expected to make a big contribution to the UK's 2020 power needs. The 2011 Renewable Energy Roadmap examined how to hit a target of 15% of demand being met by green energy. Of expected demand of 234 terrawatt hours (TWh), onshore wind would be 24-32 TWh and offshore 33-58 with biomass electricity providing 32-50TWh and biomass heat 36-50. Solar (lumped with hydro and geothermal) was expected to provide 14 TWh . But hopes for solar have grown while expectations for onshore wind and biomass have fallen.