I think UK renewable energy shares make a great long-term investment as part of a diversified portfolio. Economies are focusing on sustainability as well as net zero carbon emissions to drive the message of climate change.
As my fellow Fool Edward Sheldon points out, the UK renewable energy market is set to grow at approximately 9% per year from now until 2026. To me, this sounds appealing.
I think there are some great UK renewable energy investment trusts. Not only do these offer investors attractive dividend yields, but also exposure to a portfolio of clean energy assets. Here are three of my top picks.
#1 – The Renewables Infrastructure Group
The Renewables Infrastructure Group (LSE: TRIG) is a great way to get broad exposure to the sector. It has 77 investments across solar, both onshore and offshore wind, as well as battery storage. These are located across the UK and Europe.
What I really like is that the trust offers investors a diversified portfolio of renewable energy assets. This way I’m spreading my risk as the concentration of each investment is reduced. The management team is also looking to expand the portfolio, which should reduce my risk even further. As an income addict, TRIG generates a dividend yield of over 5% that’s attractive to me.
But the investment trust is trading at almost a 10% premium to its Net Asset Value (NAV). This means that it isn’t cheap and the UK renewable energy share comes at a cost that could maker buying it riskier.
#2 – Greencoat UK Wind
Greencoat UK Wind (LSE: UKW) has wind farms across the UK. I guess this is fairly obvious from the trust’s name.
The portfolio comprises 38 operational wind farms and one that is under construction. Approximately 70% of its assets are based onshore with the remaining 30% being offshore. While this investment trust is only focused on wind, it’s still diversified across various sites.
I reckon this is a good way of getting sole exposure to wind energy. As an income investor, the dividend yield is also attractive too. It currently stands at over 5%.
But just like TRIG, Greencoat UK Wind comes at a price. This renewable energy share is currently trading at a 6% premium versus its NAV.
#3 – Bluefield Solar Income Fund
If I only wanted exposure to solar energy, then I’d buy the Bluefield Solar Income Fund (LSE: BSIF). This stock also generates an attractive dividend yield of over 6%.
The portfolio consists of over 100 operational solar assets across the UK. These include typically large agriculturally situated solar farms, as well as a number of small industrial and commercial sites.
What I think is interesting is that BSIF shareholders voted last year to expand the investment mandate. It’s no longer restricted to investing in UK-based assets.
The trust can also invest a minority amount of its money into other renewable energy such as onshore wind, hydro and storage. I guess the portfolio will expand over time but for now, it’s heavily invested in solar energy.
As with the previous two stocks, BSIF is expensive. It trades at a premium of 9% versus its NAV. And I think this gap could widen, especially now that the investment mandate has become broader.