Questor share tip: Greencoat UK Wind is an income generator The answer is simple. Utilities need to recycle capital back into new-build projects in order to meet legally-binding targets on developing renewable energy. The money Greencoat receives from selling the electricity will be used to pay dividends to shareholders and invest in new assets. Management are targeting a 6pc yield from its IPO of 100p a share, which means at the current share price Greencoat is yielding 5.9pc. Management plan to increase the payout in line with inflation as measured by the Retail Price Index (RPI). Of course, the company does not have a track record as a listed company and management have to prove the model works. But Questor sees no reason why it will not. Indeed, the scramble for shares before the company listed implies many others have faith in the model. Indeed, in the group's intention to float announcement, two "cornerstone" investors were announced. These were SSE, which agreed to invest £43m, and the UK Government, through the Department for Business, Innovation & Skills (BIS), which stumped up £50m. However, because of the demand, SSE's investment was scaled back to just £10m, which was part of the original plan should this situation arise. Greencoat UK Wind is managed by an experienced team of senior executives from Greencoat Capital, the cleantech and renewables-focused investment management firm. About half of the company's income will come from "green benefits" in the form of government subsidies through renewable obligation certificates (ROCs). The ROC scheme is also linked to RPI. UK wholesale power prices should also be supportive over the medium term, as our generating capacity wanes. One benefit of a long-term investment in wind generation is that there is no commodity price risk, as the power generation does need fuel such as natural gas or coal. This means returns are easier to predict. However, there are times when wind power does not operate at full capacity. The shares have edged higher since their listing on Wednesday last week, but the potential yield remains attractive. Despite the fact that the company is a relatively new beast, Questor thinks that it is very interesting for income seekers wishing to invest a modest amount.