The Growing Prominence of Renewable Energy Infrastructure – February 2014

by Stephen Yates

  • 26 Feb 2014
  • INF
  • NR

Renewable energy has emerged as a significant sector within the infrastructure industry over recent years. A total of 213 deals, which involved  renewable energy assets were reported by unlisted infrastructure fund managers in 2013 , with a further 26 deals having been completed already in 2014. In the period 2007-2013, the sector experienced a 69% increase in the number of deals, with 126 transactions recorded in 2007.

A number of high profile funds that closed between 2008 and February 2014 included renewable energy within their investment strategy. The $6bn EIG Energy Fund XVI and the $4.3bn Energy Capital Partners, which reached final closes in December 2013 and August 2010 respectively, both consider renewable energy to be a core aspect of their investment strategy. The largest infrastructure fund of all time, the $8.25bn Global Infrastructure Partners II, which closed in October 2012, is another fund which includes renewable energy within its investment remit, again pointing to the opportunities that the renewable energy sector offers.

HGCapital Renewable Power Partners Fund II remains the largest pure renewable energy infrastructure fund ever raised, having reached a final close in December 2011 on €542mn. Currently, 57% of the 152 unlisted infrastructure funds in market incorporate renewable energy in their investment strategy, targeting $47.4bn in total capital. Twenty-six (17%) of the unlisted infrastructure funds currently in market focus on renewable energy solely, and account for $8.8bn of the total capital being sought by fund managers.

The most common region for renewable energy deals completed since 2007 is Europe, with 49% of all deals recorded based in this region. This is unsurprising when considering that 50% of renewable energy-focused funds closed in the same period primarily focused on European investments. Europe is likely to remain a key area for this type of investment; this is due to plans laid down in March 2007 by the European Renewable Energy Commission to generate 20% of final energy consumption from renewable energy sources by 2020. In addition, the growing global prominence of climate change is a driving factor behind the growth in renewable energy deal flow and will remain so looking forwards. As a result, the renewable energy infrastructure sector is likely to remain a key industry sector for fund managers in 2014 and over the coming years.

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