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US-Based Institutional Investor Appetite for Renewable Energy Infrastructure – May 2016

by Brian Orlay

  • 06 May 2016
  • INF

Preqin’s Infrastructure Online contains detailed information on 948 US-based institutional investors that invest in the infrastructure asset class, of which 52% have a preference for renewable energy investments. Public and private pension funds make up the greatest proportion (50%) of institutional investors with a preference for renewable energy infrastructure, followed by foundations (18%) and endowment plans (12%). Furthermore, 89% of US-based investors with a preference for renewable energy infrastructure target unlisted infrastructure funds focused on North America, compared with 56% and 29% with a preference for Europe- and Asia-focused investments respectively.

As shown in the chart above, nearly three-quarters of US-based infrastructure investors with a preference for renewable energy have assets under management (AUM) of over $1bn, with a large proportion of mid-sized institutions (43% have AUM between $1bn and $10bn). A relatively small proportion (16%) invest through a separate infrastructure allocation in their portfolio, with more investors gaining exposure to the asset class from a private equity allocation (34%) or a real assets allocation (32%).  

The route to market for institutional investors in renewable energy varies by region; 92% of US-based institutional investors that invest in renewable energy infrastructure do so through unlisted funds, while 14% each access the asset class through listed funds and direct investments. One US-based institution that recently invested in a renewable energy fund is San Mateo County Employees' Retirement Association (SamCERA), which made its maiden investment in infrastructure in Q2 2015, committing $10mn to Everstream Solar Infrastructure Fund I. This investment will provide SamCERA with global exposure to solar photovoltaic assets and solar energy companies. Other institutional investors are looking to commit capital directly to renewable energy infrastructure funds in the next 12 months, such as Renova Capital Partners. The Denver-based investment company will target direct investments in renewable energy projects alongside Ensyn as part of its infrastructure allocation.

The global community is making efforts to achieve targets for a reduction in greenhouse gas emissions. In September 2014, the US and China pledged to cut emissions, reducing barriers to entry for investors and creating further investment opportunities in the renewable energy infrastructure space.

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