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Innovation in renewables business models hinges on finding investment partners who align on both commercial and ESG objectives
Berlin, April 11th – As European geopolitics drive power prices to new highs, creating a risk of further increases to asset valuations and pressure on yields for projects and portfolios, leading renewable energy investors have highlighted the urgency of finding new investment partners willing to share risk and support the business model evolution needed to protect tightening margins.
At the Global Summit hosted by Infrastructure Investor in March, digital investment platform RealPort AG convened a group of top renewables investors to discuss strategies for combatting yield compression into day’s volatile market.
The panellists – Josie McVitty of New Zealand Superannuation Fund, Georg Hoefler, of Allianz Capital Partners, Dr Barbara Weber of B Capital Partners and Paul Hennemeyer, advisor to RealPort – agreed that current market conditions have precipitated three major trends in renewables investment:
Investors are more willing to get involved in larger, more complex projects. There is heightened scrutiny on operations and maintenance(O&M) approaches as the market seeks to extract maximum value from its assets. And, as capital becomes more patient in general, investors are more open to entering at the greenfield development stage.
However, these changing strategies bring a very different risk profile and greatly increase the emphasis on scaling up partnerships to effectively share these risks. It is essential that prospective investment partners are fully aligned, both with respect to commercial goals and ESG objectives.
“From our discussions, it’s clear that renewables investors talking about ‘innovation’ and ‘business model evolution’ today are no longer thinking about how they will adapt in response to market changes, but who they can work with to bring these plans to fruition,”said panel moderator Ekow Yankah, CEO and Founder, RealPort AG. “Finding alignment with investment partners is key to sharing risk effectively – which in turn is the only genuine means of fighting yield compression.”
The panellists concluded that this emphasis on effective partnerships will only increase as new technologies such as batteries and EV charging assets are commercialised, requiring nimble approaches to sourcing and realising new investment opportunities. Furthermore, as more investors shift towards greenfield sites, propositions that enable them to find aligned partners who can take on some of the development risk are increasingly welcome.
Dr. Barbara Weber, Founding Partner, B Capital Partners, summarised: “When it comes to development, building trusted relationships with local partners right from the outset may require more effort in the short-term – but if you get it right at the beginning, you can buy cheaper and ultimately have a better cushion in case things go wrong down the road.”
RealPort is a digital brokerage platform giving European wind and solar asset holders access to a new source of passive capital at project level.
By aggregating passive capital from small institutions and family offices in exchange for tradable, bite-sized positions in single assets, RealPort can address the mezzanine and secondary financing needs of asset holders. This includes:
Raising equity quickly to finance specific assetacquisitions or co-investments.
Recycling equity to finance pipeline and portfoliogrowth.
Enabling the divestment of individual LPs seeking liquidity.
In each case, asset holders can retain control due to the passive structure of the investment.
RealPort is unique in automating compliance requirements and transaction and settlement processes, enabling issuers and investors to reduce transaction cost and time. The platform also integrates independent analysis to enable a transparent assessment of asset quality.
RealPort’s team of 30 works alongside a portfolio of well-established external partners including Ashurst, Deloitte, NFS Netfonds, Scope, Societe Generale and Solarisbank.
RealPort is a tied agent of BaFin-regulated NFS Netfonds Financial Service GmbH.