Are we more committed than we think?


December 6, 2013

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It’s a well-known truth that the majority of anti-wind farm lobbying – both onshore and offshore – comes from an older generation. A so-called established elite.

There’s a delicious irony, therefore, in all the chatter of institutional investment.

Particularly when what we really mean by this, at least during these first few unsteady steps, is tapping into the multitude of pension funds looking to invest.

Sure, while the capital that’s being invested now will ultimately be used to create steady returns for many years to come, ultimately there’s no escaping the fact that this level of finance is only really made possible on the basis of existing income and profits generated by the funds to date.

Go tell that to the grandparents. Or better still; go armed with some recent investment examples.

Since in the past week alone the markets have received confirmation from two separate European wind developers – one onshore and one offshore – that they’re freeing up capital through a 49% portfolio sale and through a subordinated loan.

First up was Italian listed developer, Falck Renewables, which revealed plans to sell a minority in its UK wind portfolio to the Copenhagen Infrastructure Fund.

It’s a deal worth £153m. And while Falck retains a controlling interest in the 279MW operating portfolio, it provides the Danish pension fund – that’s backed by PensionDanmark – with the potential of a solid and dependable future return.

It’s looking pretty rosy for Falck, too. Since, according to industry insiders, the partnership is seen as the beginning of a wider pipeline of project financing commitments; including near term investments of €100m in already authorised or under construction European onshore wind farm projects.

And, with a further €125m already earmarked for the wider renewable energy sector, it’s clear that investor appetite remains as strong as its pockets are deep.

And then there’s Project Gemini. A 600MW fully consented offshore site, formally owned by Typhoon Offshore that continues to inch closer to financial close.

It’s a project that’s been making good ground, thanks in the most part to some shrewd long term financial planning.

As a direct result the site is now being developed by a consortium of equity investors, including – Northland Power Inc (55%), Siemens (20%), Van Oord (10%), HVC (10%) and Typhoon Offshore (5%).

However, what makes Gemini particularly interesting is not just its ownership but rather it’s tenacious ability to attract and secure future funding.

Last week, that took the form of a €120m subordinated loan from Danish pension fund, PKA. It also brought it one further step closer to operational reality.

But here’s the thing. What’s increasingly apparent as each of these project-financing deals gets hammered out is not that the momentum and confidence is infectious.

And it’s not that when it comes to institutional investment, the Danes continue to lead the way, and show many others up, either.

No. It’s that as each of these financial heavyweights steps up onto the stage, the commitment from the wider populous steps with it.

And that, in the process, whether we like it or not, an increasingly large proportion of the pension paying populous steps with it.

Perhaps, then, we’re already more committed and engaged than we think?

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