One of Europe's largest financial investors dedicated to renewable energy is attempting to amend its investment policy to put more emphasis on European assets amid a slowdown in deal flow in the U.K. market.
The Renewables Infrastructure Group Ltd., or TRIG, a London-listed investor with a renewables portfolio of more than 1.5 GW, limits its investments outside the U.K. to 50% of the value of its portfolio, which stands at £1.7 billion.
But in a stock market note Sept. 27, the company said it was seeking shareholder approval to increase the maximum contribution of European assets to 65%, saying the existing cap was "increasingly an impediment" to its ability to source investments.
TRIG, which completed an IPO in 2013 during a relative boom period for renewables listings, sourced many of its early deals in its home U.K. market, at a time when the government still subsidized onshore wind and solar projects via its renewables obligation certificates support program.
By 2016, both technologies had been excluded from the renewables obligation certificates, and the regime had been replaced by competitive auctions for subsidies, which, while initially open to onshore wind and solar, have since focused exclusively on less-established renewable technologies, chiefly offshore wind.
Across the U.K. and in Europe more broadly, offshore wind has become a prized asset for a wide range of investors. TRIG has invested in two projects to date — a 25% stake in Ørsted A/S' Gode Wind 1 wind farm in Germany and a 14.7% stake in the Equinor ASA-led Sheringham Shoal project in the U.K. — and in the Sept. 27 release acknowledged that the large size of such projects meant its investments were "likely to comprise minority interests."
Onshore renewables assets tend to be smaller, allowing TRIG to own them outright, but the company has focused less on the U.K. in recent times. "[Given] the limited deal flow in onshore wind and solar in the U.K., when such projects do come to the secondary market, they may attract scarcity premia," TRIG added.
The dynamics in the U.K. have forced TRIG to look to Europe for deals. As it stands, 45% of its portfolio by value is attributed to euro-denominated assets. To date, the company has invested in onshore wind in France, Sweden and Ireland, offshore wind in Germany, and solar in France.
Certain European markets such as France, Ireland and Germany continue to have "robust" support regimes for onshore wind and solar, TRIG said. Other regions, such as the Nordics or Iberia, benefit from "falling capital costs, favorable weather conditions and the availability of land space" that make subsidy-free renewables development an economic reality.
All in all, whereas the U.K. is expected to add more than 20 GW of renewables by 2030, predominantly offshore wind, Europe could grow by 100 GW in the same time frame, TRIG said, citing government projections and data from BloombergNEF.
The proposed changes to its investment policy will be put to the company's shareholders at an extraordinary general meeting Oct. 17.
TRIG's investment adviser is InfraRed Capital Partners, and its operations manager is Renewable Energy Systems Ltd.
