AlphaReal identifies ‘speed of deployment’ as biggest obstacle to renewable infrastructure investment

A survey of UK pension funds and insurers that collectively oversee over £350 billion in assets, commissioned by AlphaReal, the specialist manager of secure income real assets, reveals that it is the speed of deployment that is the biggest obstacle to investing in renewable infrastructure.

When asked to choose their top three barriers to investing in renewable infrastructure, almost four-fifths (79%) of respondents selected putting their capital to work swiftly, while 70% selected policy and regulatory uncertainty.  68% cited illiquidity in their top three barriers.

In terms of the preferred stage of the asset lifecycle to invest, almost half (47%) of UK pension funds and insurers surveyed like pre-greenfield development stage projects. One-third (33%) like greenfield – fully consented projects with energization dates, and approximately one-fifth (19%) prefer brownfield sites where the asset is operational and generating revenues.

Looking at geographical preference for renewables deployment, 82% of respondents say they look to invest in the UK only; 12% consider opportunities across Europe; and 6% worldwide.

Raza Ali, Fund Manager Renewable Infrastructure at AlphaReal said: “Speed of deployment is a concern to many investors, making it important to partner with an established investment manager with a track record in the sector. Doing so ensures ample access to opportunities including off market transactions, as well as efficient evaluation. Buying unlevered also allows due diligence to be targeted solely for the needs of investors, as opposed to debt where the interests of debt holders need to be factored in, further improving speed of deployment.”

Stuart Hanson, Client Solutions at AlphaReal said: “Many DB schemes are now closer to buyout and less able to invest in illiquid assets, unless adopting a low dependency strategy. However, we are seeing insurers, LGPS investors and, more recently, DC funds making significant allocations to renewable infrastructure projects throughout the UK. These long-term investors should continue to benefit from the equity-like returns and attractive income profiles that can be provided by renewable infrastructure.”

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