Specialist financing house Aurium Capital Partners (Aurium) has announced plans to raise up to £500 million ($720 million; €641 million) for renewable power generation asset development in the UK.
The fundraise includes £200 million already gathered from investors to build and acquire a portfolio of biomass and energy-from-waste plants in the UK.
Aurium partner Steven Blase said in a statement that the impetus for the fundraise came out of the UK government's plans to phase out coal-fired power plants, which he reckons will greatly reduce overall production capacity and could increase the risk of blackouts and energy security issues.
“The decision to remove coal-fired stations increases the risk of lights going out in the UK,” he said. “Coal's share of UK electricity generation was 30 percent in 2014, and renewables accounted for approximately 19 percent. This winter, for example, our excess energy capacity is just 1.5 percent.”
Blase went on to add that the shift away from coal “makes the UK's reliance on renewables even stronger”, and that Aurium believes that desire for assets with low correlation to other classes from investors seeking steady, long-term returns “with low or no correlation to other more mainstream asset classes”.
In Aurium's view, a shortlist of factors have combined to create a business case for the fundraise: long-term infrastructure costs are falling in the renewables sector; power prices are rising; the UK is behind schedule on emissions reduction targets; renewables are a responsible and profitable way to fill the energy gap.
The fund will target institutional investors who seek long-dated assets with steady cash flows. The company aims to provide its investors with mid-teen returns from its assets in the sector.