Commerz Real launches fourth German solar fund

The €245m closed-end fund will group 23 photovoltaic plants – some of them already operational – generating close to 123MW. Commerz Real is touting the vehicle as ‘Germany’s largest solar fund’.

Commerz Real, a subsidiary of Commerzbank which manages a range of property funds, has announced the launch of its fourth solar energy fund – the CFB Fund 179 Solar Deutschlandportfolio IV.

The public, closed-end vehicle will group 23 photovoltaic plants – either already in operation or to go online by the end of the year – across nine sites in Brandenburg, Saxony and Saxony-Anhalt. The portfolio will be capable of generating close to 123 megawatts of power, which will be used to provide electricity to over 34,000 households.

Commerz Real’s fourth solar vehicle has a volume of €245 million and will be used to raise equity to help fund projects developed by BELECTRIC Solarkraftwerke, described as “a specialist and market leader for the realisation of turnkey photovoltaic power plants”. 

The fund’s investors will be guaranteed a long-term return thanks to projects’ feed-in tariffs, which amount to €0.21 per kilowatt-hour over the next 20 years for so-called “undeveloped areas” and €0.22 “for arrays on conversion areas […] if they go online by the end of 2011,” Commerz Real explained in a statement.

Commerz Real recently caught the attention of infrastructure investors when it led a consortium of German pension funds and insurers to acquire the country’s fourth-largest electricity grid, known as Amprion, for €1.3 billion. 

The acquisition was funded through a similarly structured closed-end fund and became a cautionary tale on regulatory risk following the German regulator’s announcement – just one day after Commerz Real closed the deal – that it was considering a cut to allowed returns for the electricity sector. A surprised Commerz Real spokesman told Infrastructure Investor that:

“The announcement by the Bundesnetzagentur [the German regulator] came as a surprise – in terms of the timing as well was in terms of the message itself, since the plan to lower ceilings for equity returns would be contradictory to recent statements.”

But Commerz Real’s fourth solar fund is also symptomatic of a growing trend that is seeing real estate managers move into the renewable infrastructure space. London-based real estate manager Palmer Capital launched a new fund recently to acquire UK solar parks. Because of the apparent similarities between real estate leases and feed-in tariff mechanisms, the firm has identified renewable energy infrastructure as an investment space it feels comfortable with:

Talking to Infrastructure Investor, Palmer Capital chief executive Alex Price said: “Real estate investors will move into renewable energy [infrastructure], although I’m not sure whether they will go much beyond that initially.”