In a panel on energy investing, David Scaysbrook, managing director and head of clean energy and infrastructure at Swiss asset manager Capital Dynamics, said that “heavily subsidised” renewable energy is “dead ” is markets such as the UK, US and Australia amid concern over rising energy bills.
Speaking on the second morning of the Berlin Summit 2014 in front of a packed room at the Hilton Hotel, Scaysbrook added that opportunities in these markets to invest at “above average rates of return” had gone and that expected returns should be in the region of 8-9 percent rather than 12-13 percent. In effect, this meant renewable energy investing had now become a core infrastructure strategy rather than a value added infrastructure or quasi private equity opportunity.
However, the level of deal flow remains strong in Europe in particular. Stefan Thiele, an operational managing director at Terra Firma, the London-based fund manager, pointed out that leading utilities such as RWE, E.On, EDF and Iberdrola were responding to balance sheet pressure by “selling very good assets, so there is great momentum”.
On the subject of shale gas, Thiele said that political support in countries such as the UK and Poland meant that parts of Europe could see commercial activities in shale commencing in two or three years' time. However, the environment in other countries, such as Germany, was described as “challenging” and Scott Mackin, co-president and managing partner at US-based fund manager Denham Capital, said that “the US has got land rights issued nailed, which is not the case in Europe”.
Scaysbrook said he expected objections to shale gas exploration in Europe to soften given the old adage that “necessity is the mother of invention”. Economic factors and Europe's trade competitiveness versus the US would lead the stance toward shale in Germany to be softened, he reasoned – and this would in turn lead to a more accommodating stance in Brussels.