First look
The future is bright – if not carefree – for solar
This year will be a landmark one for solar, with the International Energy Agency predicting a total of $380 billion to be invested, which will see solar overtake spending in upstream oil production for the first time.
It’s not just solar shining bright, by the way. Of the $2.8 trillion set to be invested in energy this year, more than $1.7 trillion will go towards clean energy.
Good news, then, but all that added solar capacity will require planning. The price of power in the Netherlands (18-plus GW of PV capacity), for example, is now routinely well into the red area of minus several hundred euros per MWh during hours of sunlight and low activity. And – both because of interconnectivity and German production (66.5GW PV capacity installed) – German, Belgian and Austrian prices are under pressure too during such hours. Even French and Nordic system prices dipped into negative on 28 and 29 May.
Suffice it to say that if The Pipeline was planning a solar project, it would be buying a few batteries too.
Core still works – but only if you’re disciplined
Some of the most thoughtful writing on how core infrastructure is faring in our new macro environment has come courtesy of Arjun Infrastructure Partners’ Serkan Bahçeci – and his latest contribution doesn’t disappoint.
Noting that expected core returns have gone up by some 200 basis points, Bahçeci zeroes in quickly on what was behind core’s falling return profile over the past decade (discount rate compression) and what wasn’t (too much capital chasing too few assets). His thesis is that core asset values remain robust in our new world because the negative impact of rising discount rates is mitigated by the increase in revenues prompted by inflation (and not just dodgy valuations).
The caveat? The above only applies if you were disciplined, and, crucially, put in place long-term, fixed-rate debt.
As Warren Buffet is fond of saying: “You only find out who is swimming naked when the tide goes out.”
Modus’ garners €85m first close
Modus Asset Management held an €85 million first close on its Clean Energy Infrastructure Fund, with commitments from the European Investment Fund and Baltic pension funds leading its LP base.
The Clean Energy Infrastructure Fund – which is targeting €200 million with a €350 million hard-cap – is the firm’s fourth renewable energy fund and will invest in the Baltic States, Poland and other Central European countries. Its life cycle will be 10 years, with an investment period of five. It will also qualify as an Article 9 dark green fund under the EU’s SFDR framework.
Assets targeted will be long-term investments in solar PV, wind energy and collocated battery storage, with a specific focus on assets that are in later stages of development. Modus anticipates the fund’s portfolio will reach a total installed capacity of 600MW.
Looks like the energy transition’s modus operandi is eastward bound.
Grapevine
“I believe – at the moment – they [policymakers] have a false sense of security”
Joerg Selbach-Roentgen, CEO of energy firm Met Germany, warns European politicians not to be complacent over falling gas prices
Who’s hiring
EQT appoints ex-Enel CEO as new partner
EQT has strengthened its infrastructure team with the addition of Francesco Starace, the former CEO of Italy’s biggest utility company, Enel. As an appointed partner, Starace will act as a dedicated adviser within the global EQT Infrastructure platform.
Starace, 67, was CEO of Italian utility Enel from 2014 until May, when the mandate for his third term expired.
Crucially, he has very significant experience with renewables – before becoming CEO of Enel, Starace headed Enel Green Power from its inception in 2008. This Enel subsidiary is now a renewables behemoth, with 59.4GW of capacity across hydro, wind and solar mostly.
Ahead of Starace’s departure from Enel, there were rumours of disagreements with the Italian government led by prime minister Giorgia Meloni, and the Italian Treasury is now in control of the Enel board.
Stonepeak hires BlackRock’s Leitner for credit team
Stonepeak has added Michael Leitner as a new managing director to its infrastructure credit business. Leitner most recently served as co-head of BlackRock’s direct lending and special situations investment practice, a role he came into after BlackRock acquired Tennenbaum Capital Partners, where he was a managing partner.
The Pipeline understands Stonepeak has about $1.4 billion dedicated to infra debt spread across separately managed accounts and other pools of capital. Stonepeak, however, declined to comment on fundraising and whether or not there is an infrastructure credit fund in the firm’s near future.
“Michael joins a Stonepeak team that has been actively investing in infrastructure credit since 2018,” the firm said in a statement.
It’s been a robust period for infrastructure credit these past few months – we can’t blame Stonepeak for wanting a bigger slice of that action.
LP watch
Infra tops the list for family offices
Family offices are having a rethink about their portfolios in our new world, according to a recent survey from BlackRock covering 120 single-family offices with a collective AUM of $243 billion.
Fixed income stands to benefit the most from this readjustment, with 72 percent of inquired wanting to increase exposure to investment-grade public debt. When it comes to private markets, though, infrastructure is king, with 48 percent of family offices wanting to invest more in the asset class and only 6 percent aiming to decrease their exposure. “That net increase of 42 percent is significantly higher than in any other alternative asset class represented in our survey,” BlackRock stated.
The drivers of this bullishness will be familiar to our readers, with income, inflation protection and diversification pointed out as infra’s most appealing characteristics, alongside “its broad societal benefits and critical function in powering the global economy”. The asset class’s role in driving the energy transition was another key theme.
As managers contend with the toughest fundraising environment in a decade, it’s always good to know where they will be wanted.
Aware’s restructure
Australian superannuation fund Aware Super, which has approximately A$150 billion ($99 billion; €92 billion) in funds under management, has announced a restructuring of its investment team.
The fund is recruiting for the newly created role of head of portfolio management, which will report to CIO Damian Graham, and has made three other appointments that will report into the new hire once appointed.
Mark Hector steps up to become head of infrastructure from his previous role as senior portfolio manager, infrastructure and real assets, while Alek Misev has become head of property and Jenny Newmarch has been appointed head of private equity.
In a statement, Graham said the appointments would help Aware Super achieve its growth strategy, as it moves towards A$250 billion of FUM by 2026. “These direct appointments are in recognition of the depth of talent we have in our inhouse investment teams,” he said.
Deals
Sun Cable rising
The protracted battle over the future of Sun Cable, the ambitious project to build one of the world’s largest solar farms in Australia’s Northern Territory and export the electricity generated there to Singapore via subsea cable, has come to an end.
Tech billionaire Mike Cannon-Brookes’ Grok Ventures emerged victorious, beating off a rival bid from iron ore billionaire Andrew Forrest’s Squadron Energy. But in an unexpected development, renewables asset manager Quinbrook Infrastructure Partners emerged as Grok’s partner in its successful bid.
The value of the deal was not disclosed. The Pipeline understands that the focus will be on building out the solar project first and ensuring it is economically viable, before any attention turns to the potential export of energy to Singapore – meaning that the project may eventually turn out to look quite different from its original billing.
Today’s letter was prepared by Bruno Alves. Daniel Kemp , Anne-Louise Stranne Petersen and Isabel O’Brien also contributed
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