Creating the infrastructure and projects that will one day decarbonise the planet is a costly process – and green finance is the business of finding the cash required to pay for it.
The amount required for Ireland to make the transition to a sustainable, low-carbon economy by 2040, according to the Ireland Strategic Investment Fund (ISIF), is €40bn.
Sustainable Nation Ireland’s Laura Heuston said that there is nearly €28bn of green finance activity already underway in Ireland.
Amarenco is a developer of renewable assets, currently developing €200m of solar assets in the south of Ireland so that the country can meet its renewable targets as set within the EU, according to CEO John Mullins.
“Green finance is covering so many aspects of daily lives – investments in cleaner transport, cleaner water, cleaner energy, cleaner buildings and better waste management,” said Mr Mullins.
“The scale of investment is increasing exponentially as can be seen by the growth of green bonds issued over the last five years. Ireland is a home for much of this investment as many International Institutions have based such investment in the IFSC.
“Green finance is becoming more important as there are many infrastructural deficits worldwide which need financial investment. These may be fundamental infrastructure in the developing world or environmentally correctional infrastructure in the developed world.
Amarenco and the group’s partners invest in France through Irish-based platforms. The company have completed over €300m of transactions in France in this way.
“We have invested in ground mounted, tracker, car port and rooftop solar with our partner Infracapital (part of M&G Investments Group) in France,” said Mr Mullins.
“We have just completed €70m of solar assets in the last six months in France. We expect to invest €100m in France this year and hope that we can commence investing in Ireland in 2018.”
With the combination of sustainable investment talent and the base that the IFSC provides, Mr Mullins said he is “absolutely confident” that Ireland can be key global hub for green investments.
“Irish executives based in Ireland are now responsible for Global Operations in KPMG, Blackrock, Brookfield amongst others in the Green Finance areas,” he said.
“The Taoiseach and Government as a whole fully understand that we as a nation need to be more proactive in all that we do. It is important that Ireland displays its green credentials so as to be selected by global institutions as a place of residence to do business.”
An Irish institutional investor in the Renewables market, Greencoat Renewables currently owns and operates 137MW of wind farm assets that the group have acquired from developers.
“In Ireland, wind farms are built by a range of organisations from local groups to utilities to international developers,” said Greencoat’s Paul O’Donnell.
“They all need to recycle their invested capital in order to develop more assets in the future. Greencoat is an acquirer of these completed, de-risked assets. The developers are able to use the proceeds to continue building, and our investors have liquid exposure to the secure revenues provided by renewable energy.”
In March 2017, Greencoat Renewables acquired its 136.7MW seed portfolio and later, in December, the group announced the acquisition of the 36.3MW Dromadda More wind farm from Impax.
“We continue to see a strong and growing pipeline of opportunities in the secondary wind asset market in Ireland, with a range of high quality assets which the company is well-placed to acquire,” said Mr O’Donnell.
Ireland is very well placed to lead the pack in terms of green finance, he said.”Obviously we have an unmatched wind resource which makes onshore wind, the most mature renewable technology, extremely cost-effective here. This is further benefited by a very stable regulatory regime.
“In addition, the Irish Government has announced the consultancy process around a new REFIT programme for wind, which will run beyond 2019. We think this should provide further long-term depth to the Irish wind market, underpinned by the continued strong build out we have seen under REFIT 2.”
Founded in 2008, Mainstream Renewables was created on the basis that the world was on a once-off transition to sustainability, according to Andy Kinsella, group chief executive since last September.
“The capital needs of this transition are in the trillions, and we are only getting started,” he told Independent.ie.
“Over the last 5-10 years with a wall of money chasing returns, green projects have represented a hugely attractive asset class for investors.”
Mr Kinsella said that what was once termed “alternative” is now “mainstream” with many of the largest pension funds and infrastructure investors across the globe directly owning green projects – and looking for more.
“The market is a global one that is ultra-competitive, one of the biggest factors in success or failure for any market participant will be the cost and availability of capital.
“Green Finance is driven by the goal of ensuring this capital is structured as efficiently as possible.
Mainstream’s focus is on developing plans in emerging markets, so the group is somewhat less focused on how Ireland will meet its climate targets over the next decade or so.
“[But] We see an opportunity for Ireland to further develop its finance and advisory strengths to work with companies like ours to identify and develop green business opportunities overseas.”
Within the last six months, Mainstream closed a $50m mezzanine finance deal to partially fund the group’s equity investment in a portfolio of c330MWs wind projects currently underway in Chile.
These projects – either under construction or in operation – are owned by Aela Energía, the Chilean joint venture between Actis and Mainstream.
“The Aela joint venture obtained US$410m in project financing in August 2017, bringing the projects to financial close and allowing construction to proceed,” said Mr Kinsella.
The group has also started a process to raise over $1bn in project finance for its 1.2GW portfolio of projects in Chile called Andes Renewables.
Elsewhere, Mainstream is currently exiting its £2bn 450MW Scottish Offshore project, Neart Na Gaoithe, which it expects to close in the coming months.
Additionally, in Africa, Mainstream expects to reach financial close and start construction on 250MW of wind projects in South Africa; and expects to reach financial close on a 150MW wind project in Senegal, a 150MW in Ghana and a 250MW in Egypt.
Mainstream continues to develop the 800MW Phu Cuong Wind Farm in Vietnam in a joint venture with GE Capital and local partner the Phu Cuong Group, the USD$ 2.0bn project expected to be ASEAN’s largest wind farm to date.
Mainstream believes that the opportunity for Ireland to act as a green hub is huge.
“There is no reason why Ireland can’t be at the centre of international investment in green finance with companies based in Ireland deploying their funds around the world,” said Mr Kinsella.
“Clean energy has become more economical than fossil fuels globally. Capital investment in the clean energy electricity generation sector has exceeded that of coal, gas and nuclear facilities globally.
“Numerous key markets have reached an inflection point where renewables have become the cheapest form of new power generation, a dynamic we see spreading to every country we cover not just Europe and North America. As a global asset class for investment the opportunity is huge and growing.”
By Louise Kelly, Irish Independent, 6th March 2018
Picture: Andy Kinsella, CEO, Mainstream Renewable Power