Green energy investments to accelerate in 2021


Angela Ashton

The global energy scene is undergoing arguably the greatest transformation in history as the world transitions from reliance on fossil fuels to renewable energy.

One direct implication of this phenomenon is the investment opportunity that will increasingly be presented to investors, according to new specialist alternatives Research firm Evergreen Ratings.

“Financial advisors will increasingly be called upon to assess, and make recommendations on an expanding range of renewable energy focused investments as their clients seek to participate in this exponentially growing industry sector,” says Evergreen Ratings Founder and CEO Angela Ashton.

“According to the global authority on energy matters, the International Energy Association (IEA), renewables will contribute a staggering 95% of net increase into world energy grid through 2025,” says Ashton.

“Total installed wind and solar PV capacity is on course to surpass natural gas in 2023 and coal in 2024. The IEA projects that 60% of the percent of the growth in renewables up to 2025 will be solar photo voltaic cells and 30% wind power (Source: Renewables 2020, Published December 2020 IEA).

“We are of the view that coal fired power stations in Australia will have difficulty arranging insurance beyond 2030, such is the pace of change.  It’s a pace that is being driven by society – citizens, shareholders and industry generally –  and not necessarily by government and regulation.

“In Australia, the public and industry were ahead of the legislators on same sex marriage and there is clear evidence that the same is true regarding concern about climate change and enthusiasm for a transition to renewable energy.

“Despite this, many investors are not riding the renewable wave because of a combination of a lack of investments packaged for the retail investor and a lack of independent analysis of those products that do exist.

“This is one of the reasons we formed Evergreen Ratings- to provide independent analysis of less-liquid and more complex investment opportunities.

“One of Evergreen Rating’s first assignments in the renewable field has been to assess the renewable energy investment offering from new entrant to the Australian market, the Octopus Group (OG), which has a 20-year track record in the UK specialising in this sector,” notes Ashton.

Octopus manages approximately $16 billion in assets (as at 30 June 2020). In Australia, it operates three energy assets valued at $525 million with a combined gross IRR of 8.8%. The seed asset for the Octopus Renewable Energy Opportunities Fund (OREO) is the Darlington Point Solar Farm – Australia’s largest solar farm. The site is substantially de-risked with grid connection secured and 55% of its output contracted for 11 years via a power purchase agreement.

Evergreen Ratings has assigned a ‘COMMENDED’ rating to the fund noting:

‘…the investment philosophy, investment strategy, investment process and risk management are well established, tried and tested. Evergreen Ratings believes that an investment in the fund provides an appropriate investment principally to wholesale investors, but also to high net worth (HNW) individuals, substantial self-directed superannuation funds and well-established family offices.’

Ashton adds that as Australian coal fired power plants are nearing the end of their useful lives, there is an opportunity to participate in the move to clean energy via an investment in this fund.

The Fund targets a return 7.5% IRR (net of fees), this is a return that OG has achieved over the last 10 years in undertaking similar activities in Europe.

The fund has a minimum subscription level of $100,000.

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