Financial services company Legal & General has made a significant commitment to the UK clean energy industry after investing in an onshore wind firm and committing to a portfolio of projects through the first close of a fund targeting €250m.
The firm has pledged to provide up to 47.5% to the new fund which will build up to 270MW in capacity and generate sufficient electricity to power up to 170,000 homes. NTR Wind Management, which has received backing from Legal & General, will provide €50 million to the fund, and has already acquired the first four onshore wind assets at a cost of €62m.
These include large multiple turbine wind assets located in Scotland, Northern Ireland and Republic of Ireland and will provide a combined capacity of 55MW. The sites are ready for construction with land, planning consent and grid connection agreements all in place.
The company intends to target a number of sites that already have planning secured following the closure of the Renewables Obligation in the UK and the REFIT scheme in Ireland that are being held back due to a lack of capital. According to John Bromley, head of clean energy at Legal & General: “There is a significant pipeline of these opportunities in the UK and Ireland which require the necessary finance and will make a meaningful commitment to 2020 renewable energy targets.”
Legal & General plans to grow the fund from this base to create a platform for institutional investors with an interest in the clean energy sector and accelerate the development of the market.
Despite recent cuts to solar and onshore wind subsidies by the UK government, Legal & General claims there is a global appetite for cleaner ways of producing energy that suits the long term goals of its investment decisions.
“The Paris climate agreement shows a global recognition that the world’s energy system needs transformational change, but for this to happen, hard investment decisions need to be made to deliver reductions in carbon emissions and benefits to energy consumers. As a long term investor, Legal & General is able to operate on long term horizons and support sustainable global macro trends. Globally we see the need and will to decarbonise the energy system and so that’s where we see there being an important opportunity for our capital to play a role,” Bromley continued.
“Moving into 2016 and beyond, as the costs of clean and sustainable renewable energy continue to fall, we see significant opportunities for innovation in the sector and the emergence of clean energy generation that is less reliant on subsidy, supported by enabling technologies for a more flexible and responsive transmission system.”
Plans are in place to spend a total of £15 billion on UK infrastructure, with £6.6 billion already spent by Legal & General by the end of September 2015. The firm is also planning to invest further in the solar market over the next five years, which it is already involved in as a lender.
“Solar is an important part of the UK energy mix. Founded on relatively simple and well understood technology which makes it attractive from an investor perspective, like onshore wind it is rapidly becoming economically more competitive whereas the other sources of energy, such as nuclear, are only becoming more expensive,” Bromley added.