The power industry has no shortage of investment opportunities and the addition of renewables has bolstered the options even further. Grid scale battery and storage technology is also gaining in importance.
GlobalData’s power technology writer Jack Unwin looks at the impact of these new technologies on the sector.
Turquoise is a financial adviser which focuses on energy, the environment and industrial technology. The group invests in low-carbon, cleantech companies at an early stage through its funds and was founded in 2002.
Unwin asks Turquoise managing director Francis Wright about investment trends in the renewable power sector.
Francis Wright tells GlobalData: “In terms of renewables there was a very large expansion in the market whilst renewable obligations were available to developers, but a lot less is being done now because there are no tariffs for developers.
“It’s fair to say the discount rates that investors are required to invest in wind and solar are continuing to fall quite slowly. Energy companies and pension funds were slower to the market but they are there now. Compared to oil and gas, renewables projects tend to be locked into long term fixed prices for electricity, so the returns are quite low but they are less risky. If you look at junior oil companies in the last five years most of them have had a terrible time whereas renewable companies have done very well.
“Battery and storage technology is an area where we are very active and we have a number of clients in that sector. I think it’s fair to say that it is in its infancy at the moment, the storage that exists is mainly for grid power and the number of megawatts installed isn’t massive. Storage is not a big market yet, but it’s growing every year and people are growing in confidence that the technology works.
“What the sector needs in order to grow faster is more investment in the hardware. It would help to have more venture capital and growth capital in those sectors which we currently don’t have because of the focus on software.”