“In recent years we have seen dramatic falls in the cost of renewables, which are progressively able to compete, unsubsidised, against natural gas- and coal-fired capacity.”
Author of the Deutsche AM report, head of ESG thematic research Michael Lewis, went on to suggest that the US renewable energy sector is “strongly relevant for investors’ search for yield.”
“Investor interest towards real assets and specifically infrastructure is on the rise,” Lewis said.
“Part of this added appeal reflects a more inventive mindset among investors to seek out yield as global interest rates have slumped towards zero.”
“Renewable energy projects tend to be long-lived assets with 20 to 25 year financial lives and generally have consistent, long-term contracted cash flows that are independent of fossil based fuel price volatility.
“Such projects have garnered the attention of those seeking long-term, stable and relatively high-yielding securities, particularly now during a period of low interest rates.”
Within the renewable power generating sector, Lewis said there are some particularly attractive opportunities for distributed utility-scale power generation projects, which harness less than 25MW for non-rooftop solar photovoltaic and less than 100MW for onshore wind.
Impax added that the energy transition in the auto sector was yet another reason to invest along renewable lines, as was the broad, bi-partisan support for increased infrastructure in the US.
“While we will not see significant new US environmental policy, we do not envisage changes to existing policy mechanisms supportive of renewable energy,” it said.
“Renewables are a significant job creator and growth in renewables is driven by state level policy – not Federal.”