German institutional investors are finding renewable energy an
attractive place to put their money, with guaranteed high levels of
return that are making green power in some parts of Europe already
cost-competitive with conventional power.
Perhaps European politicians formulating energy policy should have
listened to Armin Sandhoevel, the chief investment officer for
renewables at Allianz Global Investors, Europe's biggest insurer, as he
told a press briefing in Frankfurt on Thursday how he has been investing
billions of euros of policy holder funds in renewable energy.
He said that renewable energy is already almost at grid parity in
many countries; that is to say, it costs the same as dirty electricity.
"These investments either offer attractive feed-in tariffs, are
already at grid parity (competitive with conventional energy) or are
going in that direction. That is also the future of the market, it will
make it bigger and more comfortable for institutional investors," he
Spanish and Italian wind or solar installations are the most
profitable, he said, while those in the Nordic countries, Britain,
Germany, France and the Benelux will soon catch up.
Sandhoevel manages the €100m Allianz renewable fund (AREF) said that a
major advantage of using renewable energy was the decoupling of energy
costs from rising global fuel costs. He added that the proven viability
of the new technologies, which ensured long-term cash flows.
Most investors so far are from Germany.
"Renewables and infrastructure represent a good match with insurers'
and pension funds' long-term obligations to policy holders," said
Allianz' managing director Tobias Pross, adding that future yields after
costs and taxes are roughly 6%.