With energy security topping the global agenda since the start of the Ukraine war, more and more asset owners spot long-term opportunities in clean energy.
Two factoids go to show the complex nature of the energy markets, and the conflicting desires within them.
Following the Russian invasion of Ukraine in February of last year, oil and gas prices spiked with sector giants like Shell and BP both subsequently reporting massive profits.
Yet, according to the International Energy Agency’s 2022 World Energy Outlook, in order to meet net zero emissions by 2050, solar capacity is expected to grow by an annual average of 25% up to 2030.
While signing up to the Paris Agreement was a worldwide phenomenon, and countries across all continents will need to make a significant shift to renewables to hit their net zero targets, this does not mean that opportunities for returns in the space are equal across the globe.
Europe, for instance is facing issues of saturation, driving the cost of renewables down in a win for the consumer but a potential headache for the investor.
Elsewhere, there are infrastructure challenges, for example in the nation of Mexico, where fossil fuels still make up for over 90% of the energy mix.
For Anthony Catachanas, chief executive at private asset investment and advisory firm Victory Hill, Brazil’s approach to renewables is an investment opportunity.
His Victory Hill Global Sustainable Energy Opportunities fund has made acquisition of the 198MW Mascarenhas Hydro Electric Facility, in the state of Espírito Santo, Brazil, which went through a major repowering in 2011.
“Even though Brazil was privatising its energy sector back all the way back in the 1990s, it did not attract as much foreign direct investment as many European countries going through the same process," said Catachanas, adding that "has caused obviously a slower pace of development, which has left a lot of opportunities to this day."
Opening-up energy access to cater for increasing demand and population growth