Renewable energy expansion

HgCapital’s Renewable Power Partners Fund has invested in three Spanish solar photovoltaic (PV) plants as part of plans to expand its European renewable energy portfolio.

HgCapital’s Renewable Power Partners Fund has invested in three Spanish solar photovoltaic (PV) plant projects as part of plans to expand its European renewable energy portfolio.

The plants, located in the Spanish regions of Extremadura, Murcia and Castilla-La Mancha, have a total output of 35.4MW and will be the firm’s first solar investments, representing an enterprise value of €300m (£279m).

Jens Thomassen, associate director of the project, said: ‘We were attracted to Spain because of its large market for renewable energy measured by installed capacity. It is also the largest in Europe in terms of annual new installed capacity. Added to this is the benefit of strong government support for meeting its renewables targets.’

The investment means that HgCapital now has controlling interests in 35 European renewable energy projects. These include 300MW currently in operation or construction, with plans to increase capacity by a further 300MW.

Thomassen added: ‘We have a pipeline of projects that are being undertaken by a company called RidgeWind based in the UK. We are still active in the UK, and RidgeWind has been successful in its developments projects so far. Hopefully we’ll have something ready to get started there soon.’

Alongside RidgeWind, Hg is running four other UK projects. However, despite plans to increase its presence in the UK, the company said that it would be focusing its priorities on the Spanish market.

According to Thomassen, this is largely due to a combination of difficult grid connections and a complex permit process. He said: ‘We are keen to pursue UK projects, as the country has good resources. It’s getting projects through the permit cycle that is the bottle neck. From what we’ve seen there are more opportunities currently in Spain for solar PV projects.’

The company’s Spanish PV portfolio includes two fixed-axis projects (17MWp) and one single-axis tracker project (18MWp) that uses adjustable tilt-mounted solar panels to optimise efficiency.

Tom Murley, head of HgCapital’s renewable energy practice, said: ‘This is a continuation of our long-held, consistently applied strategy of investing in high-quality projects across Europe. The PV projects in this investment use the best equipment and benefit from excellent solar radiation. I am also pleased at our arrangement with 360 Corporate, which adds local content and presence.’

Hg’s €300m renewable energy investment in the European market comes at a time when there is increased speculation about whether the UK government’s goal to generate 15 per cent of the country’s energy from renewables by 2020 is achievable.

Companies such as Shell and BP have announced they are cutting back or shelving completely renewable energy projects across the country. The Spanish renewable energy firm Iberdrola Renewables recently denied a national newspaper report that stated the company was slashing wind-power investments in the UK, but admitted regulatory and planning systems do make investment more difficult.

Keith Anderson, managing director of ScottishPower Renewables, which is owned by Iberdrola, told The Herald newspaper in Scotland that regulatory and planning systems are slower in the UK than in Iberdrola’s other markets, but the situation is getting better.

Energy minister Mike O’Brien has defended the government’s record on planning regulations but admitted the downturn had adversely affected the renewables sector.

In an address to the Renewable Energy Association in London, O’Brien said: ‘To meet our commitments on renewables, we have changed the planning laws and increased support for the sector.

‘We also are working with National Grid and Ofgem to ensure sufficient access to the grid and we very much welcome the recent announcement about the timetable for an extra 450MW of grid connection.’

He added: ‘However, we are fully aware of the investment challenges facing some parts of the industry. As part of the work we are doing across the government on the low carbon industrial strategy, we are looking at the impact of the downturn and what we can do to alleviate it. To that end, we are examining how we can help ensure there is sufficient finance and other support available for viable projects that are short of the investment they need.

‘We are determined to meet the targets for 2020 that we have set out and having passed Denmark as the leading country for offshore wind, and trebled renewables in the last five years, we believe that with the right decisions, we can see the continued growth in the renewables sector that we need.’