BlackRock continues to see value in renewables investment fund

BlackRock is planning a range of follow-up products after its first renewable power fund was deemed a success. The asset management firm said the area represents an attractive investment proposition.

Jim Barry, head of BlackRock’s renewable power group, told the Financial Times, “There has been a huge flood of capital into the space. We felt this was an attractive institutional strategy.”

Barry noted that the production of shale gas also throws up some questions about the future of the energy market. Whilst shale gas is currently cheap, its price over a longer time period remains uncertain.

He said, “Do we invest in gas generation – which is cheap now, but what is it going to be like in 30 years? And then they also have to think about carbon dioxide even as a contingent liability. Or do they build or buy renewable power, where they can lock up the costs for 15, 20 and 25 years?”

The BlackRock renewable power group was founded in 2011 and aims to give investors a chance to receive predictable cash yields from wind and solar projects. The organisation describes the renewable energy market as the “fastest growing generation segment” in Europe. It added that it is an attractive investment proposition for investors focussed on the long term.

Julian Parrott, a partner at Edinburgh-based financial advisory firm Ethical Futures, said, “It’s interesting that BlackRock is backing more renewable projects. It has a decent track record, being one of the early adopters of the market back in 2001 with the Merrill Lynch BlackRock New Energy Trust.”

Parrott claimed that while that fund’s early existence may have been rocky, it has since stabilised. He went on to say that the experience of BlackRock’s fund and others emphasises that new energy technology is not for the faint hearted and is still competing with a tough economic environment and traditional energy sources.

He added, “Sustainability may make long-term sense but sadly what is viewed as altruism doesn’t count for much in the short-term timeframe of the markets.”

Parrott concluded that the sector has grown significantly over the past few years, with investors now having more options, but warned investors not to put all their money in one area.

Further reading:

UK wind power ends 2013 on record-breaking high

Claims that wind farms knock a third off house prices refuted

Renewable energy share in Europe up to 14.4% in 2010

£1.3bn invested in UK clean energy infrastructure in 2013

Bloomberg: UK measures to attract wind investment are insufficient