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Trends Watch: Renewable Energy Infrastructure

Nov 17, 2022

EisnerAmper’ s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies-Snyderman.  

 This week, Elana talks with Balduin Hesse, CEO of Frontier Renewables Capital SGEIC, S.A.

What is your outlook for investing in renewable energy infrastructure?

We are very bullish on the outlook for renewable energy infrastructure generally and, in Europe, in particular. High energy prices in the region, geopolitical issues that have brought energy security to the forefront and an increasing urgency to address climate change are accelerating the energy transition in the region. Renewable energy is not only the cleanest form of energy out there, but also the cheapest. Moreover, trends such as the electrification of transportation, the onshoring of industrial production and the emergence of green hydrogen will be a further boon to renewable energy demand. There are also regulatory and investor pressures brought by the E.U.´s Sustainable Financial Disclosure Regulation (SFDR) and ESG targets more broadly. All arrows point in the direction of renewables.

Where do you see the greatest opportunities and why? 

We see the greatest opportunity in Europe right now because that is where there is the greatest urgency. In Europe, energy security equals renewables. Not only is there E.U. policy support in terms of the fight against climate change, there is an acute need to find alternative, affordable, and homegrown sources of energy. Energy prices are sky high and there is a need for a solution now. We see the greatest opportunity in the development stage of the project cycle where risk is often mispriced and where there is a need for sophisticated capital to bring projects to construction and operation.

What are the greatest challenges you face and why? 

Permitting timelines and transmission constraints are the two main challenges in the renewable energy industry in Europe, both of which can be addressed with allocation of more financial and human resources. Projects that urgently need to come online are stuck in queues. The region needs to add more resources in local planning departments to process the gigawatts that are waiting and are desperately needed. We also need more investment in transmission and distribution… new substations, power lines, etc. Renewables are the solution to the region´s energy needs but only if they can be delivered to where the load is.

What keeps you up at night? 

That we aren´t moving fast enough in terms of decarbonizing our energy supply. The technology is there, the costs are low, the conditions are right. Society, governments, businesses and investors need to work together to get it done. We cannot afford to take our foot off the accelerator regardless of short-term volatility.

The views and opinions expressed above are of the interviewee only, and do not/are not intended to reflect the views of EisnerAmper.

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Elana Margulies-Snyderman

Elana Margulies-Snyderman is an investment industry reporter and writer who develops articles, opinion pieces and original research designed to help illuminate the most challenging issues confronting fund managers and executives.

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