What investors should look for in cleantech

By Scott Poulter

Cleantech is becoming a go-to option for investors. Ambitious government targets, a growing realization of the seriousness of the climate crisis and competitive renewables costs are all contributing to the investment frenzy.

And one great enticement for green investing is its potential for a steady payback over the medium term. Make the right investment upfront and you can look forward to a steady income stream over a 25-35 year period.

But what should the wise investor look for in a green opportunity? First, let’s look at the overall investment environment.

According to the Global Trends in Renewable Energy Investment 2020 report, government and corporate commitments to the decarbonization of energy generation are encouraging.

To make them a reality, 826 GW of new non-hydro renewable power capacity is needed in the decade to 2030, at an estimated cost of around $1 trillion. And real money is following the pledges.

826 GW of new non-hydro renewable power capacity is needed in the decade to 2030, at an estimated cost of around $1 trillion.

Global investment in renewable energy capacity was up 2% to $303.5 billion in 2020, making it the second-highest annual figure ever after the $313.3 billion invested in 2017.

Adding to the good news is that falling capital costs meant record volumes of solar (132 GW) and wind (73 GW) are being installed. The money flooding into green energy generation counts as ESG investments, focusing on environmental, social and governance principles.

This is growing in popularity as an investment category. The environmental element of ESG looks at a company's operational impact on the living world, and particularly on climate change.

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cleantech

Many businesses’ operations add to climate change due to high pollution and energy use, which could well make them less attractive options in the future as government regulation starts to bite. So, any canny investor should factor ESG into their decisions.

They should also consider the other side of the equation–how climate change can affect businesses and the broader industries in the future. But beware: even well-known and respected companies can make questionable claims about their ESG credentials.

As an example, police recently raided the offices of Deutsche Bank on suspicion of fraudulent sustainable investment fund advertising at its DWS unit.

“The allegations are that DWS has been advertising so-called ESG financial products for sale as being particularly green and sustainable when they actually weren't,” said a spokesperson for the German public prosecutor, speaking to Fortune magazine.

“In the course of our investigations we've found evidence that could support allegations of prospectus fraud.”

Needless say, Pacific Green’s projects fall into the category of genuine ESG investments—and they are attracting plenty of interest. Some investors are confident enough about the future of green investments that they are thinking bigger than putting money into single projects.

Institutional investors are pumping cash into a pipeline of projects at various stages of development. One of the main reasons for this so-called platform investment approach is a shortage of well-structured single projects in what some see as a sellers’ market right now.

Pacific Green has embraced the platform route to green investment, with its energy storage business as a particularly strong example.

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Richborough Energy Park
The first phase has already begun at Richborough Energy Park in Kent, with 100 MW of battery energy storage system (BESS) capacity due to be completed in the second quarter of 2023.

We understand that relying on an intermittent energy source such as wind means that energy storage goes from being a nice-to-have capability to an absolute necessity if a country investing in renewables plans on keeping the lights on.

Right now, our company is building a massive pipeline of battery projects and collocating or hybridizing them with sources of renewable energy. 

Take the case of the UK, where ambitious government targets and the unraveling of red tape means the country is becoming a magnet for green investment.

According to trade body RenewableUK, the total capacity of energy storage projects in operation, under construction, consented and in planning is already more than 32 GW. Projects are also getting bigger in the UK.

Major projects in 2021 ranged from 30 MW to 49.9 MW each, with smaller 5 MW to 30 MW projects becoming less prevalent. We currently have a 1.1 GW agreement to supply energy storage to the UK, with projects located at four key locations.

The first phase has already begun at Richborough Energy Park in Kent, with 100 MW of battery energy storage system (BESS) capacity due to be completed in the second quarter of 2023.

The project has a 35-year operational horizon, incorporating battery augmentations every 10 years. For investors, it offers the assurance of working with a range of highly reputable partners, with a long-term potential for substantial returns.

The 250 MW Sheaf project will be constructed at the same location next, in 2025. Both projects employ real-time smart control systems for energy control and supply as well as employing the latest lithium-ion battery technology.

Richborough Energy Park has been carefully chosen to meet the needs of renewable energy operators and business end users.

It once housed a thermal power station which has now been demolished, but retains an all-important grid connection, which is now used to bring energy ashore from the Thanet Wind Farm.

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Thanet wind farm in Kent, UK

This is one of the world’s biggest offshore wind installations, which Pacific Green’s energy storage projects have obvious potential to service. Richborough is also a landing point for the 1 GW Nemo Link interconnector to Belgium, which entered commercial service in 2019. 

The location is also well situated to provide services for the high-demand populations of Southeast England, including London and its suburbs. After our two Richborough-based projects, Pacific Green will keep the pipeline pumping.

An additional 1.35 GW of transmission-level BESS connections are scheduled for completion sometime in 2028 at three additional locations: Aberthaw in Wales, Canterbury, Kent, and the Isle of Grain.

These are all high-value sites and will expand the earnings potential for our investors across the UK, keeping Pacific Green at the forefront of forward-looking renewable investment.

From electric vehicle charging to green hydrogen, and from solar to energy storage, we mastermind projects which are strong ESG investment vehicles. Our commitment includes a long pipeline of projects with a decades–long possibility for payback.

To find out more about working with Pacific Green and benefiting from the tremendous opportunities awaiting investors in the global green energy market, contact us now.