Fiera Infrastructure Inc. executives see quite a bit of investment opportunity in renewable projects across North America.
In Canada, many renewable projects are government-backed, said Alina Osoria, Toronto-based president and CEO. Those projects tend to have power purchase agreements with government-backed agencies. Fiera Infrastructure had C$1.7 billion, including committed capital, as of April 30.
"We like assets which produce stable cash flow for all infrastructure subsectors. Renewables are a good example as they generally tend to be long-term contracted with clear visibility on the cash flow and distributions," Ms. Osorio said.
However, the opportunity set for renewables is variable, she noted.
"That pipeline (of deals) ebbs and flows," Ms. Osorio said.
AMP Capital Investors Ltd. executives are also investing in renewables and in energy storage as a way of avoiding investments with direct commodity price exposure, said Dylan Foo, San Francisco-based global head of direct investments at AMP Capital, which had $20.3 billion infrastructure AUM as of Dec. 31.
"We tend to look at real assets that will be relevant to the next century and beyond," Mr. Foo said.
Some managers say that North American infrastructure is getting too pricey.
Brendan Duval, New York-based managing partner at infrastructure developer and owner-operator Glenfarne Group LLC, said his firm is focusing on investing in Latin America because "prices are so tight in North America."
Even in the renewable sector, he said, he is "amazed at the price of capital" for wind and solar investments because of high demand for such assets.
"You can buy the bonds of utilities that own the power and get a better return," Mr. Duval said.
Some renewable energy infrastructure investors see returns building new projects. In May, Capital Dynamics' clean energy infrastructure team announced the completion of 280-megawatt California Flats Solar Project with First Solar Inc.
"Renewables are the biggest single sector of infrastructure in the U.S.," said John Breckenridge, a New York-based senior managing director and head of energy infrastructure at Capital Dynamics. According to Inframation, renewables accounted for 34% of infrastructure lending in 2018, greater than transportation, which accounted for 21%; power, 17%; and energy, 16%.
He expects this trend to continue due to lower costs and state mandates for renewables, he said.
"The trend is very much for more renewables driven by a number of things,'' he said.
The first is state mandates. California, for example, has mandated 100% (of electricity generation) renewables (by 2045) and Maryland has a 50% renewables mandate, he said.
"State after state are putting in renewable mandates that will be driving growth of renewables for years to come," he said.
"The other driver is continued cost decline … Two years ago renewables were not viable in Texas, which doesn't have a mandate. Now Texas is an active market."
