Here's How To Capitalize On The Transition To Renewable Energy

According to Mirova (Natixis Investment Managers’ affiliate), energy transition offers opportunities not only in solar and wind projects but also in the hydroelectricity, biogas, electric mobility and hydrogen industries

Mirova (an affiliate of Natixis Investment Managers) has been operating in the renewable energy industry since 2002 and has since undertaken more than 175 projects focused on renewable energy by forging partnerships with industrial companies in order to develop infrastructures throughout Europe. This nearly two-decade experience has highlighted some important truths.

The Three Important Truths About Energy Transition: Firstly, there is an exponential demand for green energy aiming to replace carbon-intensive energy sources; secondly, investments in green energy can prove to be very profitable (and have been so in most cases) for investors, especially in the case of a solid investment process; the third truth is that opportunities for investors with a good experience in the industry are constantly expanding and evolving, thus offering extremely attractive diversified return streams.

Hydroelectricity, Biogas, Electric Mobility And Hydrogen: “Our first investments were focused on simple yet effective strategies in the area of greenfield renewable energy, such as solar and wind projects in mature economies. Over the years we have considerably expanded our areas of intervention by implementing evolving technologies in energy storage, hydroelectric, biogas, electric mobility and hydrogen industries in our portfolio", said Raphael Lance, Head of Energy Transition Funds Mirova (Natixis Investment Managers’ affiliate).

Green Energy Investments In Border Regions: At the same time, the focus is shifting from the construction of infrastructures for the supply of energy to the grid to B2B projects, such as the installation of infrastructures for electric vehicles. Mirova is also increasing green energy investments in border regions such as emerging Europe and Asia, particularly in those areas in which propagating green energy and identifying new sources of income is most needed.

A Vast Network Of Contacts: “Mirova is a pioneer in the renewable energy and energy transition industry, and this enabled us to cultivate a vast network of contacts and to gain solid experience in a variety of operations types. At a time in which the whole economy’s risks are increasing, the value obtainable from operations in the green energy market is particularly important for investors", said Lance. On the other hand, policy makers are increasingly attentive to green energy and this should keep on supporting the industry despite the fluctuations in energy demand linked to the economy volatility.

A Well-Running Investment Process: Mirova's process is well established. It starts with raising capital from a large number of investors (more than $1.4 billion are committed to date), which is then grouped into vehicles to make mezzanine debt and venture capital investments within the climate-related infrastructure sector in all OECD countries. By investing mainly in mature technologies on a "ready-to-build" or operational stage, the capital can be deployed quickly, allowing the redeeming stage for investors to start usually much earlier than, for example, in private equity. Each project involves the establishment of a partnership, generally in the form of a joint venture with industrial and utility companies in Western Europe; Mirova then intends to sell them within seven to 10 years to return the capital and distribute the profits to investors.

Investors With Solid Industry Experience Are Favored: "The energy transition represents a deep change for the global economy, but its implementation implies that the vast amount of capital required is not indiscriminately injected into the sector. Only investors with solid experience in the industry and able to anticipate future changes will be able to use capital effectively", Head of Energy Transition Funds Mirova said.

This article originally appeared on Financialounge.com and was translated from Italian to English. It does not represent the opinion of Benzinga and has not been edited. For news coverage in Italian or Spanish, check out Benzinga Italia and Benzinga España.