Europe’s Hydro Fund Eyes $1.1 Billion of Investments on Opening

(Bloomberg) — Europe’s first hydropower fund opened for
business, inviting pension funds and insurers to invest in as
much as 1 billion euros ($1.1 billion) of assets.

Aquila Capital Concepts GmbH plans to buy operational
plants in Europe, including in Norway, Sweden and Turkey,
according to co-head of hydro, Oldrik Verloop. It will invest in
river-based operations, which use flowing water to turn turbines
and generate electricity.

Hydroelectric stations are being offered for sale as
strapped utilities dispose of peripheral assets. Unlike much of
Europe’s solar and wind power, such projects don’t rely on state
subsidies such as feed-in tariffs, or above-market rates,
because the technology is more mature. They also tend to last
longer than other renewable-energy installations.

“Hydropower plants aren’t dependent on government
support,” Verloop said in an interview. “That means if you’re
not on a spectrum of feed-in tariffs you’re on the market price
exposure and that’s a very liquid and transparent market,
especially in Scandinavia.”

In July, Hamburg-based Aquila teamed up with APG Asset
Management to invest 500 million euros to acquire and develop
European hydropower. The new fund will allow institutional
investors to put in money alongside APG.

There are “large chunks” of hydro assets now coming to
the market as utilities divest projects, Verloop said. Carbon-reduction targets to 2020 are also driving support for small
hydropower facilities, he said.

Aquila already has attracted interest for the fund from
German, Dutch, Swiss, Swedish and British investors and is
targeting returns of 7 percent to 9 percent. The minimum
investment is 10 million euros.

To contact the reporter on this story:
Louise Downing in London at
ldowning4@bloomberg.net

To contact the editors responsible for this story:
Reed Landberg at
landberg@bloomberg.net
Amanda Jordan, Tony Barrett

About BloombergNEF

BloombergNEF (BNEF), Bloomberg’s primary research service, covers clean energy, advanced transport, digital industry, innovative materials and commodities. We help corporate strategy, finance and policy professionals navigate change and generate opportunities.

Available online, on mobile and on the Terminal, BNEF is powered by Bloomberg’s global network of 19,000 employees in 176 locations, reporting 5,000 news stories a day.
 
Sign up for our free weekly newsletter →

Want to learn how we help our clients put it all together? Contact us