BlackRock raising UK renewables fund, eyes offshore wind

Jim Barry, Global Head of BlackRock Infrastructure Investment Group.

Jim Barry, Global Head of BlackRock Infrastructure Investment Group.

 

15 July 2014

BlackRock is raising “hundreds of millions of pounds” for a UK renewables strategy, which could see the asset manager invest for the first time in offshore wind.

An announcement on the progress of the UK strategy is expected in coming months, Jim Barry, global head of BlackRock Infrastructure Investment Group, told Environmental Finance.

Like its recently closed global renewables fund, the strategy is likely to invest in solar and onshore wind, but it will also consider offshore wind, which would mark a first for the asset manager.

Barry said there was no shortage of opportunities in the UK, although he admitted that some developers were struggling with uncertainty over the government’s commitment to support onshore wind, and there was “no doubt” that solar was winding down.

But Barry, former chairman of Irish wind energy provider Airtricity, pointed to the huge scale of offshore wind projects planned for the North Sea as a potential opportunity.

As well as working on a UK renewables strategy, BlackRock is also working on an EU renewables strategy, Barry added.

He also sees opportunities for other renewables products, in particular “a great opportunity for a higher risk, higher return product”.

BlackRock, the world’s biggest asset manager, with $4.3 trillion of assets, closed a global renewables fund in December, which makes direct investments in European and North American assets.

The fund, which has $610 million in assets as well as more than $200 million in co-investment capital, is expected to be fully committed by the end of the year, Barry revealed.

He hopes to start raising another global renewables fund next year, and said it could invest in new territories, such as Japan, Australia and New Zealand. However, he said it was unlikely to look at Spain, Portugal or Italy because the risk/return profile did not fit its profile.

Unlike many institutional investors, Barry said his funds would be prepared to take some construction risk, although they would still refuse to accept development risk. This was because the BlackRock team has expertise in project development, which made it more comfortable getting involved during construction.

“A typical institution is right to stay away from that risk – it requires real expertise,” he added. “You have to be very thoughtful about which OEM (original equipment manufacturer) you are going to invest with.”

 

By Peter Cripps, Editor Environmental Finance

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