United StatesInvesting in renewable infrastructure in the rapidly growing US market, accessing strong opportunities supported by reliable wind volumes and solar irradiation
Entering a fast-growing renewables market with experience and expertise
Schroders Greencoat entered the US renewables market in 2021, with its first two investments and a newly formed US based team.
As one of the largest and fastest growing renewables markets worldwide, a permanent presence in the United States grants access to the potential of US renewables deployment, which is forecast to increase by circa 200% over the next decade. This will require significant pools of capital. Favourable federal tax incentives, combined with strong resources in terms of wind volumes and solar irradiation, complete a significant opportunity for investment.
Building a diverse portfolio of US wind and solar
Schroders Greencoat’s current US investments consist of two wind portfolios totalling six wind farms in Texas and in Illinois, with an aggregate capacity of 532 MW – co-invested with RWE and Algonguin and EDP Renewables respectively.
The US portfolio represents an expansion of our successful “secure income” investment model. This aims to provide investors with predictable, stable income on a long term, buy and hold basis.
The portfolio is managed by a specialised US team, bringing together more than 60 years in US renewables and energy markets.
Our US team targets investments in operating assets across wind and solar. As previously seen in Europe, it is expected that utilities and utility-scale developers will need to recycle their capital to meet ambitious deployment goals.
Schroders Greencoat addresses the significant pool of international capital keen to invest in US infrastructure, in combination with a slowly increasing focus on ESG in the US asset management community.
With an expected trebling of US renewable generating capacity by 2030, we aim to become established as one of North America’s leading investors in renewables, matching our positions in the UK and Europe.
Schroders Greencoat’s US wind farm
Schroders Greencoat is one of the largest specialist infrastructure managers dedicated to renewable energy, managing $11bn across over 300 renewable energy assets globally. In this video, we introduce one of our US assets: Bright Stalk Wind Farm, Chenoa IL.
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Key Investment Risks
Volatility risk: The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested.
Liquidity risk: There may be very limited liquidity available via the secondary market of the proposed Fund given the underlying private credit assets and investors should consider an investment only if they intend to hold it for the life of the proposed Fund. Liquidity of the underlying investments might not be sufficient to meet investor subscription and redemption requirements.
Interest rate risk: A rise in interest rates generally causes bond prices to fall.
Credit risk of underlying issuers/lenders: A decline in the financial health of an issuer/lender can cause the value of its bonds/ loans to fall or become worthless.
Currency risk: The fund can be exposed to different currencies. Changes in foreign exchange rates could create losses.
Counterparty risk: The counterparty to a derivative or other contractual agreement or synthetic financial product could become unable to honour its commitments to the proposed fund, potentially creating a partial or total loss for the proposed fund.
Derivatives risk: A derivative may not perform as expected, and may create losses greater than the cost of the derivative.
Concentration risk: The proposed Fund may be concentrated in a limited number of geographical regions, industry sectors, markets and/or individual positions. This may result in large changes in the value of the fund, both up or down, which may adversely impact the performance of the fund.
Gearing risk: The proposed fund may borrow money to invest in further investments. Gearing will increase returns if the value of the investments purchased increase in value by more than the cost of borrowing, or reduce returns if they fail to do so.
Valuation risk: The underlying private credit assets may be subject to inadequate pricing reliability. In addition, property-based vehicles invest in real property, the value of which is generally a matter of a valuer’s opinion.
Industry/country risk: Legislative changes, changes in general economic conditions and increased competitive forces may affect the value of investments. Additional risks may include greater social and political uncertainty and instability and natural disasters.
Infrastructure asset risk: Infrastructure assets expose investors to additional risks, in particular construction risk (e.g. construction delays, cost overruns, etc.) and deployment risk (e.g. capital being deployed in several instalments during construction period rather than upfront for brownfield investments).