INDUSTRY FOCUS: FINANCE

Management, Nathan Wakefield, tells Energy Focus more about the strategy which will position the company on a strong path for advancement of the space while generating returns for investors and general improvements for local communities and stakeholders.

“Our renewable power division, which I head, is focussed on wind, solar, and hydro, and we are looking into net zero assets including storage,” he says.

Working across different applications, and gaining a strong portfolio, Equitix is embracing the missing links in the system, including storage.

In July 2022, the company acquired an additional stake in the Hornsea One offshore windfarm – the largest operating offshore wind farm in the world – which powers more than one million UK homes and businesses. In September 2022, an acquisition of a waste-to-energy plan in Scotland was completed. Westfield Energy Recovery Ltd is under construction in Fife and will process 240,000 tonnes of non- recyclable residual waste each year, saving from landfill and generating 23 MW of low-carbon electricity. In January 2023, Equitix welcomed one the UK’s largest recycling businesses to the Westfield Energy Recovery ecosystem when it signed a JV with Viridor to invest and deliver the project by 2025. Highlighting its commitment to renewables, the company showcased its co-owned Beatrice offshore wind farm to politicians in March – explaining the impact of the site which powers 450,000 homes. A significant agreement was inked in April, when Equitix partnered with Orsted, Equinor and RWE to invest in 10 major windfarms, contributing to more than 33% of the UK’s installed capacity.

Fresh Mandate

In a deliberate and considered approach, Equitix has been investing into green energy for more than 10 years, now with more than £2.1bn invested into carbon-reducing, renewable power-generating projects across Europe and the UK with 6GW capacity AUM.

Storage is one of the few sticking points in the sector – how can you efficiently make the most of energy produced during times of maximum generation, making it available at times of peak demand? Battery storage is a growing space, and Equitix is busy here.

“We have secured a mandate from the UK Infrastructure Bank (UKIB) for a storage infrastructure investment fund. They will be the seed investor, between £500-750 million fund, focussed on more challenging to deploy storage projects in the UK. That is a big opportunity for us to get into that sector. We have a couple of small battery projects that sit behind the meter on a couple of our waste projects, but this will be the first major foray into storage generally,” explains Wakefield.

Further into the future, the company holds the vision of deploying longer-duration technologies and electricity storage technologies with superior discharge rates and degradation levels, while investing into local skills development and sustainable management of projects – critical for Equitix.

CEO Hugh Crossley, was buoyant about the opportunities in storage, saying: “We are delighted to partner with the UK Infrastructure Bank on this important initiative, investing in the development of critical energy infrastructure and supporting the UK Government’s net zero targets and energy security objectives. This firmly aligns with our own strategic objectives and offers attractive opportunities for like-minded investors.”

While the storage market has seen some positive jumps in terms of technology in recent years, there is still much to be understood about the investment and yield process. Thankfully, Equitix takes a long-term view in its investment strategy.

“We are typically a 25 year buy and hold investor in our core funds,” says Wakefield. “The challenge we’ve had is to understand how the revenue stacks are put together for storage projects. It is clear over the short term, but we need to understand what happens over a two- or three-year horizon.”

EARLY-STAGE DEVELOPMENT

Getting new projects off the ground in a sustainable manner is also a priority for Equitix. Involvement from the early stages allows for deeper exposure and understanding, and larger investment opportunities.

“The product that we are testing the market with is a greenfield development fund which is UK-Euro focussed in a rough 50/50 split,” says Wakefield. “The target is around €1.1 billion and that is to enable us to move earlier in the investment phase. In the past, we have done greenfield investment but they have been typically closer to ‘shovel ready’ projects. This is going back to conceptual and early-stage development.”

These new fund concepts and investment opportunities are ultimately built, delivered, and managed by people and the industry remains a people-focussed space. There is a level of trust required that is created over long periods of time, based on proven ability and ambition. Equitix is a people business – investors, employees, and communities are at the heart of decision making. For Wakefield, the future of the renewable energy transition is absolutely about the development of people just as much as it is about boosting returns for investors.

“We have the largest asset management team, on a pound for pound basis. We have a vast amount of different technical expertise, whether that is financial or engineering, and that is a depth and breadth of resource that others don’t have,” he says of the company’s competitive advantage. “We have been really careful with growing the business and the type of projects and assets that we have acquired. We have a low loss rate, and that supports our credibility in the marketplace.

“In renewable power, the biggest challenge is growth in the market,” he continues. “Offshore wind has huge growth targets and the challenge of building the assets in the medium term, and maintaining them in the longer term, is large. There is a lot of