{"id":9302,"date":"2017-09-03T19:17:13","date_gmt":"2017-09-03T19:17:13","guid":{"rendered":"https:\/\/climatepolicyinitiative.org\/?post_type=cpi_pr&#038;p=9302"},"modified":"2017-09-03T19:17:13","modified_gmt":"2017-09-03T19:17:13","slug":"pension-funds-insurers-accelerate-energy-transition-lowering-cost-clean-electricity-17","status":"publish","type":"cpi_pr","link":"https:\/\/www.climatepolicyinitiative.org\/pt-br\/press-release\/pension-funds-insurers-accelerate-energy-transition-lowering-cost-clean-electricity-17\/","title":{"rendered":"Pension funds and insurers could accelerate energy transition by lowering cost of clean electricity 17%"},"content":{"rendered":"<ul>\n<li style=\"text-align: left;\">Clean Energy Investment Trust (CEIT) has potential to remove barriers to direct<br \/>\ninvestment in wind and solar assets by institutional investors, analysis shows<\/li>\n<li style=\"text-align: left;\">Investment-grade design launched today with support of Rockefeller Foundation<br \/>\ncould attract up to $4trn in patient capital into the renewable energy sector<\/li>\n<\/ul>\n<p><strong> London &amp; San Francisco, Tuesday 8 August 2017:<\/strong> CPI Energy Finance today launches its design for\u00a0a new type of investment that would transform the way solar and wind projects are financed,\u00a0attracting cheaper capital with long-term investment horizons and thereby reducing the cost of clean energy by 15%-17%.<\/p>\n<p>The suitability of wind and solar assets for pension funds and insurance companies has been a\u00a0popular preoccupation of policymakers, regulatory and commentators for many years. Twenty-year fixed-price contracts such as power purchase agreements (PPA) and feed-in tariffs (FiT) provide exactly the sort of predictable cashflows that these institutions need to cover pension payouts, insurance claims and annuity payments over the long-term, while offering a higher\u00a0return than the corporate bonds whose yields have collapsed in recent years.<\/p>\n<p>Despite this, much of this long-term \u201cpatient capital\u201d has remained on the sidelines. In 2013, CPI-EF estimated that barriers, such as liquidity and institutional size, limited the maximum potential institutional investment to $259bn (less than 1%) of the $70trn total OECD institutional assets that\u00a0could be available for direct investments in renewable energy. By 2016, CPI-EF analysis showed that just $305bn of $80trn was potentially available.<\/p>\n<p>The position had barely changed in that time because those barriers \u2013 including restrictions on illiquid investments and the costs of building an investment team that put direct investment in\u00a0renewable projects beyond the reach of all but the largest institutions \u2013 remain in place. As a consequence, asset managers who have been among the biggest beneficiaries of increased institutional interest in infrastructure, have designed infrastructure investment products around\u00a0their pre-existing business models, rather than models that match institutional investor needs and would lead to the lowest cost of capital for projects.<\/p>\n<p>CPI-EF\u2019s design for the Clean Energy Investment Trust (CEIT) overcomes many of the major barriers faced by institutional investors by offering an investment-grade vehicle to hedge long-term liabilities, while offering a higher return than bonds and requiring lower management fees than most asset managers. In fact, our analysis shows that a CEIT market could increase the potential institutional investment in renewable energy assets 13-fold from $305bn to nearly $4trn.<\/p>\n<p>David Nelson, executive director of CPI Energy Finance, said: \u201cThe CEIT mechanism breaks apart the traditional utility model of financing which is no longer fit for purpose in a high-renewables\u00a0scenario. By unbundling this model and splitting it into three distinct but interdependent\u00a0cashflows, we can drive capital more efficiently towards a future energy system that is not only low-carbon, but also low-cost \u2013 that\u2019s the prize.<\/p>\n<p>\u201cInstitutional investors should find that the CEIT overcomes many of their barriers, plus other investors seeking higher returns will have a major opportunity to finance more of the riskier,\u00a0longer-term capital that will enable us to achieve full decarbonisation. The CEIT has the potential to open up a new major class of investment that can help catalyse finance in a way that accelerates the low-carbon transition.\u201d<\/p>\n<p>The launch of today\u2019s papers, <em>Mobilising low-cost institutional investment in renewable energy:\u00a0<\/em><a href=\"https:\/\/climatepolicyinitiative.org\/publication\/overcoming-barriers-institutional-investments-renewables\/\"><em>Major<\/em> barriers and solutions to overcome them<\/a> and<em><a href=\"https:\/\/climatepolicyinitiative.org\/publication\/clean-energy-investment-trust-financial-innovation-renewables\/\"> Structuring the Clean Energy Investment Trus<\/a>t<\/em> is\u00a0a major milestone in the development of financial innovations to accelerate the energy transition.<\/p>\n<p>CPI-EF has been supported in this work by the Rockefeller Foundation\u2019s Zero Gap Initiative. Lorenzo Bernasconi, senior associate director at the Rockefeller Foundation, said: \u201cCPI-EF\u2019s\u00a0analysis breaks new ground in the financial innovation required to disrupt the financing\u00a0mechanisms for renewable assets for the benefit of investors and the climate.<\/p>\n<p>\u201cOur Zero Gap programme seeks to unblock the barriers to private finance in tackling climate\u00a0change, and the CEIT is a significant step towards creating new flows of efficient capital from institutional investors who have been prevented from putting their capital to work in this asset class.\u201d<\/p>\n<p>By restoring wind and solar investments to the category of low-risk\/low-return, a successful CEIT market would accelerate the low-carbon transition in two important ways. Firstly, it would\u00a0directly reduce the cost of electricity from wind and solar by 15-17% &#8211; developers would then be willing to bid less for contracts for new assets, knowing they have greater certainty than in the past of a higher price by selling to a CEIT. Secondly, this could free up capital seeking higher risks and higher-reward for investment in the new technologies that will help accelerate the low-carbon transition.<\/p>\n<p>For press queries, or requests to speak to David Nelson or Lorenzo Bernasconi, please contact:<br \/>\nFelicity Carus, felicity.carus@cpilondon.org<\/p>\n<p>Notes for editors<br \/>\nAbout CPI Energy Finance:<br \/>\nCPI Energy Finance is a team of analysts that evaluates policy with the aim of accelerating the energy transition. We work with investors, policymakers and corporations on four main areas: using finance as a catalyst; smoothing the transition away from fossil fuels; encouraging market reform; and developing new models in emerging markets.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Clean Energy Investment Trust (CEIT) has potential to remove barriers to direct investment in wind and solar assets by institutional investors, analysis shows Investment-grade design launched today with support of Rockefeller Foundation could attract up to $4trn in patient capital into the renewable energy sector London &amp; San Francisco, Tuesday 8 August 2017: CPI Energy [&hellip;]<\/p>\n","protected":false},"featured_media":0,"template":"","format":"standard","meta":{"_acf_changed":false},"programs":[480],"regions":[118,334],"topics":[1197,842,161,1226,238,264,346],"collaborations":[],"class_list":["post-9302","cpi_pr","type-cpi_pr","status-publish","format-standard","hentry","programs-energy-finance","regions-europe","regions-united-states","topics-electricity-market-reform","topics-financial-innovation","topics-institutional-investment","topics-policy-and-regulation","topics-private-finance","topics-renewable-energy","topics-wind"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - 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