Power and Renewables
EIG has been investing in the power sector for over 26 years and has deployed $4 billion across 117 transactions in 17 countries. Past investments comprise a wide range of proven technologies, including gas-fired and coal-fired power generation, hydro, wind, solar, biomass, biogas, geothermal and biofuels. The majority of EIG's power investments have been located in North America, Europe and Latin America. In recent years, we have become more active in new emerging markets with investments in South Africa and India. The preferred investment approach in the power and renewables sectors is through partnerships with strategic sponsors and investors, utilities, construction companies, industrial groups and developers. EIG seeks investment opportunities with partners who have the expertise, track record, reputation, human and financial resources required to develop successfully, execute and manage their projects but need tailored capital solutions and the financial support from a reliable specialist energy investor like EIG. Although EIG’s approach has been focused on single assets and portfolio of assets, we also provide structured capital solutions to asset-heavy corporates. EIG considers investment opportunities across the project life cycle from late stage development through construction and operations.
The investment needs for power generation and distribution infrastructure are staggering, in particular outside the OECD, and EIG expects to remain very active in the sector. Over the last ten years, new technologies have emerged, in particular in the renewable space, which will have profound implications on the way electricity is produced, distributed and consumed around the world. These new technologies are already being disruptive to the traditional utility model and that trend will intensify. However, we believe that the transformation of the power sector that is underway will offer attractive investment opportunities to experienced specialist investors like EIG. The following examples demonstrate EIG's experience and current areas of focus in power and renewables.
In December 2013, EIG invested in two virtually identical 830MW combined cycle natural gas turbine power plants under construction in the Marcellus Shale region of Pennsylvania, providing the projects a low cost supply of natural gas. Power generated by the plants will be marketed in PJM, one of the country’s most liquid electricity markets, and will benefit from capacity payments and energy hedges that should provide the projects with significant cash flow stability.
In a certain sense, this investment can also be viewed as a compelling Marcellus midstream play. With Marcellus gas production rapidly rising, pipeline development is failing to keep pace. Natural gas winds up stranded, wells are shut-in, and upstate Pennsylvania prices dip below Henry Hub. We believe that the power plants will fill this market need with an alternative to midstream infrastructure, moving energy from supply pockets to load centers not as molecules through pipelines, but rather as electrons across wires.
In March 2013, EIG invested in a company established to develop, construct and operate two solar thermal power plants located in South Africa and with a combined capacity of 150MW. Once operational, the power plants will be selling electricity to South Africa’s state-owned utility, under long-term contracts. The project sponsor is an engineering and construction group that is a recognized leader in solar technology and has been developing solar projects around the world.
In October 2009, EIG purchased a common equity stake in three operating wind farms (one onshore and two offshore) in the United Kingdom with a combined capacity of 220 MW. At the time of construction, the two adjacent offshore winds farms formed the largest offshore wind farm in the world. EIG acquired 50% of a newly formed holding company from a large United Kingdom utility that had developed the assets on balance sheet and was looking for a partner to monetize some of its investment once the assets became operational. EIG holds 50% of the board seats.