Responsible Investment

Institutional investors will rebuild the energy network

December 9, 2011
Matthew Hammond
http://www.youtube.com/watch?v=A0L-AfiAy3U

Every technology is different and each one is at a different stage of development, so policies will differ. What investors want is simplicity and reliability, and they want consistency. “That will be the key to unlocking investment funds.”

Renewables

For investors, renewable assets are already far more important than traditional energy sources. Most renewable technologies are about up-front capital expenditure and very low operating costs going forward. But if institutional funds are to continue to invest in, say, feed-in tariffs, there must be consistency in government regulations. “We must eliminate the ‘noise’ caused by feed-in tariff changes. Feed-in tariffs are designed to fall in time, but it should not be too difficult to handle this in an organised way. They could, for example, be auctioned off and then be kept flat for 25 years. This would remove the idea that these are some random subsidy, albeit more overt than the hidden subsidies already prevalent in the energy industry. Feed-in tariffs may very well prove to be the cheapest energy in the future.”

References

This interview was recorded during TBLI Conference Europe 2011, held in London, November 2011, organized by the TBLI Group.

This article may be reproduced according to our terms of use with attribution (and link, if online) to www.tias.edu. To be cited as: “Institutional investors will rebuild the energy network”, Matthew Hammond, www.tias.edu, December 9, 2011.

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