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Renewables an opportunity for institutions but carbon lurks

Renewable energy offers a range of investment opportunities for the private sector, including partnerships with public sector bodies, according to Thomas Engelmann, head of energy transition, at Munich-based investment and asset manager KGAL.

There is a potential role in the generation and distribution of energy to buildings, including district heating. Although that is traditionally a role for utilities, Engelmann believes that public-private partnerships could be important as heat generation is switched from carbon-based to renewable energy sources.

There could also be roles where renewable energy is used to generate other energy vectors such as hydrogen or ammonia.

“There is an opportunity for institutional investors to go along the value chain – upstream,  midstream or downstream,” he told Real Asset Insight’s Richard Betts.

But he warned that methanol production, which entails the use of carbon, could involve oil and gas market players who may try to prolong the use of natural gas, creating problems for potential institutional investor-partners.

“Where we can play a major role is if we concentrate on hydrogen as the energy vector and the commodity being sold to the transport and logistics market.”

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