The overwhelming majority (92 per cent) of British institutional investors and wealth managers are planning to increase their allocations to renewable energy in order to diversify their portfolios, according to a survey by London-based asset manager Downing LLP.
The survey, which polled 100 professional investors including pension plan sponsors, institutional investors and asset managers, found respondents were most drawn to solar power opportunities, with more than three-quarters (76 per cent) indicating they’re likely to invest in the sub-sector.
The second-most popular sub-sector was hydro power, cited by a similar percentage (74 per cent) of respondents. This was followed by biomass-related energy projects (64 per cent), wind-based power collection schemes (59 per cent) and tidal power (27 per cent).
In a press release, Henrik Dahlstrom, investment director at Downing Renewables and Infrastructure Trust, noted there was a logical explanation for institutional investors’ interest in using the renewables as a diversification tool. “U.K. pension funds recognize the value these assets have to portfolios and we have already seen a trend to increasing allocations, which looks set to continue over the next year and a half.”
The survey also found institutional investors are most drawn to renewable energy projects in North America and continental Europe, with 80 per cent of respondents indicating they intended to invest in the regions’ opportunities. About three-quarters (76 per cent) said they’re drawn to U.K.-based opportunities, while a slim majority (55 per cent) indicated an interest in Asian ones. Only a minority (44 per cent) indicated any interest in making similar investments in other regions.