Pension schemes in the UK view ‘putting their capital to work swiftly’ as the biggest barrier to investing in renewable infrastructure, according to a survey from AlphaReal.

It found that 79 per cent of respondents selected the speed of capital deployment as one of the top three obstacles, while 70 per cent cited ‘policy and regulatory uncertainty’.

More than two-thirds (68 per cent) said that illiquidity was one of the top three issues when investing in renewable infrastructure.

“Speed of deployment is a concern to many investors, making it important to partner with an established investment manager with a track record in the sector,” commented AlphaReal fund manager renewable infrastructure, Raza Ali.

“Doing so ensures ample access to opportunities including off market transactions, as well as efficient evaluation.

“Buying unlevered also allows due diligence to be targeted solely for the needs of investors, as opposed to debt where the interests of debt holders need to be factored in, further improving speed of deployment.”

When asked about their preferred stage of the asset lifecycle to invest, nearly half (47 per cent) of schemes said they preferred ‘pre-greenfield’ development stage projects.

A third (33 per cent) liked greenfield - fully consented projects with energisation dates - while 19 per cent said they preferred ‘brownfield’ sites where the asset is operational and generating revenues.

The survey also assessed schemes’ geographical preferences for renewable investment, with 82 per cent of respondents saying they look to invest in the UK only.

More than one in 10 (12 per cent) were considering investment opportunities across Europe and 6 per cent were looking worldwide.

“Many defined benefit schemes are now closer to buyout and less able to invest in illiquid assets, unless adopting a low dependency strategy,” AlphaReal client solutions, Stuart Hanson, stated.

“However, we are seeing insurers, Local Government Pension Scheme investors and, more recently, defined contribution funds making significant allocations to renewable infrastructure projects throughout the UK.

“These long-term investors should continue to benefit from the equity-like returns and attractive income profiles that can be provided by renewable infrastructure.”

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