A new study among institutional investors, commissioned by Aquila Capital, reveals that respondents’ average portfolio exposure to clean energy has nearly doubled in two years.
According to the report’s findings, average portfolio exposure of those surveyed has risen to 3.6%, up from 2% in 2016, with 12% now allocating 10-15% of their assets to renewable energy.
Between now and 2021, investors expect the biggest increases in their investment allocations will be made to offshore wind, solar thermal and onshore wind, the study found.
Of those surveyed 55% said long-term stable cash-flows is a key driver in committing more capital to renewables, followed by geographic diversification and low correlation to other asset classes (both 35%), inflation hedging (33%) and fulfilment of ethical standards (30%).
Around 75% of institutional investors said they were positive about the future of renewable infrastructure, an increase of 9% on 2016.
However, 63% of respondents flagged regulatory risk as the greatest challenge influencing their decision towards investing in renewable infrastructure.
The next biggest challenges, identified by 37% of investors surveyed, were political risk, government subsidies and the development of electricity prices.
Aquila Capital investment management energy and infrastructure EMEA head Susanne Wermter said: “Looking ahead, new investment opportunities continue to emerge as Europe accelerates its energy transition from fossil fuels to renewables.”