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Sep 02 2021 · 2 minute read

CAPITAL DYNAMICS

Capital Dynamics Clean Energy Infrastructure Funds VIII and IX are new additions to our portfolio.

The funds invest in onshore wind and solar renewables projects in the UK and Europe. Energy decarbonisation is vital to keep the rise in global temperatures in line with the aims of the Paris Agreement. Furthermore, the World Energy Investment report published in June 2021 estimates that clean energy investment would need to double in the 2020s to maintain temperatures well below a 2°C rise and more than triple in order to keep the door open for a 1.5°C stabilisation.#

The funds are building diversified portfolios of wind and solar projects which have received planning consent and are ready to construct. The most recent purchase is Sorbie, a subsidy-free onshore wind project located in North Ayrshire, Scotland, which will be operational in the second half of 2022. Once operational, Sorbie is estimated to reduce greenhouse emissions by over 0.7 million metric tons during its lifetime — the equivalent of emissions produced by over 150,000 passenger vehicles driven for a year or the electricity to power over 110,000 homes for a year.

The solar exposure is focused in warmer climes, for example the solar farms in Puerto Real in Southern Spain. Once Puerto Real 2 becomes operational in the first quarter of 2022 Capital Dynamics will have invested in over 480 MW of subsidy-free solar projects in Spain.

This is Snowball’s first investment in a private market clean energy fund, having been invested in public market funds since our inception. Private market funds bring additional capital to the sector which is used to bring on much needed extra capacity. For this reason, these funds have a higher impact and increase the impact intensity (which we refer to as our ‘impact bullseye’) of our portfolio.

We also expect a higher return from these funds for two reasons — the funds invest in pre-construction assets which tend to offer a premium to investment trusts which purchase operating assets — and we require an illiquidity premium as the fund is not daily traded and has to be held to term.

We are excited to be an investor. Capital Dynamics has an experienced team and robust governance. We believe that Capital Dynamics is a values-aligned manager with Snowball, having an open and transparent culture committed to learning and continuous improvement.

Read more about Capital Dynamics.

If you have any thoughts about this article or would like to learn more about Snowball, please email us at hello@snowball.im.

Abigail Rotheroe, Investment director, Snowball
Abigail Rotheroe, Investment director, Snowball