US Capital Flight

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Adam Barber
December 9, 2011
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US Capital Flight

Against the backdrop of a climate conference that has always seemed unlikely to result in a deal, US private equity firm First Reserve has made a bold move.

In the past week, the company announced that it will establish a joint venture with Spanish power utility Renovalia, to own and operate wind projects across Europe and Canada.

The business, known as Renovalia Reserve, will start with 559MW of existing Renovalia wind assets in Spain, Hungary, Romania and Canada and $150million of First Reserve’s capital.

For First Reserve, which markets itself as an energy investor as opposed to a firm exclusively focused on renewables, the deal serves as a sensible hedge against the rise and fall of a multitude of international energy sources.

Including debt, Renovalia Reserve will have a value of $1bn. Clearly then, a serious investment.

But given the heritage of First Reserve, why has it overlooked its own US domestic market and instead, sought to commit capital overseas? And what does this mean for Europe?

The answer is as simple as it is complex. And at its heart, it is driven by the beginnings of a fundamental shift in US energy policy – something that the US domestic renewable energy markets, and the conference delegates at COP17 have long feared.

Indeed, with the country set to become a net exporter of natural gas, it’s a fair bet that we’ll see a growing number of US clean energy investors turn their eyes to Europe. A fact that is already a clear frustration for the fledgling US offshore market and that will be yet another blow to those campaigning Congress to extend the renewable energy production tax credit (PTC).

For Europe of course, it spells a significant influx of capital. HgCapital estimates that spending in the sector has already grown from $900m to $2bn in this year alone.

And this additional liquidity – a critical ingredient in ensuring we hit 2020 targets – can only spell further good news in bringing down the cost of construction and the cost of capital.

For the US – a country that along with China and India looks set to hold off on binding COP17 climate change commitments – it’s an altogether different matter. And with large outflows of clean energy capital already heading overseas, Congress needs to act, and fast.

Against the backdrop of a climate conference that has always seemed unlikely to result in a deal, US private equity firm First Reserve has made a bold move.

In the past week, the company announced that it will establish a joint venture with Spanish power utility Renovalia, to own and operate wind projects across Europe and Canada.

The business, known as Renovalia Reserve, will start with 559MW of existing Renovalia wind assets in Spain, Hungary, Romania and Canada and $150million of First Reserve’s capital.

For First Reserve, which markets itself as an energy investor as opposed to a firm exclusively focused on renewables, the deal serves as a sensible hedge against the rise and fall of a multitude of international energy sources.

Including debt, Renovalia Reserve will have a value of $1bn. Clearly then, a serious investment.

But given the heritage of First Reserve, why has it overlooked its own US domestic market and instead, sought to commit capital overseas? And what does this mean for Europe?

The answer is as simple as it is complex. And at its heart, it is driven by the beginnings of a fundamental shift in US energy policy – something that the US domestic renewable energy markets, and the conference delegates at COP17 have long feared.

Indeed, with the country set to become a net exporter of natural gas, it’s a fair bet that we’ll see a growing number of US clean energy investors turn their eyes to Europe. A fact that is already a clear frustration for the fledgling US offshore market and that will be yet another blow to those campaigning Congress to extend the renewable energy production tax credit (PTC).

For Europe of course, it spells a significant influx of capital. HgCapital estimates that spending in the sector has already grown from $900m to $2bn in this year alone.

And this additional liquidity – a critical ingredient in ensuring we hit 2020 targets – can only spell further good news in bringing down the cost of construction and the cost of capital.

For the US – a country that along with China and India looks set to hold off on binding COP17 climate change commitments – it’s an altogether different matter. And with large outflows of clean energy capital already heading overseas, Congress needs to act, and fast.

Against the backdrop of a climate conference that has always seemed unlikely to result in a deal, US private equity firm First Reserve has made a bold move.

In the past week, the company announced that it will establish a joint venture with Spanish power utility Renovalia, to own and operate wind projects across Europe and Canada.

The business, known as Renovalia Reserve, will start with 559MW of existing Renovalia wind assets in Spain, Hungary, Romania and Canada and $150million of First Reserve’s capital.

For First Reserve, which markets itself as an energy investor as opposed to a firm exclusively focused on renewables, the deal serves as a sensible hedge against the rise and fall of a multitude of international energy sources.

Including debt, Renovalia Reserve will have a value of $1bn. Clearly then, a serious investment.

But given the heritage of First Reserve, why has it overlooked its own US domestic market and instead, sought to commit capital overseas? And what does this mean for Europe?

The answer is as simple as it is complex. And at its heart, it is driven by the beginnings of a fundamental shift in US energy policy – something that the US domestic renewable energy markets, and the conference delegates at COP17 have long feared.

Indeed, with the country set to become a net exporter of natural gas, it’s a fair bet that we’ll see a growing number of US clean energy investors turn their eyes to Europe. A fact that is already a clear frustration for the fledgling US offshore market and that will be yet another blow to those campaigning Congress to extend the renewable energy production tax credit (PTC).

For Europe of course, it spells a significant influx of capital. HgCapital estimates that spending in the sector has already grown from $900m to $2bn in this year alone.

And this additional liquidity – a critical ingredient in ensuring we hit 2020 targets – can only spell further good news in bringing down the cost of construction and the cost of capital.

For the US – a country that along with China and India looks set to hold off on binding COP17 climate change commitments – it’s an altogether different matter. And with large outflows of clean energy capital already heading overseas, Congress needs to act, and fast.

Against the backdrop of a climate conference that has always seemed unlikely to result in a deal, US private equity firm First Reserve has made a bold move.

In the past week, the company announced that it will establish a joint venture with Spanish power utility Renovalia, to own and operate wind projects across Europe and Canada.

The business, known as Renovalia Reserve, will start with 559MW of existing Renovalia wind assets in Spain, Hungary, Romania and Canada and $150million of First Reserve’s capital.

For First Reserve, which markets itself as an energy investor as opposed to a firm exclusively focused on renewables, the deal serves as a sensible hedge against the rise and fall of a multitude of international energy sources.

Including debt, Renovalia Reserve will have a value of $1bn. Clearly then, a serious investment.

But given the heritage of First Reserve, why has it overlooked its own US domestic market and instead, sought to commit capital overseas? And what does this mean for Europe?

The answer is as simple as it is complex. And at its heart, it is driven by the beginnings of a fundamental shift in US energy policy – something that the US domestic renewable energy markets, and the conference delegates at COP17 have long feared.

Indeed, with the country set to become a net exporter of natural gas, it’s a fair bet that we’ll see a growing number of US clean energy investors turn their eyes to Europe. A fact that is already a clear frustration for the fledgling US offshore market and that will be yet another blow to those campaigning Congress to extend the renewable energy production tax credit (PTC).

For Europe of course, it spells a significant influx of capital. HgCapital estimates that spending in the sector has already grown from $900m to $2bn in this year alone.

And this additional liquidity – a critical ingredient in ensuring we hit 2020 targets – can only spell further good news in bringing down the cost of construction and the cost of capital.

For the US – a country that along with China and India looks set to hold off on binding COP17 climate change commitments – it’s an altogether different matter. And with large outflows of clean energy capital already heading overseas, Congress needs to act, and fast.

Against the backdrop of a climate conference that has always seemed unlikely to result in a deal, US private equity firm First Reserve has made a bold move.

In the past week, the company announced that it will establish a joint venture with Spanish power utility Renovalia, to own and operate wind projects across Europe and Canada.

The business, known as Renovalia Reserve, will start with 559MW of existing Renovalia wind assets in Spain, Hungary, Romania and Canada and $150million of First Reserve’s capital.

For First Reserve, which markets itself as an energy investor as opposed to a firm exclusively focused on renewables, the deal serves as a sensible hedge against the rise and fall of a multitude of international energy sources.

Including debt, Renovalia Reserve will have a value of $1bn. Clearly then, a serious investment.

But given the heritage of First Reserve, why has it overlooked its own US domestic market and instead, sought to commit capital overseas? And what does this mean for Europe?

The answer is as simple as it is complex. And at its heart, it is driven by the beginnings of a fundamental shift in US energy policy – something that the US domestic renewable energy markets, and the conference delegates at COP17 have long feared.

Indeed, with the country set to become a net exporter of natural gas, it’s a fair bet that we’ll see a growing number of US clean energy investors turn their eyes to Europe. A fact that is already a clear frustration for the fledgling US offshore market and that will be yet another blow to those campaigning Congress to extend the renewable energy production tax credit (PTC).

For Europe of course, it spells a significant influx of capital. HgCapital estimates that spending in the sector has already grown from $900m to $2bn in this year alone.

And this additional liquidity – a critical ingredient in ensuring we hit 2020 targets – can only spell further good news in bringing down the cost of construction and the cost of capital.

For the US – a country that along with China and India looks set to hold off on binding COP17 climate change commitments – it’s an altogether different matter. And with large outflows of clean energy capital already heading overseas, Congress needs to act, and fast.

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Become a member of the 6,500-strong A Word About Wind community today, and gain access to our premium content, exclusive lead generation and investment opportunities.