German insurer Allianz to invest another €500m in wind parks by 2016

Report from this year’s European Wind Energy Association (EWEA) conference in Vienna.

German insurance giant Allianz plans to invest between €300m and €500m in European wind parks over the next three years as it continues to expand its already sizeable renewable investment portfolio. Its existing portfolio is worth €1.3bn and encompasses seven photovoltaic (PV) facilities and 35 wind parks, all of which are onshore. Allianz has so far stayed away from offshore wind investment in part due to the risks it says are associated with the new technology. But David Jones, Head of Renewable Investments at Allianz, said this didn’t mean the insurer had ruled out offshore wind: “In principle, we’re ready to invest in offshore, but only if we can see a return that properly compensates the incremental risk taken.” He added that at least in one case, the insurer had come close to acquiring an offshore park. Jones also said that while the renewable portfolio had provided the insurer a return that was stable and above current bond yields, there was another non-market-related risk to consider: “That risk is wind, and we have seen that since 2008, wind output has varied.” Allianz puts the annual yield from its renewables portfolio at 7% annually. According to Robert Pottmann, Head of Renewable Energy & New Technologies at Munich Ergo Asset Management, renewables investors also still face changes to government subsidies, which can be appliedretroactively. This has happened with Photovoltaic (PV) subsidies in France and Spain. Its parent, German re-insurer Munich Re is investing €2.5bn over the mid-term in renewable technologies across Europe. Its has since allocated over a quarter of the volume, with the latest investments being onshore wind parks formerly owned by Iberdrola, the Spanish utility company. A consortium comprising Munich Re, General Electric and Electricité de France (EdF) acquired Iberdrola’s operator of French wind parks for €350m. Munich Re and GE’s financial arm will each own 40% of the operator, known as Iberdrola Renovables France (IBRF). Pottmann declined to specify the return on Munich Re’s renewable portfolio, saying only that it exceeded bond yields. Pottmann and Jones both said that Solvency II, the EU’s new regulatory scheme for European insurers, was another hindrance to more renewable investment from insurers. Solvency II treats long-term renewables infrastructure investments on the same basis as those for equity and requires a significant capital charge. Thomas Pütter, the former chief executive of Allianz Capital Partners, said European insurers were lobbying regulators to get them to re-think the capital charge: “It is one of the reasons why the enactment of Solvency II has been delayed.”