UK Pension Fund Invests £170M in Renewables to Boost Energy Transition

The UK's Environment Agency Pension Fund has committed £170 million to Schroders Greencoat's UK Secure Income Renewables Fund, bringing the total capital raised to £1.35 billion. The fund invests in wind, solar, and bioenergy assets to support the UK's transition to a low-carbon economy.

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Nitish Verma
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UK Pension Fund Invests £170M in Renewables to Boost Energy Transition

UK Pension Fund Invests £170M in Renewables to Boost Energy Transition

The UK's Environment Agency Pension Fund (EAPF) has committed £170 million to Schroders Greencoat's UK Secure Income Renewables Fund, bringing the total capital raised to £1.35 billion. This significant investment aims to support the UK's transition to a low-carbon economy and help the country meet its ambitious energy targets.

Why this matters: This investment not only supports the UK's energy transition but also sets a precedent for other pension funds to prioritize environmentally responsible investments, potentially driving a broader shift in the financial sector. As the world grapples with the challenges of climate change, such investments can have a significant impact on reducing carbon emissions and achieving a sustainable future.

The Greencoat Renewable Income fund, which is the UK's largest secure income fund specializing in renewable infrastructure, has already deployed over £1 billion into wind, solar, and bioenergy assets across the country. These investments generate stable, inflation-protected income streams over the long term, making them an attractive option for pension funds looking to align their portfolios with environmental, social, and governance (ESG) goals.

Craig Martin, Chief Pensions Officer at EAPF, emphasized the importance of this investment in achieving the fund's climate targets: "We have a long-standing target of achieving 17% AUM in climate solutions by 2025. This investment will help us achieve this, and support the UK's levelling up agenda. We look forward to working with the team and our Brunel partner investors to scale UK renewables."

The EAPF's commitment to the Greencoat Renewable Income fund was facilitated by the Brunel Pension Partnership, of which the EAPF is a founding member. In October 2022, several Local Government Pension Schemes within the Brunel Pension Partnership collectively committed £330 million to the fund, demonstrating the growing interest among UK pension funds in impact-focused investments targeting renewable infrastructure.

Richard Fanshawe, Head of Private Markets at Brunel Pension Partnership, highlighted the multiple benefits of this investment: "This investment achieves multiple Impact, Levelling Up, energy transition, and return ambitions in one fell swoop for the Environment Agency, whose remit is country-wide, not county-specific."

Schroders Greencoat's UK Secure Income Renewables Fund is set for a final close in December 2024, with a target portfolio that includes wind, solar, and bioenergy assets, as well as opportunistic allocations to emerging technologies such as heat pumps and green hydrogen electrolysis. Tatiana Zervos, portfolio manager at Schroders Greencoat, noted the importance of renewable infrastructure in the energy transition: "Renewable infrastructure assets are the backbone of the energy transition and, as the largest asset manager of operational wind and solar assets in the UK, Schroders Greencoat can offer its clients direct access to these opportunities with long-term reliable, inflation-linked cashflows via a diversified strategy."

The EAPF's £170 million commitment to the Greencoat Renewable Income fund represents a significant step forward in the UK's journey towards a low-carbon economy. As more pension funds and institutional investors recognize the importance of aligning their portfolios with ESG goals and supporting the energy transition, the UK is well-positioned to become a global leader in renewable infrastructure investment.

Key Takeaways

  • EAPF commits £170m to Schroders Greencoat's UK Secure Income Renewables Fund.
  • Total capital raised reaches £1.35 billion, supporting UK's low-carbon economy.
  • Investment sets precedent for pension funds to prioritize environmentally responsible investments.
  • Fund targets 17% AUM in climate solutions by 2025, supporting UK's energy transition.
  • Investment generates stable, inflation-protected income streams from renewable infrastructure.