Actis sees renewable energy projects as “remarkably” resilient and essential building blocks, especially in the current volatile environment, Lucy Heintz, partner and head of infrastructure, told PE Hub Europe.
Rezolv, a central and southeastern Europe renewables platform launched by Actis in late July, announced in November plans to build Europe’s largest solar photovoltaic plant in Arad County, Romania. Rezolv expects the plant to be online by 2025 and to provide clean energy to over 370,000 households.
The platform is part of Actis’ energy infrastructure strategy. The London-headquartered company is focused on sustainable infrastructure and invests globally. It has raised $24 billion since its inception in 2004.
The push for renewables in Europe comes at a vital time, especially given the impact of Russia’s invasion of Ukraine on energy prices.
“There’s a lot going on in Europe,” said Heintz. “Not only do you have Europe’s need to achieve energy transition, particularly pressing in CEE, which has high levels of installed fossil fuels. Of course, added to that, you have the pressure of the Ukraine situation.”
Rezolv will provide subsidy-free clean energy at a long-term, stable price for commercial and industrial users, including supermarkets, breweries, telecoms and other large businesses, according to the firm.
With its investments, Actis looks for “enormous” market opportunity, a foundation set of assets, a route to market in terms of power purchase agreements, an additional pipeline and a high-quality management team, said Heintz. “We see all that in central eastern Europe, with this added dimension of energy security; the need for corporates to procure, not just for the reliability and security, but also for their own transition, which we’ve seen really accelerate since COP 26.”
Rezolv, headquartered in Prague, Czech Republic, is Actis’s first investment in central and southeastern Europe, and it will be one of seven generation businesses that Actis is already building from its Actis Energy 5 fund. These are across Mexico, Brazil, Middle East and Africa, Vietnam, Southeast Asian gas and Indian renewables.
The platform already has a portfolio of foundation projects and Actis is working on some additions to those assets. “Overall, it’s about bringing those ingredients together – the foundation assets, a high-quality management team and a great pipeline,” said Heintz.
The CEE region presents other opportunities for Actis. “We see opportunity, in our CEE business Rezolv, to focus a lot on environmental best practice, training and reskilling, in terms of building the skills required for the energy transition, so that we create shared value with local communities,” Heintz explained.
While investors are keeping a keen eye on public market valuations amid volatile conditions, Heintz has found the private markets to be “remarkably resilient”. “I think one ingredient of that is, within all this volatility, renewable energy projects remain the essential building block,” she said. “If you’re going to do anything in terms of energy transition, the most straightforward thing to do is to go and get involved in renewable energy.”
The resiliency and growing interest in renewable energy projects, which Heintz described as the nuts and bolts of energy transition, positions Actis well for exits. The firm has exited “a number” of businesses from Actis Energy 3 and 4 over the last few years. “We’ve seen appetite from an ever-widening array of high-quality institutions, such as infrastructure funds, oil and gas companies, strategics and regional players,” she said.
The CEE region does not have “a great stock” of operating assets at present, which plays well into Actis’s hand, according to Heintz. “In all this geopolitical and macro uncertainty, there’s a scarcity of renewable projects,” she said. “That represents a very significant, and in some ways, enhanced opportunity for us.”
A recent report by Bain & Company, covered by PE Hub Europe, indicated that investors generally have an optimistic outlook on the CEE region.