EnerCap’s new Exergy Efficient Energy Fund to be invested in CEE region

London, 25-4-2014 — /EuropaWire/ — In a second article by Clean Energy Pipeline EnerCap Partner Shane Woodroffe explains why EnerCap is confident about the attractiveness of the CEE region for investments in clean energy infrastructure, such as through EnerCap’s new Exergy Efficient Energy Fund.

Please see below for an excerpt from the full article.

Czech Republic-based private equity fund manager EnerCap Capital Partners intends to revisit the renewable energy market with a second fund aimed at Central and Eastern European projects, despite recent policy changes in its core markets.

“We hope to return to the renewable energy market soon,” Partner Shane Woodroffe told Clean Energy Pipeline in a telephone interview.

Woodroffe remains unfazed by the multiple downgrades of feed-in tariffs and renewable energy certificates across the CEE and the pervasive uncertainty over future policies in these markets.

Many CEE countries have abruptly altered their incentives for clean power generation when faced with rising energy prices. Hungary and Bulgaria both applied retrospective changes to their renewable energy subsidies, while Romania has long said it will reduce its green certificate subsidies, which it will likely succeed in doing despite a recent presidential intervention.

EnerCap raised Eur98 million for its first renewable energy fund, a respectable result given the uncertainty surrounding the CEE market, and will increase its target for its second renewables fund despite ongoing challenges in many CEE countries.

“Absolutely, we will increase the size of the next fund,” Woodroffe confirmed.

EnerCap, which has been virtually the sole private equity trailblazer for renewable energy investment in the CEE region, will capitalise on the reputation it has built in that region for its next fund.

It has fully invested its first renewable energy fund, the EnerCap Power Fund I (EPF I), but so far postponed raising a second fund due to the recent political uncertainty.

EnerCap has high confidence in the Polish market, both for its Eur350 million Exergy Efficient Energy Fund and any future renewable power fund, which could be launched within the next year. The firm will, however, likely steer clear of some of its former main markets.

Although EnerCap financed Romania’s first non-recourse power project, the country is unlikely to feature significantly in its second fund due to its fluctuating policies. Debt also remains challenging in Romania due to the scarcity of providers willing to provide sufficient leverage.

“Romania just decimated its green certificate market,” Woodroffe said. “No one is going into that market for a long time. It is now very hard to make a wind project work in Romania. We need the regime to stabilise a bit.

“Romania is now a member of EU [but] the challenge is getting something that looks like project finance. We are looking for 70%-plus gearing. All our projects in the first fund were 70%-plus.

“By having high levels of debt, which is cheaper than equity, a lower cost of capital for the project can be achieved. This reduces the regulatory support needed making renewable electricity cheaper for the host country.”

EnerCap may hold out on other jurisdictions, including the Czech Republic and Croatia, but the Romania situation has highlighted a need for it to diversify. The Czech Republic recently increased its tax revenue on photovoltaic systems to 10% and while Croatia benefits from a promising incentive structure, EnerCap has not yet built up a significant track record in the country’s wind industry.

Investors interested in EnerCap’s funds should contact:

Partner Shane Woodroffe at swoodroffe@enercap.com

Please see here for the full Clean Energy Pipeline article.


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