The first US investment is a major step for Allianz and offers great potential. David Jones, Head of Renewables at Allianz Capital Partners, explains the latest milestone.
What is the difference between the European and the US wind market?
Both are large markets with considerable potential going forward but one key difference is that individual project sizes in the US tend to be larger than in Europe. This is appealing to large investors such as Allianz as roughly the same amount of resources, in terms of time and due diligence expenses, are required to invest in larger projects as in smaller projects – so there are some economies of scale in the investment process.
Could you explain the difference between the European and US incentive schemes for wind?
In the US, renewables are primarily incentivized through tax benefits rather than premium electricity prices, as they are in Europe. Federal tax credits based on the amount of production and other tax benefits are the government's main incentives to help drive the adoption of domestic clean energy technologies.
What does this step mean for Allianz?
This is Allianz's first investment outside the European market for our Renewables platform and is therefore a major milestone for our business. It also represents our first joint venture, as all our European investments are 100% owned by Allianz insurance investors. In this investment Allianz is providing around 40% of the total tax equity, representing around 30% of the total project cost.
Allianz's strong position in insurance and asset management in the US enables it to participate in this sector and, with the renewal of the Production Tax Credit legislation, we hope to be making further investments in the near and medium term.
We believe the financial services sector is in a unique position to help and provide the much needed capital and financing to accelerate the low carbon economy. With this investment Allianz is now supporting the energy transition in the US and has now invested in 60 wind farms and 7 solar parks, located in France, Germany, Italy, Sweden, Austria, Finland, and now the United States.