The Question & Answer with David Jones appears in the latest edition of the Top 100 Power People report, published by A Word About Wind and read by a community of over 2,500 senior international industry decision makers.
What was your personal highlight in wind in 2014?
As an investment fund manager each new investment is a highlight. So far this year we've made five new wind farm investments in Germany, France and Sweden.
However, the last one we made — the 28MW Forterre wind farm in France — took us beyond €2bn of equity invested in renewables, and this further cemented Allianz's position as one of the world's leading financial investors in renewable energy. Getting beyond €2bn certainly feels like my personal highlight of the year.
Which trend in wind will you watch with most interest in 2015?
I am concerned, in the very low interest rate environment in which we remain, that the volume of capital chasing yield has driven asset prices up. This has driven returns down to levels where the long-term risks — regulatory, operational performance, wind and power prices — are not being properly remunerated.
There are many new and inexperienced investors in the sector who are driving asset prices upwards towards bubble-level pricing that we saw in the build-up to the 2008 crisis. I am hoping that 2015 will see more investors re-visiting assumptions based on growing sector experience for wind; on operational performance; and on macro developments such as the impact of shale gas on long term power prices.
If this re-evaluation takes place then it will have the effect of addressing the over-heating of the market and reducing the long term risk in wind investments for the benefit of investors.
For me, this would certainly be the most interesting and positive trend in 2015 if it happens. Whether the market will act this way remains to be seen.
What key hurdles must wind overcome to achieve further growth?
Generally, wind faces a challenging time while it remains dependent on subsidies.
The long-term political challenge of addressing climate change has fallen down politicians' priority lists as they focus attention on the shorter term challenge of securing a sustainable economic recovery. We see tangible evidence of this in the reduction or termination of renewables incentives in many markets and even the retroactive cutting of incentives in some, such as Spain and Italy. This badly damages investor confidence in those markets.
While these actions are damaging, they also emphasise the need for renewables to become cheaper so they can compete without subsidy against hydrocarbon-fuelled generation — particularly when you consider the impact of abundant shale gas supplies in the coming decades.
The Question & Answer with David Jones appears in the latest edition of the Top 100 Power People report, published by A Word About Wind and read by a community of over 2,500 senior international industry decision makers. To purchase and download your report copy, visit -http://www.awordaboutwind.com/reports/the-top-100-power-people-in-wind-2014/