Sun shines brightly on renewable energy sector

Energy is one of those commodities that ties into everything and consequently those investing in it are almost certainly making a lucrative move. Indeed, energy-related infrastructure, be it of traditional or alternative forms, has been at the forefront of private equity investments recently and continues to attract a wealth of investors.

In fact, as Southern Europe unquote" was going to press, energy investor First Reserve Corporation closed its seventh fund on $9bn, up from $7.6bn in its previous vehicle - albeit a long way off its initial $12bn target. Investors include California State Teachers' Retirement System, which committed $400m, and CalPERS, which contributed $300m to the fund.

But while major league players such as First Reserve can diversify into all types of energy infrastructure, smaller players are looking into solar. In fact, the one deal to break up an otherwise slow month in the region was the EUR300m purchase of stakes in three Spanish solar photovoltaic plants by HgCapital's Renewable Power Partners Fund from AIG Financial Products Corp and investment banking firm 360 Corporate.

In the renewable energy sector, solar draws the most capital, offering a low resource variance and portfolio diversification, as well as predictable cash yields. Add to that European and government incentives (see Solar infrastructure, page 12) and it's a compelling investment case.

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