Tackling climate change is recognised as one of the defining issues of our times. Transitioning to a lower carbon economy will involve increasing the weight of renewables in the generation mix and reducing the carbon emissions associated with our economic and day-to-day activities.
Generation of renewable energy
Energy production and use and transportation are currently responsible for the vast majority of EU greenhouse gas emissions. Renewable power generation remains one of the areas of focus for our Infrastructure business, as most countries across the world try to increase the proportion of renewables in their electricity generation mix.
Infinis is the leading UK generator of low carbon power from captured methane. Methane is a highly potent greenhouse gas, with a contribution to global warming over 20 times greater than that of carbon dioxide. Infinis’ operations in the year to March 2021 captured 300,000 tonnes of methane, preventing more than an equivalent of 6.5 million tonnes of carbon dioxide (CO2) escaping into the atmosphere.
The business operates from 148 geographically dispersed sites across the UK, located close to end-user demand and thereby avoiding both the electrical losses and associated charges from use of the national transmission network. By burning captured methane to generate power, Infinis provides an efficient, secure and non-intermittent source of power generation, which is highly complementary to other renewable sources such as solar and wind, which are intermittent in nature.
We have continued to support Infinis since first investing in 2016, funding further investment and a number of bolt-on acquisitions.
Valorem is a fully integrated, independent renewable energy operator which develops, owns and operates onshore wind farms, hydro projects as well as photovoltaic systems across Europe. Today the company is the fourth largest wind developer (and the largest independent) in France and has developed over 2.4GW of installed capacity across wind, solar and hydro. The business has built an impressive future pipeline of 4.9GW of wind, solar and hydroelectric projects across European geographies, of which 2.1GW is at an advanced development stage.
Since first investing in 2016, we have supported investments across Valorem’s portfolio, including the expansion in the solar and hydro markets.
Infrastructure to support the renewable energy sector
Increasing the importance of renewable power generation within the overall power generation mix requires the development of broader, supporting infrastructure.
ESVAGT is a leading provider of emergency rescue and response vessels and related services to the offshore energy industry in and around the North Sea and the Barents Sea and the market leader in the fast growing segment of service operation vessels for the offshore wind industry. ESVAGT’s service operation vessels provide full time accommodation to wind farm engineers, allowing safe and efficient conduct of continuous maintenance programmes which maximise electricity generation from turbines, improving overall uptime, and ensuring operational robustness of the wind farms for the long term. This is increasingly important for the offshore wind industry as operators are focused on their ability to lower the total cost of energy produced in order to reduce dependency on Government support schemes.
The further development of services for the offshore wind industry is a key pillar of our investment case for ESVAGT. As investment managers we have supported the company’s growth in that segment. Services to the offshore wind industry contributed c.64% of ESVAGT’s pro forma 2020 EBITDA compared to c.7% at the time of acquisition in 2015.
Reducing carbon emissions from transportation infrastructure
Successfully achieving a transition to a lower-carbon economy will require the abatement of emissions associated with public and private transport.
Scandlines operates two high-frequency and large-capacity crossings between Germany and Denmark: between Puttgarden and Rødby and Rostock and Gedser. Its ports and ferry routes constitute a crucial piece of infrastructure that connects motorways E47 and E55 between Europe and Scandinavia.
Since first investing in 2007 we have supported the investments made by Scandlines in a cleaner fleet of vessels, and in particular in hybrid propulsion and sulphur emissions reduction technology. The business pioneered hybrid ferries and has invested more than €300 million in this technology since 2013. All six of Scandlines’ passenger ferries now have hybrid propulsion technology and are equipped with state-of-the art scrubbers to reduce particulates emissions.
Scandlines continued along this path in 2020, despite the Covid-19 emergency, with several investments and activities to future proof its fleet and further reduce its impact on the environment. The business made green investments of around €6 million in 2020, including:
Scandlines has committed to continue to make targeted investments with the aim of making the Puttgarden – Rødby route a zero-emissions crossing in the foreseeable future and realising its zero emission vision in the longer term. As a significant shareholder, 3i continues to support these objectives.
Through 3i Infrastructure plc, our main Infrastructure investment vehicle, we invested in Joulz, a Dutch company which, among other services, also designs, installs, leases and maintains medium voltage electricity infrastructure and charging infrastructure for electric vehicles. This is a growing business for Joulz, which we have supported notably through the acquisition, announced in April 2020, of GreenFlux’s electric vehicle charging station business.
Alongside charging infrastructure for electric vehicles Joulz has also recently acquired a rooftop solar developer, further strengthening its development into a leading integrated energy transition solutions provider.