Demand for energy is most pronounced in growth markets where macro drivers such as favorable demographics, a rising middle class and urbanization along with an acute underinvestment in the sector have created a strong need for private capital.
Growth markets are set to account for over 70% of global GDP growth by 2030. Investment in energy will be vital for these markets to sustain their growth trajectory.
Clean energy, more specifically renewable power generation, will play a critical role in meeting this significant energy gap. We believe that in many growth markets, renewable energy provides a cheaper alternative to diesel generated temporary power, while also providing short-to-medium term solutions for off-grid consumers. Additionally, specific forms of clean energy (hydro power plants, concentrated solar plants with thermal storage, geothermal and biomass power plants) are not only able to serve as base load power generation but also reduce a country’s dependency on expensive imports of fossil fuels and alleviate budget deficits.
Recognizing the importance of clean energy, many governments in growth markets have implemented, sound, supportive and commercial renewable power generation policies further driving investments into clean energy generation.
Given the compelling energy infrastructure investment opportunity and leveraging on our experience in the sector, we have created a dedicated Clean Energy Platform (‘Platform’) to develop and invest in clean energy assets in global growth markets. The Platform’s in-house development capabilities, via Themis Energy, our dedicated project development arm, provides us with unparalleled access to a proprietary source of projects in growth markets where the lack of local expertise often leads to a dearth of investment opportunities.
Our approach is premised on three key pillars: geography, asset lifecycle, and sector.
- Our geographic focus has been identified based on a rigorous screening criteria in markets where we have local footprint and presence.
- In terms of asset lifecycle, the Platform aims to capture the clean energy opportunity across the entire lifecycle and will deploy capital into development, greenfield and brownfield assets.
- A structured process is used to identify key sub-sectors within the clean energy value chain. Our core focus will be on developing and investing in clean energy power generation, i.e., renewable power generation assets. We will also selectively invest in base-load gas-fired power generation assets and select midstream and downstream energy infrastructure assets including transmission and distribution assets that complete the value chain.
Abraaj has longstanding experience of investing in the energy sector. As of June 2016, we have invested c. US$ 1 billion in 12 companies, including oil and gas services in Latin America, Africa, Central Asia and Southeast Asia, conventional and renewable power generation in South Asia and energy-related transportation in Africa.
Investment in energy infrastructure will be vital for these markets to sustain their growth trajectory. The gap in energy infrastructure in growth markets translates into a long-term investment opportunity. Through the Abraaj Clean Energy Platform, we will build energy infrastructure platforms and invest in brownfield assets expansion.
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