Disclaimer: Views in this blog do not promote, and are not directly connected to any L&G product or service. Views are from a range of L&G investment professionals, may be specific to an author’s particular investment region or desk, and do not necessarily reflect the views of L&G. For investment professionals only.
Renewable energy returns – where next for investors?
As the macroeconomic environment shifts from one of low to higher interest rates, we assess how this may affect returns for investors in renewable energy projects.
The returns required by investors for their direct investments in renewable energy were declining for the best part of the past decade. A low-inflation, low-interest-rate environment, coupled with increasing awareness of environmental, social and governance (ESG) considerations, has resulted in fierce competition for a limited pool of assets, exerting ever more pressure on return expectations.
As the macroeconomic environment shifts, however, will investor return requirements in renewable assets rise, and where will the corresponding increase in the cost of capital leave European clean energy investments?
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