Hydro, Hydro, and Off to Work Go Your Euros — RENAIO has its Game Plan All Worked Out

Unique combination of technology and sustainable asset management.

Hydropower is key to accelerating and diversifying the global energy transition — and RENAIO Assets, founded in 2019, has embraced that trend.

Today it is a leading asset manager for the sector in Europe. RENAIO focuses on financing infrastructure projects, and optimises and operates hydro-powerplants with its own technicians… and with great success.

The company started out just four years ago, with an unusual approach for an asset manager. The company focused on identifying investment opportunities in sustainable energy, but its team includes engineers and specialists. They ensure that facilities within the portfolio operate optimally and efficiently.

It has developed its own servicing and control software called the RENAIO Monitor to achieve these goals. The software allows technicians to perform “predictive maintenance”. Computer-optimised service plans with real data-recording significantly reduce downtime and maintenance schedules for turbines and other high-maintenance parts. RENAIO has been awarded the ISO 9001:2015 quality management certificate for the area of “purchase with technical takeover and operation of power plants”.

To ensure the best support and efficiency, RENAIO co-operates with local companies for care and inspections, and has maintenance contracts with turbine manufacturers and the designers of hydropower plants.

RENAIO’s predictive maintenance management and technical improvements can transform low-performing hydropower plants into high efficiency ones. By optimising the plants, efficiency can be increased by up to 20 percent.

In contrast to traditional asset management companies, RENAIO covers the entire value chain: Purchasing, commercial-, technical-, and risk management, investment consulting, and sales.

Group managing director Oliver Platsch explains the underlying philosophy: “By offering our particularly green fund, we wanted to show that power generation does not necessarily have a negative impact on the environment. It creates a profitable offer for Investors who value highly sustainable investments. That’s why we focus exclusively on investments in renewable energy projects.”

Hydropower offers several benefits: Electricity generated this way represents the only baseload-capable power of all renewable energies. There are currently more than 157 gigawatts of installed hydroelectric capacity across the EU, and some 10,000 plants in the Alpine region alone. These are “technically mature” and cost-effective to operate.

The plants allow for more than 5,500 operating hours per year — and hydropower boasts the highest efficiency among all sources of power generation: more than 90 percent. Nuclear power is 33 percent efficient, wind power 30 percent, and photovoltaics 20 percent. Hydropower offers a high return per kilowatt of installed capacity.

The expected returns for hydropower plants with less than 5MW in Europe range between one and 10 percent, with Italy, Poland and Slovakia currently offering the highest yields.

Only 3.6 percent of funds in Europe meet the strict requirements of Article 9 — and the RENAIO Infrastructure Fund is one of them. This is proof that the company is serious about its commitment, and an important part of the EU Disclosure Regulation (SFDR). It makes it easier for investors to measure the sustainability of financial products.

The EU released its Sustainable Finance Action Plan in March 2018. The objective is to ensure stricter compliance with the principles of the UN’s 2030 Agenda for Sustainable Development, and the goals of the Paris Climate Agreement.

With the RENAIO Water Infrastructure Fund, 100 percent of the assets are sustainable investments, according to the SFDR directive. As of December 31, 2022, the taxonomy ratio of the fund is 93 percent due to cash positions, with a minimum required ratio of 85 percent due to the SFDR directive. “We are very proud of the fact that our investment fund is a pioneer of sustainable investments in Europe, and one of the ‘Dark Green Financial Products’ providing exceptional environmental benefits,” says Andreas Grassl, managing director at RENAIO Group.

Environmental commitment can pay off for investors, too: they have seen an average annual return of 8.5 percent since the fund’s launch in 2019. Investment in the mutual fund is less volatile, as it is not listed on a stock exchange and functions largely independently of economic cycles. Investors also benefit from the fact that capital committed and subscribed is invested swiftly — typically one to three months. Minimum investment is €200,000.

There is permanent compensation for electricity fed into the grid, and this provides predictable income in the long term through guaranteed electricity prices and a long-term cash flow with stable, partly guaranteed payments. Since hydropower is deemed to be one of the pillars of the energy turnaround in Europe, an investment should be “future-proofed”.

Investors have a holding period of two years, after which they can terminate with 12 months’ notice, enabling them to be flexible in the face of unforeseen events. An investment in the RENAIO Water Infrastructure Fund is considered an infrastructure investment with an overall horizon of more than 10 years.

Investors receive annual financial statements with an auditor’s report, including a review and performance notes. An overview of the activities in the fund and in investment properties is distributed quarterly.

The open-ended hydropower fund focuses on medium-sized and smaller institutional investors. Currently, the majority are BaFin-regulated pension funds and insurance companies. As of June 2023, the fund’s AUM totalled €103m.