2019 performance overview
In 2019, Triodos Groenfonds:
- grew assets under management to close to EUR 1 billion;
- had a portfolio of 325 projects;
- invested EUR 513 million in renewable energy projects;
- financed Europe’s largest floating soar park;
- explored and financed opportunities in emerging markets, Africa in particular;
- achieved financial returns of 3.2%, without the additional fiscal benefit investors receive.
“Things are going well. We achieved strong impact, good results and very stable returns,” says fund manager Angeles Toledo Rodriguez. “The fund has a strong pipeline of projects, more than double compared to last year, but the projects do take time to deploy so we can’t disburse as fast as we would like to.
Toledo Rodriguez believes the year’s success comes down to having an impactful, good and robust portfolio, while carefully assessing and managing the risks. A decrease in both interest rates and risk premiums also increased the value of the investments.
“We are extremely active, paying special attention to innovative impactful transactions, or to the smaller and medium ones. Nowadays, with the low interest rate environment, there is more capital available for larger projects, which is great. But by financing medium and smaller projects, we fulfil our mission of making capital available to those that may have difficulty accessing finance and where we can make a difference with a green certificate. We can be more competitive, add more value in terms of environmental and social considerations, and get adequate and slightly better returns for our investors.”
Renewable energy takes centre stage
The fund invests mainly in the Netherlands but may invest up to 20% in emerging markets. The portfolio is diversified across the themes of energy transition and food security, and 50% is now in renewable energy projects.
“Investment in renewable energy projects grew from 93 to 108,’ says Toledo Rodriguez, ‘but more excitingly, we surpassed the half billion-euro mark. It’s a significant milestone that has strongly positioned us to continue facilitating the energy transition.”
Floating Solar in Tynaarlo, the Netherlands
Climate Investor One - Construction of a run-of-the-river hydro plant in Uganda
San Martin Hydro in Nicaragua
Europe’s largest floating solar park
During 2019, the fund invested in what at that moment was Europe’s largest floating solar park, located in Tynaarlo, the Netherlands. The 8.4MW solar farm floats on a lake that was created as a result of sand extraction.
“It’s new and innovative. Who better than the Dutch understand the challenges that come with projects on water?And in a country where land is scarce, such dual use of the available space is a great option. We are proud financiers. It’s a very competitive world but the developers chose Triodos because we have a long track record and could quickly understand the project’s challenges. We could be very pragmatic and adapt quickly. Being financed by Triodos is like achieving a green seal of approval and many developers look for it because it adds value to their project.”
Renewable energy in emerging markets
It’s not only European renewable energy projects that are of interest. Expansion into emerging markets has become a key strategy for the future.
“We want to do more in emerging markets, to support the democratisation of energy and open up access for more people in some of the world’s poorest countries. We are already active with utility-based renewable energy projects in wind, solar, and hydro that connect to the grid, but we want to do more with commercial industrial initiatives and off-grid solutions.”
Commercial industrial initiatives, also known as captive or mini-grid initiatives, provide energy to companies that cannot rely on the grid, find it too expensive, or simply want to make their operations more sustainable. Examples include rooftop installations and hybrid solutions such as a windmill plus battery on commercial locations.
“Other Triodos funds, like TriodosRenewables Europe Fund have supported similar projects in Europe, so we already have the expertise and knowledge inhouse. We expect to be able to easily translate it to emerging markets.”
Off-grid solutions are a lot smaller in terms of volume but highly impactful because they are relevant for very poor communities where there is no existing infrastructure. “We are already active in Africa,” says Toledo Rodriguez. “It’s a region that is most in need and a lot needs to happen. A connection to the grid may not exist so we are looking at supporting the production of energy where it is consumed.”
“It creates strong social impact, stimulates local development and promotes innovation. It’s relatively new and entails more risks, which we carefully and diligently address before investing.”
The Netherlands is home to 90% of the fund’s projects but it is becoming a challenging environment. Toledo Rodriguez tells that the fund -tends to focus more on small and mid-sized projects: “This is where we can add more value. We can respond quickly to projects that can really use the green subsidy we receive. A few can offer it, and it can make a big difference to the projects” she says.
She says the fund will also pursue innovative initiatives, despite being low-risk and a loan provider.
“We have always been a pioneer and we want to stay that way. We were the first to finance windmills in the Netherlands more than 25 years ago, the first with solar panels in the Netherlands more than six years ago, the first with the largest park, the first ones with floating solar. Our motivation is to continue to look for new things and adapt. We really want to be early entrants and stimulate innovation.
When asked where she thought the market was headed, Toledo Rodriguez was clear: “Solar and wind technologies will continue but it will be more about innovation around those technologies. The sector is being changed by batteries, digitalisation, data mining, smart grids, and data management. I believe we are at the start of a new era, the digitalisation of renewable energy. It’s going to be a big thing and it’s very exciting.”
Impact of COVID-19
This interview was conducted on the brink of the World Health Organisation declaring COVID-19 a pandemic, and such does not mention potential impacts.
Every Triodos Investment Management fund has its own mission, investment theme/s and strategy. The correlation and potential impact of COVID-19 on each fund therefore differs.
The current macro-economic trends are likely to have an impact on Triodos Groenfonds. However, due to the fund’s long-term objectives and good fundamentals of projects, the effects of the current downturn are at this point expected to be limited. Toledo Rodriguez: “This is the result of the fund’s well diversified portfolio of more than 325 projects across three main segments, of which renewable energy is the largest. I expect the energy transition to push ahead, and governments to continue to work towards delivering the Paris Agreement CO2 reduction targets.”
For the fund specific information and the latest Triodos news and views, insights and economic outlooks regarding COVID-19, see our dedicated page COVID-19 pandemic.
Visit the fund page on our website for more information about Triodos Groenfonds.