To meet Paris Agreement goals and stay below 1.5 C° from pre-industrial levels, investments towards climate fighting are necessary. While the world is funneling around $600 billion dollar/year in investments, the UN estimates that $1.6 trillion–$3.8 trillion is required annually to avoid warming exceeding 1.5 °C. Institutional investors represent a huge liquidity pool with over $84 trillion worth of asset under management but they contribute minimally to funding renewables. My thesis is that they avoid such investments because of riskiness traditionally associated with infrastructural energy asset classes. This his work contains an empirical analysis of motives which make the renewable energy industry a risky sector, especially in the first development and construction phases. An overview of renewable markets at a global, European and Italian level is presented. I have highlighted how M&A strategy is being used by asset management firms to avoid risks in development stages. A literature review on motives of M&A in the utility, electricity generators and renewable companies is conducted finding out differentiation and risk mitigation is the main cause. I have then used my working experience to reconstruct a Renewable Financing Chain from developers, to specialized renewable funds to large asset managers highlighting the different investment vehicles and financing capabilities of the actors. I developed a model for specialized funds to increase profit selling portfolios to Asset Management Companies, an Asset Management Optimization model to mitigate risk and create green bond funds which can be appetible for institutional investors.
Per raggiungere gli obiettivi dell'Accordo di Parigi e rimanere al di sotto di 1,5 C° dai livelli preindustriali, l'ONU stima che $1,6-$3,8 trilioni sono necessari ogni anno ma il mondo ne sta allocando circa $600 miliardi. Gli investitori istituzionali rappresentano un enorme bacino di liquidità con oltre $84 trilioni di asset in gestione, ma contribuiscono minimamente al finanziamento delle rinnovabili. La mia tesi è che evitano tali investimenti a causa della rischiosità tradizionalmente associata alle classi di asset energetici infrastrutturali. La tesi contiene un'analisi empirica dei motivi che rendono l'industria delle energie rinnovabili un settore rischioso, soprattutto nelle prime fasi di sviluppo e costruzione. Viene presentata una panoramica dei mercati delle rinnovabili a livello globale, europeo e italiano. Ho evidenziato come la strategia di M&A sia utilizzata dalle società di asset management per evitare i rischi nelle fasi di sviluppo. E' stata condotta una revisione della letteratura sulle motivazioni delle M&A scoprendo che la differenziazione e la mitigazione del rischio è la causa principale. Ho poi sfruttato la mia esperienza di lavoro in un per ricostruire la catena dei finanziamenti nelle rinnovabili, dagli sviluppatori, ai fondi rinnovabili ai grandi asset manager, evidenziando i diversi veicoli di investimento e le capacità di finanziamento degli attori. Ho sviluppato un modello societario per fondi specializzati per aumentare il profitto vendendo portafogli di impianti alle società di asset management, un modello di ottimizzazione della gestione degli asset per mitigare il rischio e creare fondi obbligazionari “green” che possano essere appetibili per gli investitori istituzionali.
Profitability in photovoltaics development : finance joins M&A to improve economic figures of renewable energies
GALLO, STEFANO
2020/2021
Abstract
To meet Paris Agreement goals and stay below 1.5 C° from pre-industrial levels, investments towards climate fighting are necessary. While the world is funneling around $600 billion dollar/year in investments, the UN estimates that $1.6 trillion–$3.8 trillion is required annually to avoid warming exceeding 1.5 °C. Institutional investors represent a huge liquidity pool with over $84 trillion worth of asset under management but they contribute minimally to funding renewables. My thesis is that they avoid such investments because of riskiness traditionally associated with infrastructural energy asset classes. This his work contains an empirical analysis of motives which make the renewable energy industry a risky sector, especially in the first development and construction phases. An overview of renewable markets at a global, European and Italian level is presented. I have highlighted how M&A strategy is being used by asset management firms to avoid risks in development stages. A literature review on motives of M&A in the utility, electricity generators and renewable companies is conducted finding out differentiation and risk mitigation is the main cause. I have then used my working experience to reconstruct a Renewable Financing Chain from developers, to specialized renewable funds to large asset managers highlighting the different investment vehicles and financing capabilities of the actors. I developed a model for specialized funds to increase profit selling portfolios to Asset Management Companies, an Asset Management Optimization model to mitigate risk and create green bond funds which can be appetible for institutional investors.File | Dimensione | Formato | |
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Stefano Gallo Final Thesis.pdf
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Descrizione: Final Thesis
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7.23 MB
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Stefano Gallo Executive Summary.pdf
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Descrizione: Executive Summary
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https://hdl.handle.net/10589/186344