J.P. Morgan Asset Management (JPMAM), one of the world's largest asset and wealth managers, and Sonnedix, an Independent Solar Power Producer (IPP), announced recently that institutional investors advised by JPMAM have joined Sonnedixs management and shareholders in a new 50/50 joint venture platform company, Sonnedix Power Holdings, to pursue opportunities in the attractive, rapidly expanding global solar market.
Lydia Cambata, of the J.P. Morgan Asset Management, told pv magazine that JPMAM owns the new venture company on behalf of the institutional investors.
The joint venture platform currently operates 17 power plants with 117 MW of installed capacity across France, Italy, Spain, Thailand and Puerto Rico. It also has a portfolio of 18 projects representing over 600 MW of projects in pre-construction stages in Japan, Puerto Rico, Chile, UK and South Africa. The joint venture anticipates a total commitment for the operating and development projects of more than 300 million (US$366 million).
Sonnedix IPP aims at generating solar power from all ground-mounted, rooftop and building integrated photovoltaic (BIPV) projects. It currently operates 14 ground-mounted plants (99.4 MW) and three BIPV plants (1.9 MW), while a further 13 projects (456.7 MW) are currently under construction or in the licensing process. Sonnedix has offices in Europe (France, Italy, the Netherlands and the U.K.), the U.S., Thailand and South Africa.
Oil price plunge facilitates RE investment in 2015
Recent reports have been proclaiming a rush from institutional investors towards renewable energy (RE) investments of late, while major financing and other firms are undertaking various financing innovations targeting renewable power projects.
However, the current circumstances might reinforce a great deal of RE deals in the coming year. Specifically, the world's big banks had until recently hoped that the new year will draw a line under their losses stemming from the financial crisis, regulatory changes and fines from eye-catching market manipulation scandals. But the current oil price plunge has left many banks and other financing institutions exposed to big potential losses in oil and gas loans, leading to new worries.
Oil and gas financing has taken off in recent years, dominating the riskier end of the bond market. Under the current low oil prices, some of these bonds are now considered ‘junk', while new research conducted by the U.S.-based AllianceBernstein asset management firm confirms the great exposure of U.S. banks in risky loans. J.P. Morgan for example, according to AllianceBernstein, has participated in $31.7 billion of non-investment grade loans.
Although the exact exposure of financial institutions to the oil and gas sectors needs to be accessed further, it is becoming clear banks will struggle to continue supporting the expansion of the oil and gas industry quite as willingly as it has in the last number of years. By contrast, the funding of RE is becoming increasingly attractive and financially viable.