"We've found that returns from clean-tech infrastructure have been more robust than in more varied, core infrastructure funds," Mike Hardwick, an investment manager at the £8 billion ($12 billion) West Midlands Pension Fund, told a Responsible Investor conference in London on Tuesday.

Whereas returns from infrastructure investments in assets such as ports, toll-roads and airports can be correlated to GDP levels, renewable energy assets such as wind and solar farms typically benefit from long-term power prices guaranteed by government policies, such as feed-in tariffs.

The West Midlands Pension Funds – which provides the pensions for 243,000 local authority workers in the UK – has dedicated £144 million to renewable energy and sustainable investment funds, across a number of asset classes.

In particular, it has invested £8.1 million and £9.0 million, respectively, in the €300 million ($380 million) HgCapital Renewable Power Partners fund and the €125 million Impax New Energy Investors.

Hardwick told Environmental Finance that the ultimate rates of return achieved by the funds' investments will only be realised once they are exited. However, he said that the project cashflows have been more stable in comparison with the "turbulence of returns" seen in other infrastructure assets.

HG Capital’s Tom Murley said that it can be difficult to accurately compare returns across different types of infrastructure funds.

However, he said that the aggregate portfolio of the 18 operating assets in the Hg Capital fund has “hit 100% of its forecast budget”.

“If you focus on quality assets, with good equipment, that are well tended, you can get very stable revenues … [and] more stable returns than GDP-linked infrastructure.” 

Mark Nicholls

Environmental Finance is hosting its inaugural Renewable Energy Infrastructure conference in London on 9 July. Free places are available for qualifying asset owners.