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€500 million Climate Endowment Hydropower Fund launched

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The Climate Endowment Group and eHydro500 have created the Climate Endowment Hydropower Fund (CEHF), an institutional investment fund focused on investing in midsized hydropower plants across Europe.

The Climate Endowment Group is a climate-focused investment company employing the multi-asset class endowment style pioneered by Yale and Harvard universities. eHydro500 is an interdisciplinary team of hydropower experts with unique market access.

The fund will give institutional investors better and direct access to hydropower energy and foster the refurbishment of existing and the construction of new medium-sized hydropower plants (10 MW to 50 MW), thereby contributing to achieving the climate targets set in the Paris COP-21 agreement within the United Nations Framework Convention on Climate Change (UNFCCC).

The CEHF is a climate impact fund that aims to both achieve sound long-term returns and CO2 emission savings. It focuses on investments in mid-sized European hydroelectric power plants, diversified between the construction of new plants (greenfield) and the acquisition and modernization of existing plants (brownfield).

The open-ended fund is part of the Luxembourg Impact Investment Fund platform initiated by Nixdorf Kapital AG, a Luxemburg Regulated Alternative Investment Manager (RAIF), managed by Hauck & Aufhäuser. It can be subscribed to by professional investors only.

In addition to a stable return potential, medium-sized European hydroelectric plants emit only 1/100th of CO2 per kWh compared to the average EU electricity production mix and 1/1000th compared to a coal power plant. Medium-sized projects have a much lower environmental impact compared to larger projects: no large dams nor severe changes of the landscape. For institutional investors, hydropower has so far been just a niche market.

The CEHF aims to raise €500 million (US$588.3 million) to create a portfolio based on an identified project pipeline that is suited for institutional investors. The investment team consists of experienced capital market investors, entrepreneurs and engineers, including hydropower experts Dr Günther Rabensteiner, former member of the managing board of the Verbund Group, and Dr Gilbert Frizberg, former chairman of the supervisory board of the Verbund Group, as well as Wolfgang Kröpfl, chief executive officer of European hydropower asset manager of enso GmbH, and Jürgen Jelly, founder of itom invest GmbH, an M&A boutique focusing on renewable energies. The team is complemented by several experienced international investors.

“Hydropower is the most sustainable and mature renewable energy, a growing niche product worldwide for investors with impeccable CO2 balances,” Dr. Rabensteiner said. “The long life of hydropower plants is an enormous advantage for investors.”