Flowing into Hydro power
Citywealth Editor Karen Jones spoke to the Managing Partner of Augusta Investment Management, a European renewable energy investment manager, about its work on using hydro power in Scandinavia
Augusta Investment Management is a thirty-seven strong team and a European energy asset manager with its focus on utilising plentiful hydro power in Scandinavia. Their current work is on purchasing ‘power’ from one utility company with government contracts or state agreement then selling those on the open market to ‘new’ buyers or other state utilities. As energy needs grow and resources have been threatened globally, their vision sees a marketplace where bountiful energy (hydro currently) in one country can be sold on the open market to another country (or company).
“There is no cross-border electricity currently”, says Mortimer Menzel, Managing Partner, who says Augusta has one of the biggest, specialist corporate finance renewable teams in Europe, “it just doesn’t exist because of historic ways of doing business and operating procedures”. He believes he has developed not only a new green business but also a new asset class.
“I see a world with connectors to help facilitate energy sharing or purchasing on the private markets. We can help utilities develop their ESG programmes with low priced debt to invest in the changes they need to make to participate. For instance, Germany has a lot of electricity but the UK only a small amount of capacity. It’s a business in its infancy.” They see another opportunity with AI as the need for data centres increases the need for electricity. “AI and more cooling centres is something that we predict will be very big.”
The risks in the business are minimised says Menzel as they run the business in partnership with state utilities. Also, hydro has “less technology risk” unlike wind. They can also cherry pick projects to work with who have known success.
Augusta could get into hot water by ‘getting the price wrong’ when there are swings in demand, but Menzel says this is the benefit of the private markets which enable everyone to get on the phone and renegotiate. He says private ESG is very different to public, the market operates more quickly with less drag. So, if you are wet behind the ears when it comes to hydro power and clean energy, Augusta can help you stay out of hot water.
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